Brain drain in China’s rust belt exacerbated by economic decline as talent competition heats up
- Weaker economies in Northern provinces lead to talented employees moving to prosperous south, which leads to further economic weakness
- Housing costs are low in the Northeast, but companies in prosperous southern provinces can offer much higher salaries
In 1996 not long after graduating from a vocational school with some computer skills Liu Qingfeng left Liaoyuan, a once coal-rich town in northeastern Chinese province of Jilin. It was a period of massive lay-offs in state-owned enterprises that were enduring brutal government-mandated reforms.
Over the next two decades, Liu travelled between Shanghai, Shenzhen and Beijing, taking jobs in hospitals, investing in an electric vehicle rental business and setting up his own online marketing firm in 2016. He also married his childhood sweetheart and had two children. From time to time, he went back home to check on his two young boys, and told them they would eventually need to leave Liaoyuan for first-tier cities.
“There are more opportunities in tier-one cities even though competition is fierce,” Liu said, referring to the handful of China’s largest cities, including Beijing and Shanghai. “My children can decide where they want to settle down or what kind of work they want to do, but they need to have the ability to survive in first-tier cities.”
Liu’s wishes for his sons to have bright futures are equal to the worries of officials in China’s rust belt – the northeastern provinces of Liaoning, Jilin and Heilongjiang – which was home to millions of industrial workers in the 1950s and 1960s, but over the last two decades have been suffering different degrees of brain drain on top of weak incentives for economic growth. This has led to a vicious cycle where the weak economy expedites the talent loss that in turn slows growth further.
The population outflow has been the most severe in Heilongjiang province, which sits on the border with Russia. Between 2013 and 2017, the number of residents fell by 460,000 to 37.89 million, according to data from National Bureau of Statistics. Jilin did not have a net outflow of residents until 2016 but lost 360,000 people over the next two years, while Liaoning’s situation was slightly better, with about 200,000 people leaving the province from 2015 to 2017.