In this interview, Guangzhi Ye and Zhiwei Yang discuss the research and findings of the recent article in Environmental Politics – When legitimacy backfires: symbolic policy signals and strategic green compliance in China’s multi-level governance.
Congratulations on your recent article! What is the key message that you hope people take from this research?
Thank you. One message we hope readers take away is that policy implementation should not be viewed as a simple linear process moving directly from policy adoption to governance outcomes. Rather, it is a continuous process involving policy commitments, implementation actions, and eventual outcomes. At each transition between these stages, execution gaps may emerge, and these gaps can shape firms’ expectations and behaviour in different ways.
Our findings suggest that firms respond not only to formal regulations but also to the signals embedded in policy implementation. Compared with the gap between implementation actions and environmental outcomes, the gap between policy commitments and implementation actions, the Word–Action Gap, has a stronger influence on firms’ strategic green behaviour. This suggests that firms pay attention not only to the ultimate effectiveness of environmental policies, but also to whether policy commitments are consistently translated into concrete implementation. The credibility of implementation shapes firms’ expectations about the future regulatory environment and, consequently, their decisions regarding long-term green transformation.
More broadly, the study highlights that effective climate governance depends not only on ambitious policy design, but also on implementation credibility. Aligning policy commitments, implementation, and outcomes is important for encouraging firms to undertake substantive environmental improvements rather than focusing primarily on visible compliance.
Your study shows that the Word-Action Gap drives strategic green behaviour more than the Action-Result Gap. Does this suggest that China’s environmental enforcement law is fundamentally a signalling instrument rather than a compliance mechanism, and what legal reforms would close that credibility deficit?
We would be cautious about drawing that conclusion. Our study does not suggest that China’s environmental enforcement system is merely symbolic or that enforcement is ineffective overall. China has made substantial progress in strengthening environmental regulation and improving environmental outcomes over the past decade, and there are many examples where enforcement has led to meaningful improvements.
Our findings do not suggest that environmental enforcement is fundamentally a signalling instrument. Rather, its signalling function operates alongside its conventional compliance function, and the two are complementary. Our results simply suggest that firms appear to respond more strongly to the credibility of implementation than to environmental outcomes themselves.
From a firm’s perspective, whether policy commitments are consistently translated into concrete actions provides a more immediate signal about future regulatory expectations. By contrast, environmental outcomes are jointly shaped by many additional factors, including technological constraints, industrial structure, governance capacity, and resource endowments, and often take much longer to materialize. As a result, implementation credibility provides firms with earlier and more direct signals when forming expectations about the future regulatory environment.
Rather than viewing this primarily as a legal issue, we see it as a broader implementation challenge that many multi-level governance systems face. Environmental governance often requires balancing multiple objectives, including environmental protection, economic development, employment, and social stability. Achieving these objectives simultaneously is inherently complex.
Our evidence highlights the broader importance of strengthening the credibility and consistency of policy implementation, regardless of the specific legal instruments adopted.
Our findings therefore suggest that greater implementation consistency, transparency, and continuous monitoring can further strengthen policy credibility and provide firms with clearer expectations about future policy implementation.
Given that local governments are the primary, not the only, source of implementation distortion, what kinds of vertical accountability mechanisms would your findings suggest are most likely to reduce the Word-Action Gap?
Local governments operate within a complex governance system and often face multiple objectives simultaneously. The implementation gaps we observe likely reflect institutional coordination challenges rather than the behaviour of any single actor.
At the same time, our study does not compare the effectiveness of different vertical accountability mechanisms, so we are not in a position to conclude which particular institutional arrangement would be most effective. Our focus is on identifying implementation gaps at different stages of the policy process and examining their behavioural consequences.
Our findings point to a broader principle. Accountability mechanisms that place greater emphasis on the implementation process, not simply policy announcements or final outcomes, are more likely to reduce the Word–Action Gap. Continuous monitoring of whether policy commitments are translated into implementation, together with greater transparency and dynamic feedback throughout the implementation process, can strengthen implementation credibility and provide firms with more stable expectations about future regulatory policies.
Ultimately, the objective is not simply stronger enforcement, but more credible, consistent, and predictable implementation. Firms are more likely to undertake long-term environmental investments when they perceive that policy expectations remain stable over time.
Your finding that southern, market-oriented regions show stronger signalling effects raises a federalism-type concern. Should central law pre-empt local discretion in green policy implementation?
The stronger signalling effects we observe in southern and more market-oriented regions likely reflect differences in institutional environments, economic structures, and interactions between governments and firms, rather than indicating weaker environmental commitment.
At the same time, our findings suggest that local discretion has a dual role. On the one hand, it allows local governments to adapt policy implementation to local resource endowments, industrial structures, and stages of economic development, thereby improving policy adaptability. On the other hand, without effective coordination and monitoring, differences in implementation intensity and credibility may emerge across regions.
The broader challenge is therefore finding an appropriate balance between national consistency and local flexibility. A common set of long-term environmental objectives can provide stable policy direction, while allowing local governments sufficient flexibility to design implementation approaches suited to local conditions. This challenge is not unique to China. Many multi-level governance systems face similar trade-offs between national policy consistency and local flexibility.
Our findings therefore suggest that maintaining implementation credibility across regions may be more important than pursuing complete policy uniformity. Clear implementation standards, transparent monitoring, and consistent long-term expectations can preserve the flexibility needed for local adaptation while reducing unnecessary implementation gaps. In this way, local flexibility and national policy consistency can complement rather than undermine one another.
Finally, what’s next? Are you publishing more on this topic?
Yes. This paper opens several directions that we are currently exploring.
One question we are particularly interested in is why similar environmental policies often produce very different implementation outcomes across regions. The current study focuses on implementation gaps at different stages of the policy process, but future research could further explore how different institutional conditions jointly shape implementation effectiveness.
Rather than examining individual factors in isolation, we would like to understand how government implementation capacity, institutional environments, and firm characteristics interact to generate different implementation pathways. Configurational approaches, such as fuzzy-set Qualitative Comparative Analysis (fsQCA), may provide one useful way to study these interactions.
More broadly, we hope this line of research contributes to a better understanding of how environmental governance can simultaneously support sustainable development and long-term economic growth. In practice, these objectives are often pursued together rather than in isolation. Improving implementation credibility can help reduce uncertainty, strengthen firms’ long-term expectations, and encourage investments that contribute to both environmental and economic resilience.
Bio
Guangzhi Ye is an Assistant Professor of Economics at Nanyang Technological University, Singapore. His research combines macroeconomics, corporate finance, and sustainability to understand how firm heterogeneity shapes aggregate economic outcomes. His work examines how financial frictions, expectations, and policy-related risks affect firms’ investment and financing decisions and how these microeconomic mechanisms propagate through the macroeconomy. His recent research focuses on intangible capital, supply-chain risk, environmental policy, and monetary transmission. Using a combination of firm-level data, textual analysis, and quantitative general equilibrium models, he studies how uncertainty and policy shocks are transmitted across firms and influence macroeconomic dynamics. Guangzhi received his Ph.D. in Economics from Boston University and his B.S. in Mathematics and Economics from The Hong Kong University of Science and Technology.
Zhiwei Yang is a PhD candidate at the School of Economics and Management, North China Electric Power University. She was a Visiting Scholar at Tufts University and is currently a Visiting PhD Student at Nanyang Technological University (NTU). Her research interests include environmental policy, policy implementation, and environmental governance. Her work examines policy implementation gaps and firms’ strategic responses to environmental regulation using quantitative methods and causal inference.
