Inspired by research on rural sustainability and development in China, this thesis presents a case study on The Loess Plateau Watershed Rehabilitation Project (LPP), a state-led, World Bank-funded environmental improvement and development project in northwestern China initiated in 1994. The focus of the study is on ecological modernization in the Chinese context, seeking to develop a better understanding of the Chinese discourse of sustainable development. Qualitative research methods were employed in situ in rural area of Ordos city in the Autonomous Region of Inner Mongolia, with data from local institutions as well as individual project staff and farmers. This study offers a micro-level perspective, investigating the project s local planning and implementation processes, in particular the interaction and communication between local stakeholders, as well as long-term effects of the project on local farmers and their villages. Three main interventions, as the result of institutional operation and planning, were identified: land tenure contracts, integrated watershed planning and grazing management. These were implemented through the LPP at the local level, contributing to the project s success and sustainable development of local communities. The World Bank was a main actor influencing policy-making during the project. However, as this thesis demonstrates, the World Bank s requirements and rhetoric were translated into Chinese terms and adapted to local practical conditions. Local governments played a crucial role in implementing the project s policies and practices on the ground. In particular, there existed a gap between the World Bank-required participatory approach and the actual version of this utilized at the local level. Problems were found in terms of limited empowerment in local village communities, especially regarding gender equality and the empowerment of women. This may result from the political nature of participation with its constraints for achieving true bottom-up development, as well as the Chinese interpretation and implementation of western ideas and practice within their development context. The thesis argues that the LPP can be treated as a microcosm for understanding the tensions that persist in the Chinese discourse and practice of ecological modernization.