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.

Industry-specific problems combine with continuing efforts to reform state-owned enterprises to spell trouble for the central and local governments. The Economist reported on protests earlier this month in northern Heilongjiang, where workers from struggling SEOs are not being paid. The provincial finance minister warned that 1.3 million coal workers and 500,000 steel workers could lose their jobs over the next five years. The state-run news agency Xinhua trumpeted in January, “China will raise funds to help workers reestablish themselves should they lose their jobs when coal and steel firms close amid campaigns to cut overcapacity,” noting that over 7,000 mines had already been closed in the past five years.

Fastest Growing Provinces

Generally the fastest growing provinces or independent municipalities in 2015 were towards the bottom of total GDP. Chongqing (#21/31 in 2014), Tibet (#31), and Guizhou (#26) were the only three to hit double digit growth rates.

Liaoning (#7) and Hebei (#6), however, grew at rates that paled in comparison to southeastern provinces near Shanghai like Jiangsu, home to highly developed cities like Nanjing, Suzhou, and Wuxi, which grew at a rate of 8.5% (#11), while already having occupied the #2 spot for total GDP. Fujian, just east of Guangdong, which ranked #11 in total GDP, added 9% to its GDP, and Anhui, which borders Jiangsu, added 8.7%.

Yunnan, Guangxi, Xinjiang, and Gansu, in less developed western China, all grew at fast than 8%. China will have to continue to work to balance its uneven growth. The west must grow more quickly, but it happens at the same time it must deal with stabilizing the slowing northeast.

China 2015 GDP Growth by Province (Chinese)
Photo by Andreas Habich, shared with Creative Commons license on Wikimedia.


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