Cooler ChinaInternational Special Interest Group Study Tour to North East China 2014

North East China

3 provinces•Liaoning – Shenyang and Dalian (port and holiday resort)•Jilin – Changchun (cars) and Changbaishan National Nature Reserve•Heilongjiang – Harbin (“Russian”), Songhua Rover and Daqing (oil)

NE China Data

Liaoning Jilin Heilongjiang TotalsPopulation (m)

44 28 38 110

GDP (nominal £bn)

250 110 140 500

GDP / head £ 5500 4300 3500External trade (£bn)

80 24.5 28 122.5

Land area (‘000km2)

146 187 455 788

Liaoning province

Shenyang

Dalian Liaoning province

Jilin province

Changchun

Jilin provinceChangbaishan National Nature Reserve

Heavenly Lake 2470 metres

Heilongjiang Province

Harbin

Songhua River

HeilongjiangDaqing – world city?

High speed trains

What future for China’s “Old Rustbelt”?

• 2014: slow growth rate 6%; 1.4 points below national average;

• Industrial output rose 0.5% year-on-year in October, far below the national average of 7.7%;

• Ranked in the bottom 5 of China’s 31 provinces.

History of the North East

• Rich in oil and coal, 1930s became industrialised under Japanese military control.

• Mao Zedong made it the heart of heavy manufacture.

• Decline in 1980s when China was opening up and other areas, Yangtze and Pearl river deltas were flourishing.

• Unemployment rose and mass protests spread as loss-making state-owned companies were closed or cut.

• 2003 plan to “revitalise the old NE industrial bases.”

• Transform factories; trade with nearby countries; new industries, from tourism to software.

• NE caught up with national growth (10%) and then pulled ahead (12.4% in 2008 – 2012, 3 points ahead of national pace) – China’s fastest-growing region.

• Recent sharp downturn since 2012 compared to rest of China.

“A deepening economic malaise”• NE reliant on investment and manufacturing, closely related

to now-slowing property market;• Car industry (NE was national leader) declining as foreign

cars are more popular than home grown ones;• Decline in service industries and investment;• Half finished buildings;• New homes not selling;• Over-capacity in heavy industry, e.g. cement;• Poor investment decisions – less money for social service;• Geography: relatively isolated; N Korea and sparsely

populated eastern Russia; tensions with Japan. • Investment by Japan and S Korea fell. • Birth rate low; ageing population.• Emigration; 2m residents working elsewhere in China.

The future?• Shenyang establishing as an airport hub for northern Asia;• Underground rail system for Shenyang;• Hope that NE industrial heritage will become a strength,

Shenyang Machine Tool Group (SYMG) is a good example.• Central government to the rescue again!• Construction of rail lines, airports and affordable housing,

support for high-tech industries, robotics to integrated circuits.

• State owned companies encouraged to sell stakes to private companies.

• “Letting Go“ – government must loosen their grip; companies must find their own solutions.

References

• www.economist.com/news/china/21637449-after-promising-signs-renaissance-chinas-old-rustbelt-suffers-big-setback-back-cold?