Lessons from China’s rust belt

MAO ZEDONG called China’s three north-eastern provinces—Heilongjiang, Jilin and Liaoning—the country’s “eldest son”. In the Chinese tradition the family’s future rests on that child’s shoulders. But this one is failing in his duties. Debate rages over what has gone wrong and what to do. Many experts conclude that the regional economy needs to be run a different way. Their analysis has lessons for the national economy, too.

Mao made the north-east the centre of heavy industry. It still contains many of China’s largest makers of cars, aircraft and machine tools. In 1978, on the eve of Deng Xiaoping’s economic opening, Liaoning, the most populous of the trio, had the third-largest economy among mainland China’s 31 provinces. Its GDP was 20% bigger than that of Guangdong, the southern province with the biggest population. But 40 years of rapid national growth have left the north-east lagging behind. By 2016 Liaoning had fallen to 14th among provinces by income and had only one third of Guangdong’s GDP. In 1978-2016 its share of China’s output fell by more than half.