Beijing is China’s only shining northern city as centre of economic gravity moves south

Orange Wang
·3-min read

All Chinese cities north of the Yangtze River, except Beijing, are in relative decline as the centre of economic gravity in the world’s second biggest economy quickly shifts southward.

The capital is the only city in the north of the country included in China’s top 10 cities in terms of economic size this year, according to government data. Tianjin, one of China’s four municipalities under direct administration of the central government, lost its position in the list for the first time on record.

As China pivots towards “coordinated regional development” for 2021-25, private investors, banks and workforce talent are concentrating in the Pearl River Delta and the Yangtze River Delta in the south.

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That is increasing China’s north-south divide and adding to an already complex regional imbalance between eastern coastal provinces and landlocked western regions.

Wang Yiming, former deputy director of the Development Research Centre of the State Council, said the economic disparity between north and south was becoming too large to ignore, and was overtaking the east-west gap as the prime regional imbalance.

The regional gap is likely to widen further in the next five years

Wang Yiming

“The regional gap is likely to widen further in the next five years,” he said last week at a forum at Renmin University of China.

Wei Houkai, head of the Rural Development Institute at the Chinese Academy of Social Sciences, agreed the north-south divide would soon be the top concern for regional development.

The polarisation shows most parts of the country are struggling due to the economic impact of the coronavirus pandemic, the ageing population and heavy debt – making China’s US$15 trillion economy vulnerable to shocks.

The economic weighting of northern China as a proportion of the national economy has dropped to about a third this year, from nearly half in 2008, according to data from the National Bureau of Statistics.

The economic decline of China’s north could have far-reaching impacts on national strategies, from the Belt and Road Initiative that passes through the region, to the new “dual circulation” plan that aims to develop the domestic market for future growth, analysts said.

Wu Xiaohua, vice-president of China Academy of Macroeconomic Research, a think tank affiliated with the powerful National Development and Reform Commission, said last month the entire northern economy was “sinking”.

To narrow the gap China should develop an economic zone along the Great Canal, which connects Beijing in the north and Hangzhou in the south, Wu said. He added the north-south divide was so big it could impact “the great rejuvenation of the Chinese nation”.

Beijing could face difficulty drafting nationwide policies to fit regions that were as diverse economically as Silicon Valley and Detroit, analysts said.

Ni Pengfei, an urbanisation expert in the Chinese Academy of Social Sciences, was quoted by website sohu.com last month as saying that northern regions usually relied heavily on state-led investment for growth, which had contributed to their economic decline.

In the latest China City Competitiveness ranking compiled by Ni’s team, southern hi-tech hub Shenzhen ranked first, followed by neighbouring Hong Kong and financial powerhouse Shanghai.

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