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Recent scholarship suggests that authoritarian leaders may use seemingly democratic institutions to strengthen their own rule. In this vein, China’s leaders attempted to rein in local governments by introducing new transparency regulations, with environmental transparency a key focus. However, implementing these requirements necessitates cooperation from the very actors who may be weakened by them. Surprisingly, more industrial or more polluted cities were no slower in implementing environmental transparency than cleaner ones, with pollution measured using satellite data in order to avoid relying on questionable official sources. However, cities dominated by large industrial firms lagged in implementing environmental transparency, and this effect appears strongest when a city’s largest firm is in a highly polluting industry. Our findings demonstrate that even institutional innovations designed to preserve authoritarian rule can face significant challenges of implementation.