This chapter traces the defects of the Chinese corporate-political ecosystem to a combination of lingering Maoist/Communist political practices and a short-term capitalist profit-maximizing mindset that was introduced during the Reform period. The chapter shows the devastating impact of this contradictory ideology on the environment, which has only worsened over the past three decades of reform due to self-interested alliances among local government officials, state-owned enterprises, and private corporations placing economic development and profit-making over the health of their surrounding citizens and natural environment. The result has been a massive ecological and public health crisis and increasing social tensions that threaten the Chinese Communist Party's hold on power.

This chapter shows that state-owned enterprises (SOEs) still play a major role within the Chinese corporate ecosystem, but even after a long period of reforms, they are still plagued by skewed government incentives leading to irrational investment decisions, huge waste of resources, and widespread defiance of central government regulations. The chapter includes case studies of the coal and power sectors to demonstrate the unholy "tripartite" relationship among SOEs, local government officials, and corrupt central regulators, all engaging in rent-seeking activities in their own vested interests. Current reform programs fail to address these key defects.

This chapter follows on from the previous one, evaluating the Chinese Communist Party's recent attempts to transition toward an ecocivilization and to address China's ecological and public health crisis through a new approach toward balanced economic growth. The chapter finds that while the intentions and accompanying legal reforms are admirable, implementation will likely fail due to continuing misalignment between official/corporate incentives (especially at the local level) and central policies, compounded by the fragmented political structure and subversive elements within the corporate-political system that we identified in Chapters 4–7. The chapter also critically analyzes the recent introduction of public interest environmental lawsuits brought by procurators, which, while filling a major gap in legal enforcement against polluters, too often appear to result in opaque settlements with local governments rather than strong penalties against offenders.