Earlier this week, Chinese media reported that China’s economic planner will roll out its Northeast Revitalization Plan 2.0, a package of about 130 projects with total investment of 1.6 trillion yuan, over the next three years, to help the region. It appears that Beijing has fallen back to its old trick of fiscal stimulus in an attempt to revive economic growth in northeast China, which is also called as the country’s rust belt that is falling into economic stagnation, or even recession.

The northeast, an old industrial base, has experienced more struggles than the rest of China in the past two years even with China’s economic slowdown. The region largely relies on heavy and chemical industries, energy resource, raw materials and a large proportion of state-owned enterprises. Heilongjiang, Liaoning, and Jilin were an industrial backbone of the country during its planned economy era. However, as China made its economy to become more market-driven, the region’s growth was stumped.


Many times the northeast was tried to revive. In the late 1990s, then Premier Zhu Rongji dismissed millions of state workers in the region in a sector reform push, but it just resulted to a serious social unrest. Then, in early 2000s, the central government released supportive methods to address the region’s problems. An economic rebound took place but that momentum has died away in recent years.

Provincial economic growth in the region has been stuck near the bottom of regional gross domestic product rankings in recent years. In fact, Liaoning reported a rare 1% fall in its GDP growth in the first six months of the year, when last year its GDP growth was 3%, the lowest in 23 years. This is the worst among 31 provinces, municipalities, and regions on China’s mainland. The economies of Heilongjiang and Jilin, two other provinces in the northeast, expanded 5.7% and 6.7% respectively in the first half of the year.


The economic stagnation in the northeast has called for a package of stimulus programs, which would focus on improving mechanisms, pushing structural reform, encouraging innovation and startups, and ensuring people’s livelihoods. The stimulus also includes 127 important projects in sectors such as transport, energy, agriculture and urban-rural construction.

At a press conference on Tuesday, Zhao Chenxin, spokesperson for the National Development and Reform Commission, said that this three-year plan will be distributed soon and that it was a different plan from before, which aimed at survival.

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