Revitalization of Northeast China emerges positive trajectory
Published: Feb 28, 2024 07:57 PM
Tourists visit the Harbin Ice and Snow World. Photo: VCG

Tourists visit the Harbin Ice and Snow World. Photo: VCG

Among the provinces and cities across China that have recently released their population data for 2023, the net inflow of population in Northeast China's Jilin and Liaoning provinces is worth noting. 

While Jilin experienced a net inflow of 43,400 people, putting an end to the trend of population outflow that had persisted for nearly 13 years, Liaoning witnessed a net inflow of 86,000 people, marking the conclusion of a trend of population loss that had lasted for almost 11 years.

GDP growth rates of each province in 2023 have also been released, with Jilin and Liaoning outperforming the national average.

Does the continuous popularity of winter tourism in Northeast China, along with the recent population changes and economic data in Jilin and Liaoning provinces, suggest that the economic and population development in the Northeast region may be starting to reverse its decline and return toward a growth trajectory?

The revitalization of Northeast China has been a topic of continuous attention. One common mistake in past discussions about the development of the region is the reversal of cause and result. Issues such as population size are not the reasons for the relatively lackluster development of Northeast China over recent years, but rather the results. To observe the opportunities and challenges facing the current development of Northeast China, it is necessary to have a historical perspective.

In history, the Northeast region of China, due to its geographical and climatic factors, has not been a densely populated, culturally developed, or commercially prosperous area. In modern times, the rise of the Northeast region can be attributed to three main reasons:

First, the Industrial Revolution that emerged in the 18th century, which led to a significant increase in the global demand for raw materials such as coal, steel, and timber. This shift in demand caused a change in the economic development orientation of regions.

Second, during the process of globalization, multiple countries have frequently engaged in geopolitical conflicts to compete for resources.

Third, given the technological level and geographical conditions at the time, the development of traditional economically advanced regions had reached a bottleneck, temporarily unable to provide more economic opportunities and employment. As a result, more businesses and individuals chose to return or relocate to underdeveloped areas in search of new opportunities.

At that time, the Northeast region relied on its abundant natural resource reserves, the influx of residents from inland regions, and its advantageous geographical location at the junction of multiple countries in the Far East, leading to a rapid economic takeoff.

In the 1920s, Harbin rapidly became an important transportation and distribution center in Northeast China.

During the Cold War, the development advantages of the Northeast were also evident. In the context of globalization being hindered and intensified geopolitical conflicts, the Northeast region played an irreplaceable role as a resource and industrial base for national security. As a result, it received relatively more national investment and planned immigration, and achieved outstanding economic and social development results.

Following the end of the Cold War, with the further advancement of reform and opening-up, the rapid development of the global market, and the emergence of a new wave of non-industrial technological revolution such as the internet, the macroeconomic factors that previously drove the economic boom in the Northeast region gradually faded, leading to temporary difficulties in the economic and social development of the Northeast.

Based on the above logic, it seems that macroeconomic factors are once again favoring this part of China. 

First, an industrial revolution in high-quality development industries represented by new-energy vehicles (NEVs) and lithium batteries is emerging. With its favorable resource endowment and industrial foundation, the Northeast region is embracing this wave of industrial transformation.

Once the industrial structure and consumer market are established, they will continue to exert force, becoming long-term factors stimulating a new round of economic growth in the Northeast region. 

The Northeast region is also actively cultivating strategic emerging industries such as new energy, new materials, advanced manufacturing, and electronic information, fostering future industries, accelerating the formation of new quality productivity, and enhancing the development of new momentum.

Second, there has been a new setback in economic globalization. Against the backdrop of a global economic downturn, developed Western countries have resorted to measures such as technological sanctions, trade barriers, investment restrictions, and military conflicts to safeguard their own interests and target their "opponents." 

This has caused cracks in the efficiency-driven globalization system that was built on Chinese production capacity, Western capital, Middle East's energy, and raw materials from Asia and Africa. 

Developing domestic industrial centers, raw material bases and regional consumer markets that meet their own economic needs, has become the focus emphasized by many countries. This will be a key factor affecting the development of not only the Northeast region but also many inland regions of China in the medium term.

As the traditional business and trade hubs experience a slowdown in providing employment opportunities, people are once again turning their attention to regions where factor prices are still underdeveloped. 

In the past, people flocked to the Yangtze River Delta and the Pearl River Delta regions, attracted by better development opportunities. Once the efforts and rewards are not closely connected and prospects become uncertain, some individuals will lean toward pursuing more stable and fulfilling living or working opportunities. This is one of the reasons why the Northeast region has recently gained traction on social media and is a short-term factor influencing the local economy and population structure.

On the whole, the comprehensive revitalization of Northeast China is facing new significant opportunities. With the emergence of various favorable macroeconomic factors, the new round of development in the Northeast region has begun to take shape. 

Staying abreast of trends of the times, consistently enacting market-oriented reforms, attracting top-tier talent, enhancing the legal framework, achieving self-reliance and advancement in cutting-edge technology, and converting short-term traffic surges into sustained growth are the enduring strategies for the economic and social progress of the Northeast region.

The author is a financial commentator.