CHINA´S NEW REVITALIZATION PROGRAM / GEOPOLITICAL FUTURES

China’s New Revitalization Program

The northeast offers more advantages than central China but won’t solve the country’s broader problems.

By: Victoria Herczegh

In the first weeks of September, dozens of senior Chinese officials from high-profile positions throughout the country were tapped to take up new positions in the rust belt of the northeast. 

Their task is simple if not easy: to use what they’ve learned in Beijing, Shanghai and Jiangsu to revitalize a once powerful region, bringing it closer to technical autonomy and thus narrowing the gap between it and the wealthier coastal regions. 

In political terms, the new initiative is meant to bring unity to the country and mitigate the risk of social unrest.

If this sounds familiar, it should. 

The goal is practically the same as that of President Xi Jinping’s flagship rural revitalization plan, which aimed to uplift the poorer, agricultural areas of central China. 

That project now exists only in occasional government statements. 

Apparently, Beijing has decided that the northeast can unlock more economic potential. 

The problem is that though the rust belt may well serve the government’s more immediate goals relating to high-tech and military development, its revitalization could widen the wealth gap further, aggravating the very problem the experiment is supposed to solve.

It’s no secret that the government has paid less attention to its peripheral regions than its more prominent ones. 

In the era of Mao Zedong’s economic planning, the region’s industrial capacity was a key driver of Chinese economic growth. 

But since Deng Xiaoping’s market reforms, the northeast’s economic performance has underwhelmed, its share of the national gross domestic product dropping from 13.3 percent in 1978 to 4.8 percent in 2023. 

Several factors contributed to the region’s decline. 

A structural shift occurred from heavy industries such as machinery to light industries such as textiles. 

After China became a member of the World Trade Organization and participated more in international trade, it began to prioritize labor-intensive industries over capital-intensive ones, thus promoting the economic output of places like Beijing, Shanghai and Guangdong. 

The northeast simply could not afford to make the transition, especially if transitioning meant forsaking its traditional productive capacities.

But in light of China’s recent economic downturns, it seems as though Beijing can no longer afford to ignore the rust belt. 

Xi’s plans aside, the effort to boost provincial economies is part of a 2023 government strategy. 

That year, Premier Li Qiang conducted several inspection tours in the northeastern provinces of Liaoning, Jilin and Heilongjiang, visiting aircraft, automotive and agricultural smart equipment manufacturing companies and calling for improved smart production, greater innovation and, notably, an increased role for state-owned enterprises. 

(The installation of new officials is just the first step in this process.) 

It’s not that the state’s priorities have fundamentally changed – old-school steel mills may be important, but they don’t suit China’s current needs – it’s that the state wants to transform traditional industrial centers into modernized high-tech hubs capable of jumpstarting China’s economic recovery. 

The government believes that the region’s resources and solid traditional industrial foundations are ideally suited to boost tech innovation and manufacturing, and that its proximity to Russia will only increase its odds of successfully developing a modern, state-of-the-art military.

It therefore seems as though Beijing has every reason to finally focus on the northeast. 

This is great news for the northeast, but remember that the government, wittingly or not, tends to abandon such initiatives at a moment’s notice. 

Even Xi’s rural revitalization plan, the headline project of his five-year plan, wasn’t immune to Beijing’s political vagaries. 

It was always a front for wealth redistribution, with the central government cracking down on the richest companies and individuals that accumulated wealth – often not fully legally – and moving the capital to the central region in need. 

The regulatory crackdowns did, in fact, result in funds being allocated to the agricultural modernization of central China. 

But when the government realized the importance of sci-tech in emerging economic trends – not to mention its importance in building self-sufficient supply chains – it ended its regulatory crackdowns and began to pour money into the wealthy and largely coastal tech hubs.

Similarly – and, technically, an initiative under the umbrella of rural revitalization – the relocation of youths from big coastal hubs to second- and third-tier rural cities is far less urgent than it once was. 

That thousands of fresh graduates in large cities struggled to find jobs commensurate with their qualifications made moving them, through various subsidies, to secure, well-paid positions in rural China seem like a no-brainer. 

Yet the initiative yielded few, if any, results. 

Most young graduates were reluctant to leave the cities, choosing instead to keep looking for big-city employment and accepting the financial support of their families. 

Some even took lower-paying blue-collar jobs to remain in the city.

Knowing that rural revitalization has failed in central China, or at least failed to yield the desired results, Beijing is hoping for a better outcome in the northeast. 

The program there bears some similarities to the revitalization plan, offering, for example, financial incentives to recent graduates who want to move there. 

Though it’s unclear whether the program will succeed, its advocates hope that its existing resources and capacities will make it an easier win than central China was. 

But even if it does succeed, providing a near-term boost to economic activity, it’s unlikely to do much for the beleaguered center.

Rural central China seems to be getting the same treatment the northeast got when the country shifted from a market economy to a planned economy, with its development being sidelined for the sake of short-term economic gains. 

Focusing on certain regions more than others could be advantageous during times of economic prosperity. 

But China today is facing a downturn, meaning ignoring a key area of the country could come with disastrous effects. 

Throughout Chinese history, unrest has been most likely to occur in poor rural communities, where feelings of dissatisfaction and marginalization prevail. 

The failure of the government's rural revitalization plan could exacerbate these tendencies, creating a hotbed for dissent.

Economic growth is important for China, but internal stability is even more critical. 

The Chinese leadership thus needs to turn its attention back to the country's most vulnerable region, as sacrificing it for the sake of serving more immediate interests could result in instability. 

Similar to its strategy in the northeast, redesigning the core ideas of the rural revitalization plan and deploying experienced officials from wealthy regions could help the government score some wins and keep at least some of its promises to rural China.