Third-party monitoring and environmental data manipulation: the case of air quality control in Chinese cities

The high-powered performance target responsibility system and the central-local information asymmetry jointly incentivize local governments in China to manipulate environmental quality data, particularly the notorious air quality data. The central government implemented several nationwide reforms to reduce the information gap after 2010, and a third-party air quality monitoring system has been introduced since 2015. However, the literature did little to explore whether the situation has changed due to these reforms. This chapter quantitatively examines China’s reforms in the environmental monitoring system and the effectiveness of these measures in improving the credibility of air quality data. The results of Benford’s law, the McCrary test, and regression discontinuity design support the argument that data manipulation has decreased after a more centrally based monitoring system was built by the central government. Despite that, data fabrication is still difficult to identify and mitigate, and the case of air quality regulation in China suggests that it is practically viable. © The Editors and Contributors Severally 2024. All rights reserved.