Can Beijing revive China’s ailing rust belt?
Analysts question whether plan by the authorities can restructure the economy in the northeast and help the unemployed find jobs as millions face layoffs in heavy industry
The State Council’s latest plan to rescue the economies of the northeast by 2020 might not be enough to overcome the magnitude of the challenges facing the rust-belt provinces, analysts say.
The government tried but failed to rejuvenate the region in 2003 after it was hit by massive protests by workers at state-owned factories when the authorities introduced plans to shut down unprofitable firms.
Now, the region has again become a major source of concern over fears of social instability as the government prepares to shut down ailing “zombie” state firms, amid slower growth.
Hao Hong, managing director at BOCOM International, said the “[previous] plan for the northeast region is dated, now that the economic base and demographic have changed”.
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Hong said the latest initiative was to transform old heavy industry into a more diverse and sophisticated economy.
“It’s a challenge because of the brain drain from the region,” he said. “Whether a rejuvenation of the economy could stop and reverse the situation remains to be seen.”