This paper explores why post-reform decentralization in China has failed to bring about environmental sustainability, using a case study from Uxin banner in Inner Mongolia. The local government has promoted intensive grassland improvement in its political, economic, and environmental policies under the umbrella of "ecological construction," a term used to describe the enhancement of vegetation cover on this and terrain. The government's aggressive approach to ecological construction, however, is incongruent with the ecology of the Inner Mongolian drylands. Consequently, although beneficial to short-term economic growth, "ecological construction" has led to unintended grassland degradation, thus undermining environmental sustainability. (c) 2006 Elsevier Ltd. All rights reserved.