Why Northeast China's 'Rust Belt' Is Crucial to Xi Jinping's 'Chinese Dream'

Why Northeast China's 'Rust Belt' Is Crucial to Xi Jinping's 'Chinese Dream'
Credit: Reuters / Stringer
What you need to know

No leader since Mao has truly placated the residents of northeast China. Xi Jinping is trying.

By Nathan Attrill

For 40 years, northeast China has frustrated the political leadership in Beijing. Once the heartland of an industrial, modern socialist China, the region has fallen behind the rest of the country on all measures of economic, social and environmental well-being.

Since 2003, the central government has spent a significant amount of resources on revitalizing the northeast into a fourth engine of the Chinese economy after the Pearl River delta, the Yangtze River delta, and the Beijing-Tianjin-Hebei economic corridor. But the results have been mixed at best and hopeless at worst.

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Credit: China Daily via Reuters
Workers of China National Petroleum Corporation (CNPC) are seen at a construction site of natural gas pipelines connecting China and Russia, in Heihe, Heilongjiang province, China.

Not only is the northeast the ‘rust belt of China,’ it may be one of the most severe cases of deindustrialization globally. The revitalization strategy has itself been ‘revitalized’ twice, with the changes reflecting the economic debates in the leadership of the time.

In September 2018, Chinese President Xi Jinping undertook an extensive and well-publicised inspection tour of China’s three northeast provinces – Liaoning, Jilin and Heilongjiang. Inspection tours by political leaders in China are an essential part of their role in drawing attention to issues of importance and in scaring recalcitrant cadres into adopting the center’s policy lines.

Xi knew exactly what he was doing by visiting the northeast right before the anniversary of Deng Xiaoping’s reforms and opening up speech in 1978. The northeast still has a symbolic and substantive significance to contemporary Chinese politics, which Xi understands and which China watchers should as well.

Northeast China is the last redoubt of Maoist political economy in today’s China. It is this so-called ‘northeast economic mentality’ that Chinese officials blame for the failure of the people to embrace market reforms. But for Xi, the northeast represents something else.

Xi is undoubtedly the most institutionally powerful leader since Mao Zedong and the Chairman’s spirit of economic development still haunts the northeast. While the leadership of Deng Xiaoping, Jiang Zemin and Hu Jintao saw a movement of policymaking away from the center, Xi Jinping has sought to reclaim this power.

‘Self-reliance’ was the theme of the tour and the recent trade war developments with the United States were squarely in mind. The ability of China to produce enough food for its people was a key talking point.

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Credit: Reuters / Stringer
Workers unload sacks of imported soybeans from Russia at Heihe port in Heilongjiang province. China recently announced it would stop buying soybeans from the US.

From Beijing’s point of view, China can no longer rely on an open and liberal trade regime for its continuing economic modernization and instead should build up its own capabilities and economic activity. The northeast is the perfect symbolic location to hammer home this point as its self-reliance is an enduring legacy of the Maoist industrialization drive.

The great rejuvenation of the Chinese nation is a core component of Xi’s ‘Chinese Dream.’ As other world leaders look to their own nation’s rust belts as a basis of support to make their country great again, so too is Xi looking to the history and economic values of the northeast.

China’s north-eastern citizens feel the same sense of grievance and abandonment by elites as those in Detroit, the north of England, northeast France and East Germany. They may not have an electoral outlet for their rage but they express their anger in their own way. This is usually done through illegal strikes, a vast grey-economy network or voting with their feet and leaving the region altogether.

The northeast has arguably received the least benefits from China’s 40 years of market reforms and its leaders are reluctant to embrace further marketization, privatization and internationalization. By deliberately mirroring the inspection tours of Chairman Mao, Xi may be signalling that the northeast does not need to abandon its long held political and economic values.

The revitalization strategy itself has previously only offered the same solutions as industrialization strategies have offered in other regions of China. These strategies include free trade zones, foreign investment and corporatization of public assets – all of which diminish the personal power of local cadres in the northeast without guaranteed economic benefits.

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Credit: Reuters / Hallie Gu
A customer visits a pork stall at a market on the outskirts of Harbin, Heilongjiang province, China.

Xi’s willingness to strengthen the role of state-owned enterprises (SOEs) appeals to the northeast’s longing for a return to the past when SOEs dominated the economy and the lives of their respective workers – a policy that Beijing has previously been in conflict with the northeast over. Now SOEs are allowed to be bigger and more firmly under the control of the politicians.

Many within China argue that a return to the old ways of doing business are as bad as reintroducing the same set of revitalization policies every few years. Fear of new economic ideas and new ways of governing post-industrial societies is what stalls the revitalization of northeast China and all regional economies that are blighted by deindustrialization.

If Chinese policymakers were truly worried about their revitalization efforts, they should be concerned less about the nostalgia of the people for days past and more about the policy parameters that cadres can operate within under an increasingly authoritarian political structure.

Xi’s appeal to ‘make China great again’ indeed speaks volumes about his thoughts on the legacy of Deng’s reform and opening up mission. Communist China may be richer but may have lost an important part of itself in the process. Whether Xi’s tour will be enough to jumpstart fresh and long-lasting revitalization results may take several years to determine.

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