Rust to Riches

Comprising Liaoning, Jilin, and Heilongjiang provinces, Northeast China is rich in natural resources such as oil, coal, iron ore and fertile land. It was once the cradle of China’s heavy industry, emerging in the 1950s as a hub of industrial and technological development in cooperation with the Soviet Union.　

The region was home to China’s first steel, truck and jet plane factories. At its peak, the region accounted for about three-quarters of the nation’s heavy industry output. It once boasted the country’s longest road and rail transportation network and the highest rate of urbanization.　

However, with China’s economic reform and the rise of the private sector, the Northeast lost its prominence. As regions like the Yangtze and Pearl river deltas flourished, millions of employees of State-owned enterprises were laid off in the 1990s. In the past couple of decades, the provinces suffered from brain drain as young workers migrated south to pursue better career opportunities in warmer climate.　

According to the 2020 census, the population of the three northeastern provinces had shrunk by 11 million compared to a decade earlier, standing at 98.5 million.　

China’s attempts to revive the region’s economy date back to 2003, with the release of a State Council document on “revitalizing the Northeast’s old industrial bases.”　

However, despite the multiple strategies and initiatives, progress has been limited.　

The region’s economic performance remains among the weakest in the country. In 2023, per capita GDP of Heilongjiang Province, the northernmost of the three provinces, ranked 30th out of the 31 provincial regions in the Chinese mainland, only higher than the arid northwestern Gansu Province. Jilin and Liaoning ranked 27th and 19th.　

In 1985, their combined GDP accounted for 11.65 percent of the national total. In 2021, the ratio dropped to 4.87 percent.

Since then, the central government has appointed numerous officials from more developed coastal regions to key roles in the Northeast. For instance, in October 2023 Cao Lubao, former Party secretary of economically advanced Suzhou in Jiangsu Province, was appointed director of Jilin’s provincial publicity department. He has an MBA and years of work experience on taxation affairs and government investment operations. Between June and August 2024, another eight officials from coastal provinces were reassigned to the Northeast.　

Among them is Zhu Huan, former deputy mayor of Ningbo, a major port city in Zhejiang Province, who was appointed Party secretary of Meihekou, a transportation hub in Jilin. Ruan Ganghui, former deputy mayor of Jinhua, Zhejiang Province, now serves as executive deputy mayor of Baicheng, Jilin Province. Both were responsible for trade and investment promotion in their previous positions.　

Cross-regional official appointments have long been a part of the strategy to revitalize the Northeast through “pairing assistance” initiatives.　

In March 2005, Shanghai and neighboring provinces Jiangsu and Zhejiang signed a talent development cooperation agreement with northeastern provinces, which has since seen thousands of officials participating in temporary job exchanges.　

In 2016, the State Council issued another pairing assistance mechanism between the Northeast and Jiangsu, Zhejiang and Guangdong provinces. The following year, the State Council again called for creating a regular mechanism aimed at transferring skills, experience and leadership to the underperforming region.　

Zhang Yishan, director of the Center for Quantitative Economics of Jilin University, argues that the Northeast’s economic stagnation is not due to a lack of resources, funds or infrastructure. Rather, it is what he calls a “soft environment” problem.　

Compared to southeastern coastal regions, the Northeast lacks a solid market economy foundation. It has long been argued that the prevalence of nepotism and the dominance of State-owned enterprises in the region create a less favorable environment for private investors.　

Liu Xin, director of the Research Center of Human Resources Development and Management at the Renmin University of China in Beijing, said that these newly reassigned officials can help “shake up the entrenched bureaucratic atmosphere” and “introduce the experience, governance style and market economy logic of southeastern coastal regions into the Northeast.”　

“The abilities, vision and mindset of a top leader can have a direct impact on the overall political atmosphere and resource allocation of a region,” Liu told NewsChina.

The Northeast has become one of the three hubs of the China-Europe freight train service. Two of the three rail ports in the east corridor of the service, Suifenhe and Tongjiang, are in Heilongjiang, while the third, Manzhouli, is in Inner Mongolia Autonomous Region, adjacent to the Northeast.　

By August 20, 2024, these three ports had handled 30,000 China-Europe cargo trains transporting 2.91 million containers of goods since the service began in 2013, according to China Railway Harbin Group.　

In 2023, 5,000 China-Europe cargo trains passed through these ports, a significant increase from 45 in 2013. Its 27 routes link 60 Chinese cities with 14 European countries, including Germany, Belgium, the Netherlands and Poland.　

In his keynote speech made last year in Heilongjiang, President Xi emphasized that the region faces “new and great opportunities.” Xi urged the region to push for industrial innovation through scientific and technological innovation and to upgrade its unique industrial system. “To push for the full revitalization of Northeast China, the real economy is the foundation, sci-tech innovation is the key, and industrial upgrading is the direction,” he said.　

In 2023, the economies of Liaoning and Jilin picked up considerably. Jilin’s GDP increased by 6.3 percent in 2023, ranking seventh among the country’s 31 provincial regions. The main powerhouse, according to the provincial government’s press conference in January 2024, included high-end manufacturing, new energy power generation and tourism. Driven by strong growth in new energy vehicle production and new material manufacturing, Liaoning’s 5.3 percent GDP growth rate surpassed the national average of 5.2 percent in 2023. Both provinces also recorded a net population influx for the first time in over a decade, with 86,000 new residents in Liaoning and 43,400 in Jilin.　

Eastern coastal cities and provinces, which lead China’s import, export and advanced industries, are expected to lend their expertise to the Northeast, helping the region develop new trade avenues and growth opportunities.　

For example, Jiang Bing, former director of Gaochun District, Nanjing, capital of Jiangsu Province, now serves as acting mayor and deputy Party secretary of Dandong, a major port city in Liaoning Province. Jiangsu, home to the country’s largest private shipyard, and Gaochun, known for its advanced manufacturing and high-tech parks, Jiang is expected to bring valuable experience to Dandong’s development.　

Additionally, the central government is working to ease the Northeast’s burdens by redistributing resources between prosperous regions and the Northeast. The 2024 No.1 Document issued by the CPC Central Committee and the State Council, which sets out agricultural and rural policy for the year ahead, called for an inter-provincial compensation mechanism between grain-producing and grain-consuming areas, highlighting the importance of food security and the relatively low profitability of agriculture compared to other industries. This policy aims to redistribute wealth from wealthier provinces that consume more grain to the less developed provinces that produce it.　

If implemented, Heilongjiang and Jilin would be key beneficiaries. In 2023, Heilongjiang produced 77.9 million tons of grain, accounting for 11.2 percent of China’s total output, and has ranked first in national grain production for 14 consecutive years.　

The province’s grain self-sufficiency rate was 617.6 percent in 2022, meaning it produced more than six times its own consumption, with 83.4 percent of its grain available for export to other provinces. Despite this, Heilongjiang struggled with a GDP growth rate of just 2.6 percent in 2023 and 1.5 percent in the first half of 2024.　

Jilin, the country’s fifth-largest grain producer, would also benefit from the policy with a grain self-sufficiency rate of 419.5 percent and 76 percent of its grain available for export.

Guazhi temporarily assigns officials to work in another region or organization for a set period, typically a couple of years. During this time, they retain their original positions and titles but serve in new roles. Afterward, they return to their original posts. This system allows officials to gain experience in different roles, regions and sectors to strengthen their leadership capabilities.

　

However, Professor Liu argues that guazhi has proven ineffective. “It sends the wrong message to both the appointed individuals and local governments,” Liu said. Appointed officials view their positions as temporary and lack incentives to drive significant reforms. Local governments also are reluctant to grant the officials full authority since they are expected to leave in a few years. “So these officials often do not become deeply involved in local affairs,” Liu added.　

The recent appointments indicate a shift in strategy by the central government. Professor Bai Zhili of Peking University’s School of Government suggests that these permanent assignments give officials greater authority, allowing them to have a more significant impact than before.　

“Considering the vast differences in social and cultural norms between the northeastern provinces and the southeast coastal regions, it’s essential to grant them enough authority through permanent appointment,” Bai told NewsChina. “This way, the officials’ ideas and experiences can be effectively implemented.”　

Still, Professor Liu cautions that the success of this new strategy remains uncertain. “Excelling in the favorable market conditions of the South is one thing, but performing well in an entirely new environment is another,” Liu said. “After all, being able to handle pressure and accomplish tasks across regional conditions is a key requirement for building a well-rounded leadership pool.”