Embedded Interests and the Managerial Local State:Methanol Fuel-Switching in China

This paper analyzes the determinants of alternative automobile fuel regulation and developmentsupport with a particular focus on methanol fuel. We find that embedded interests, bureaucraticreforms, and political circumstances in the Chinese national, provincial, and municipalgovernments have all shaped policy outcomes in this area. The paper seeks to explainwhy at, the national level, support for alternative fuels has waned and finds that the concernsof state oil majors and disorganization during the process of national bureaucratic restructuringhave been the deciding factors. Interestingly, at the sub-national level promotion of methanolcontinues unabated in some places. At the local level, business relationships as well asthe embedded economic and personal interests of local leaders help to explain manageriallocal government behavior and sheds light on why government officials actively create andmanage methanol fuel business opportunities through local standardization, subsidies, andhands-on management of SOE opposition. The switch towards methanol fuel was more successfulin localities where individuals, either government officials or enterprise managers,formed an alliance and made this their ‘pet projects’. The analysis draws on 55 interviewsconducted between June and October 2010 in Shanxi, a major coal-producing province whichhas supported methanol fuel-switching programs for over ten years. The findings contribute todebates about the condition of the local state in China. The argument put forward in this paperis that because of limited state capacity at the central level and insufficient concerns for thedevelopment of alternative fuels in the short-term, some sub-national governments withstrong embedded interests promote certain alternative fuels by taking on active managerialroles, adopting creative and ad-hoc strategies to fill in the national level policy gap at the locallevel.