Going into China’s 2016 National People’s Congress, which concluded earlier this month, one of the issues facing the economy was the slowdown of northeastern China, which has been a leader in coal production and steel production.
Southern Weekend, a nationally-distributed Guangzhou-based newspaper, reported that week on the struggles facing China’s rust belt, which saw among the slowest growth in the country last year. Liaoning province, the southernmost of the three provinces referred to collectively as “Northeastern China” (Dongbei), grew at a rate of 3.0%, the slowest in the country, and fell three places from seventh to tenth in total GDP numbers. Heilongjiang, the northernmost of Dongbei, grew at 5.7%, third worst, and Jilin was fourth worst at 6.5%.
Other steel producing northern provinces didn’t do well either. Hebei, which borders Beijing, grew at 6.8%, just better than Jilin. In January, Hebei’s governor announced plans to cut steel output, which is dominated by state-owned companies, in order “to ease pollution and help curb oversupply.” While China does produce about half the steel in the world and exported a record, 112 million tons, in 2015, Chinese steel companies are generally not very profitable, due to overproduction and heavy competition.