Can the north hold?

For most part of China’s history, going back around 5,000 years, the country’s north has not only been a cradle of civilization, but also acted as its economic center of gravity.

The Qinling Mountain Range and the Huaihe River chalk out for the country, both geographically and economically, where the north ends and the south begins.

But after the First Opium War (1840-42) led to the lifting of the haijin, a ban on maritime trade that the country had intermittently enforced since the 10th century to ban smuggling and crack down on pirates, the south of the country started thriving with the opening up of a string of coastal cities as ports for international trade.

With the bar on maritime trade lifted, the economic gap between the south and the north began narrowing. Despite huge inputs during the planned economy era into key projects in North and Northeast China, on the industrial foundations left behind by foreign occupiers, the economy of the south and the north was evenly poised at 50:50 during the 1980s, thanks to an already booming private economy in the south.

After China joined the World Trade Organization in 2001, the dramatic increase in its foreign trade has been mainly stoked by the dramatic development of export processing enterprises in the south, dragging the country’s economic center of gravity southward.

Although they might have sensed it, the people had not realized how far behind the north was lagging compared to the south until a list of the top 10 cities, ranked on the basis of their economies last year, went viral recently. The list had just one city from the north, Beijing.

Last year, Tianjin, a port city in the Bohai Bay that used to be a national industrial and commercial center for most part of the first half of the 20th century, was surpassed by Nanjing in Jiangsu province. In the 1980s, Beijing, Tianjin, Shenyang and Dalian in Liaoning province, and Qingdao in Shandong province were the five cities from the north that often made it to the top rankings.

However, Shenyang, Dalian and Qingdao have been replaced by Shenzhen in Guangdong province, Hangzhou in Zhejiang province and Chengdu in Sichuan province, thanks to thriving high-tech companies, the digital economy and equipment-manufacturing industries.

The regional development strategy the central authorities have adopted in recent years has further consolidated the strengths of the cities in the Yangtze River Delta, such as Shanghai, Suzhou and Hangzhou and those in the Pearl River Delta, such as Guangzhou and Shenzhen. These cities, all in the south, firmly occupy the top 10 rankings in the country in the 21st century.

The other regional center cities in the south, such as Chongqing, Wuhan in Hubei province, and Chengdu in Sichuan province, also frequent the list or are strong competitors for a position on it.

Notably, Wuhan and Chengdu account for about 20 percent of the population of Hubei and Sichuan provinces respectively, and more than 30 percent of the provincial economies. Yet that also raises the question of whether it is worthwhile to concentrate provincial resources and energy to support the development of just one city, or whether it is rational to stoke the boom in just two city clusters, while ignoring progress in a large number of smaller cities, towns and villages.

The latest national census indicates that over the past 10 years about 11 million people have relocated from Northeast China to other parts of the country. During the same period, the population of Guangdong, the largest provincial economy in the country, has increased by twice that number.

In the 1980s, when there were few migrant workers, about 30 percent of the country’s population lived in the cities, and less than 4 percent of the population in the top 10 cities that contributed to about 10 percent of the country’s gross domestic product.

Last year, China’s urbanization rate crossed 60 percent. The top 10 cities in the country are now home to about 12 percent of the country’s population, and account for about 23 percent of the nation’s GDP.

However, some experts say that the so-called development gap between the country’s south and north should not be exaggerated. Although the north does face some difficulties in socioeconomic development because of historical reasons, the experts say it is essentially a reflection of the different development models that are taking shape in different regions of the country.

The north is trying to weed out the polluting and overcapacity industries, such as cement, plate glass and iron and steel factories, to “vacate the cage for new birds”.

Before the new growth drivers arrive, it is necessary to fill the vacuum so that economic growth is not affected, says Fan Hengshan, an economist of regional development studies and former secretary-general of the National Development and Reform Commission. However, because of the region’s underdeveloped business environment, the north lags far behind the south in the competition for investment.

Shandong, the third largest provincial economy after Guangdong and Jiangsu, has not only emerging industries and private economy as in the south, but also underperforming enterprises as in Northeast China.

Shandong Party chief Liu Jiayi told civil servants in the province at a recent meeting on high-quality development: “If we still hold the old steamer ticket featuring an old development model and industrial structure, we will never board the giant ship of high quality development, and we will be a big encumbrance to the country in growth, energy saving and emissions reduction and regional coordinated development.”

“Economic growth is only one side of the picture,” Fan said. “What the north is going through now will help it realize high-quality development in the future.”

It should be noted that infrastructure in the north has also developed, the structure of the economy has been optimized and the environmental protection has been markedly strengthened. That, experts argue, lays a solid foundation for developing the economy in the country’s north in a way that fits its practical conditions.

The people should show more foresight when analyzing the economic gap between the north and the south, which is a byproduct of historical, political, geographical and economic factors, said Fan.

Lu Ming, a researcher in city administration at the Shanghai Jiaotong University, attributes the economic disparities between the north and the south to China’s integrating into the global market system, as well as the market reform the country carried out.

He said the major cities in the country are mostly major sea ports or big river ports, leading the country’s opening-up. On the one hand, migrant workers provide them with sufficient cheap labor forces; on the other hand, foreign investment and technology found not only a huge workshop but also a large market in the country by turning the port cities into their footholds in East Asia.

“After more than three decades of development, the south has a better business environment than the north, as local governments there attach greater significance to IPR protection and the rule of law than their counterparts in the north,” Lu said.

He suggests that the central government transfer more civil servants working in the south to the north to help the region open up to the idea of making market economy reforms, which will unavoidably help move the cheese of vested interests. Unless a rule-of-law business environment is created it will be difficult for the north to attract more investment than the south.

Experts say that development is a comprehensive concept that should take into account more factors than GDP alone. It should also factor in per capita GDP, and public services, environmental quality, etc. So GDP does not reflect some of the advantages that the north has or its development potential. Compared with the south, the north is not weaker when it comes to universities, institutes, natural environment, public services, natural resources, as well as some manufacturing industries.

Feng Kui, a researcher at the China Center for Urban Development, said the small towns and villages that have been hollowed out by the development of megacities in the south are the other side of the prosperity that must catch the policymakers’ attention. “A city cluster can develop around a central city, but that does not mean satellite towns and villages can be sacrificed for the development of the central city,” Feng said.

He thinks the north is indispensable to the country’s ecological security, energy security and food security.
Source: China Daily