Home > Views & Papers > Liu Xinghua: Blazing a New Trail for Northeast China’s Development with a Reliance on Cities

Liu Xinghua: Blazing a New Trail for Northeast China’s Development with a Reliance on Cities

Thu, Jan 11, 2024

Northeast China is an important hub for agriculture and industry, and its superior development affects the country’s overall development.

Given the current domestic and international environments, northeast China occupies a prominent strategic position in maintaining national defense security, food security, ecological security, energy security and industrial security. The “five-security” has become the new important strategic positioning for northeast China and is bringing major opportunities for the full revitalization thereof.

Northeast China should leverage its unique advantages and strategic position, master the profound connotation of full revitalization, shoulder its new historical mission, seize new development opportunities, build a modern industrial system in reliance on the city cluster and belt and blaze a new trail toward high-quality development and sustainable revitalization.

Attaching importance to cities as carriers

Northeast China has a long way to go in coordinating security and development. Objectively speaking, the current development situation in northeast China is the result of multiple factors including global industrial iteration, economic geography pattern evolution, economic system, population and regional geopolitical environment. Looking into the future, the latest global revolution in science and technology and industrial transformation are trends northeast China must be on board with. It is vital to consider its full revitalization and high-quality development against the backdrop of a greatly changing external environment and the domestic focus on building a new development landscape. The “five-security” corresponds to high-quality development in five areas. More development brings greater security, and in turn, security should guarantee development. Only by coordinating security and development can sustainable revitalization be achieved.

To achieve high-quality development and sustainable revitalization, northeast China should improve its total factor productivity and economic efficiency through market mechanisms. Regions with higher marketization generally have more robust economic growth, while those with lower marketization tend to have anemic economic development. One of the important reasons for this lies in the use of reform measures and market mechanisms to improve total factor productivity. To achieve full revitalization, the northeast must establish a sound human capital accumulation mechanism, capital market and enterprise fund accommodation mechanism, technological innovation and application mechanism as well as a mechanism that promotes the rational flow of factors, while reforming the land ownership system by keeping pace with the times. These mechanisms and systems should be built in alignment with the new urbanization in northeast China.

The city cluster and city belt in northeast China are important carriers for coordinating security and development, promoting open innovation and achieving full revitalization. Income gaps and development opportunity gaps are driving the forward flow of the population. Along with industrialization and urbanization, population agglomeration in economically developed regions and cities has become a general trend. Cities gather various factors, with most production and consumption taking place there, and cities are more conducive to innovative development and laborers’ employment.

The outflow of population, particularly the young and middle-aged, from northeast China has attracted much attention in recent years. Therefore, northeast China needs to figure out how to retain more young people and employed population. To do so, northeast China should vigorously develop a city cluster and belt, optimize the allocation of various factors and resources and build a modern industrial system, to retain employees, attract entrepreneurs and encourage innovators. Innovative development in city clusters and belts includes not only sci-tech innovation, industrial innovation, business model innovation and management model innovation but also system and mechanism innovation.

Promoting coordinated development

High-quality infrastructure is a precondition for high-quality development and sustainable revitalization. Currently, northeast China should use all ways and means to stabilize the fundamentals of the economy and, on this basis, plan a group of major projects and infrastructure with overall importance, fundamentality and leading significance, in a bid to accelerate the construction of a modern infrastructure system. These efforts will not only drive investment and create physical workloads but also lay a solid foundation for long-term development. In the long term, northeast China should not only target high-end industries in the global production system and vigorously develop the high-end equipment manufacturing industry with high added value and technological level but also follow the general trend of digital-intelligent and green low-carbon development and promote the transformation from “conventional manufacturing in northeast China” to “green intelligent manufacturing in northeast China”.

High-quality development and sustainable revitalization require sci-tech innovation based on northeast China’s advantages and in line with future trends. Enhancing independent innovation capacity is the top priority in promoting high-quality development. While striving for financial support from the central government and support from relevant ministries and commissions, provinces and regions in northeast China should provide matching provincial financial support, fully absorb social funds, leverage the regional advantage of having numerous universities and research institutes, cooperate with large domestic enterprises and build regional sci-tech innovation centers with national influence and driving force. These are what is required in the central government’s call for “more support and stimulating endogenous motivating power, and strengthening the strategic support role of northeast China”.

High-quality development and sustainable revitalization require industrial reengineering. The government should be determined to address and adjust the current situation of simple repetition of industries across northeast China. The top ten industries in terms of industrial output value in the three northeastern provinces are mostly resource-intensive industries, with great similarity. Low-level repetitive competition has become an important factor restricting the security and development of regional industrial and supply chains. Northeast China should break away from the extensive economic growth mode formed over the years with excessive reliance on resources, achieve industry reengineering, accelerate the building of a modern industrial system and foster new productive forces.

High-quality development and sustainable revitalization require an efficient governance system and market system. In particular, a digital-intelligent, market-oriented, law-based and international first-class business environment should be created. The business environment and investment environment in northeast China have many gaps with those in the developed coastal areas. Northeast China should use digital-intelligent technologies to integrate related affair approval procedures into government services and business services, minimizing the interference of human factors and achieving the agile governance of the city cluster and belt in northeast China. On this basis, northeast China should strengthen the internal and external channel connection and economic interaction between provinces and regions within it, establish a sound new mechanism for regional integration cooperation and coordinated development, promote the rational flow of goods and production factors, advance regional economic integration and promote concerted efforts to build a modern industrial system based on the advantages and characteristics of northeast China.

High-quality development and sustainable revitalization require a scientific and effective incentive mechanism. Extensive practice over the past 45 years of reform and opening-up has demonstrated that a developed economy is present whenever there is a generous and fault-tolerant system; without these, audacious endeavors and attempts would not occur. Important preconditions for a place to develop lie in establishing a fault-tolerant system, optimizing the responsibility structure, avoiding the “responsibility trap” and allowing those who can see the trend to make decisions in line with the law of industrial development and market demands. Therefore, to achieve full revitalization in northeast China, an effective incentive mechanism must be established to stimulate proactive actions by the Party and government leaders at different levels and encourage state-owned enterprises to promote sci-tech innovation and management model innovation, a better development environment must be created, and the weak link of the private economy must be improved by boosting the development and growth thereof.

High-quality development and sustainable revitalization require building northeast China into a new frontier of China’s opening-up. Northeast China, although located along the coast and border, has relatively low participation in global technology and trade cycles. The foreign trade dependence of the three northeastern provinces was 19.3% in 2022, significantly lower than the national average of 34.76%; in particular, the foreign trade dependence of Heilongjiang and Jilin was only about 10%, ranking low in the country. The insufficient impetus and vitality of northeast China’s economic development are directly related to its low level of economic openness. The total amount of foreign investment actually utilized in the three northeastern provinces was USD 3.6 billion in 2020, accounting for only 2.5% of the national total. This is related to the context of Northeast Asia where northeast China is located. The strategic position and role of northeast China are becoming increasingly prominent in China’s effort to strengthen regional cooperation in Northeast Asia and the interplay between domestic and international flows. Therefore, northeast China should firmly establish the consciousness of its role as a frontier and of opening-up, seize opportunities and strive to improve its level of opening-up, especially institutional opening-up in rules, regulation, management, standards, etc.

Building world-class cities

Northeast China should bring into full play the core driving role of its existing central cities and build a world-class city cluster and belt. With favorable resource conditions and solid industrial foundations, northeast China is an important base for industry, agriculture, energy, raw materials and heavy equipment manufacturing in China. To truly transform northeast China’s unique advantages into strong impetus for high-quality development, another key is promoting urbanization and modernization. The development of the city cluster in northeast China should be overall planned and strengthened connection and resonance with the eastern coastal areas and the Beijing-Tianjin-Hebei region. The experience of coordinated development in the Yangtze River Delta, Pearl River Delta and Beijing-Tianjin-Hebei region can be drawn on for overall consideration. It is suggested that based on the principles of complementary advantages, opening and sharing, and win-win cooperation, a unified development plan from the central government be introduced for the coordinated development of the city cluster and belt in the northeast, similar to the plan for Beijing-Tianjin-Hebei integration or the Guangdong-Hong Kong-Macao Greater Bay Area development. This plan should take into full account aspects such as population size, industrial development, infrastructure construction, comprehensive urban functions and regional collaborative innovation. It should rely on the city cluster and belt in northeast China to promote the integrated development of the primary, secondary and tertiary industries with the real economy as the foundation and sci-tech innovation as a breakthrough.

Northeast China should rely on the city cluster and belt to vigorously develop advanced producer services that match advanced manufacturing. Comparatively, the manufacturing value-added in the U.S. accounts for about 10% of its GDP and about 15.3% of global manufacturing value-added; the manufacturing value-added in China accounts for about 28% of its GDP and 30% of global manufacturing value-added. Although these two figures for China are 2.8 times and 2 times those of the U.S., respectively, China’s competitiveness in advanced manufacturing has a significant gap with that of the U.S. An important reason for this is that the U.S. has a strong manufacturing sector and powerful global economic competitiveness thanks to its advanced producer services that support the development of advanced manufacturing. Producer services account for 50% of the U.S. GDP but they only account for 20% of China’s GDP. Northeast China should develop advanced manufacturing and producer services in the city cluster based on its solid foundations in basic industries and manufacturing through internal upgrading and external introduction. In fact, not only do northeast China’s modern manufacturing and strategic emerging industries need the support of advanced producer services but also the development of modern agriculture in northeast China is inseparable from the support of modern services. This is the only way for industrial transformation and upgrading in northeast China.

Northeast China can build itself into a pilot demonstration zone for coping with aging and realizing the “carbon peaking and carbon neutrality” goals. Northeast China’s economic development needs to address two important issues: firstly, how to effectively respond to the trends of aging and population outflow; secondly, how to achieve the green, low-carbon transformation of fossil fuel production, consumption and industrial structure. These are also global issues but are particularly prominent in northeast China. It is suggested that led by effective responses to the outflow of the employed population and the aging of the population and the realization of energy transition and new urbanization, the state support northeast China in building a pilot demonstration zone for coping with aging and realizing the “carbon peaking and carbon neutrality” goals, with the aim to accumulate experience and blaze a new trail for the country’s coordinated development of population, resources and environment and realization of green development. This is an institutional arrangement to be considered from multiple aspects such as economic policy, population policy, social policy, administration, technological innovation, industrial layout and political achievement appraisal. Exploration and practice in this regard will be of great significance not only for northeast China but also for the whole country.

Northeast China should actively strengthen pragmatic cooperation with neighboring countries. The Report to the 20th National Congress of the Communist Party of China proposed to more widely open the northeastern region. To achieve full revitalization, northeast China should accomplish higher-standard opening-up in terms of market access, the flow of factors and institutional opening-up. Northeast China’s unique geographical and industrial advantages determine that strengthening economic cooperation and sci-tech and people-to-people exchanges with Japan and South Korea is an important path to its full revitalization. In particular, under the backdrop of the formal entry into force of RCEP, northeast China should capitalize on momentum and further expand economic cooperation with Japan and South Korea, which is also an important initiative to maintain the stability of global industrial and supply chains and promote the building of a new global value chain pattern.

Northeast China should also exert its geographical advantages to conduct economic and infrastructure cooperation with the Russian Far East and further improve the soft environment level such as port customs clearance facilitation.

Source: Xinhua News App, December 11, 2023


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