Authors: Professor Antai school of economics and management of Shanghai Jiaotong University, Executive Dean of China Development Research Institute and researcher Lu Ming of China Urban Governance Research Institute.
For some time, the economic development gap between North and South has aroused heated discussion. The voices of "The North Lost" and "China ushered in the era of the Great South" are endless. So, what is the reason for the economic development gap between North and South? What is the background of regional economic differentiation in China? The study found that the gap between North and South was actually exaggerated. The so-called north-south gap is only brought about by the shipping capacity along the Yangtze River and the coast. For example, in the first three quarters of 2020, most of the nine southern cities that entered the top ten list of GDP were cities along the Yangtze River and the Pearl River Estuary. However, if the cities along the Yangtze River and the Pearl River Estuary in the top ten list are removed, or Hangzhou and Suzhou near Shanghai are also removed, it can be easily found that the gap between the north and the south is not that big.
The gap between North and South is the result of the interaction of natural and human factors.
Since the mid-1990s, the pattern of China’s economic opening-up has undergone tremendous changes, namely, its deep participation in globalization. The important driving force of globalization is international trade, and the mainstream way of international trade is sea transportation combined with inland river shipping. This is the result of the combined action of geography and technology. Geographically, China has no land transportation lines with North America, South America, Japan and South Korea and some Southeast Asian countries. In terms of technology, the cost of sea transportation is often much lower than that of land transportation. Under the background of economic globalization in China, the so-called "economic development gap between North and South" is only brought by the shipping capacity of southern cities along the Yangtze River and the coast to some extent. In the era of big ships, the Yangtze River was the only river in China that could take big ships. Only a few cities in the Pearl River Basin can develop export-oriented manufacturing industry with the help of shipping conditions. In the north, some seaports freeze in winter, and the non-freezing ports lack the cooperation of inland river shipping, which limits the hinterland of manufacturing industry.
The distance between a place and a big coastal port will greatly affect or even determine the degree of economic development of this place. As far as the actual situation is concerned, the farther away from the big port, the smaller the GDP scale is. However, the distance to the big coastal ports, a variable, has more explanatory power to the GDP scale between cities in China than the sum of all other factors, and this is still under the condition that the state strongly supports the development of the central, western and northeastern regions.
In the relatively closed planned economy period before the reform and opening up, Northeast China and North China had the most powerful manufacturing industries in China. At that time, seaport conditions were not as important to regional economic development as they were after the reform and opening up. After the reform and opening up, the regional economic structure of China has undergone tremendous adjustment. Southeast coastal areas along the Yangtze River are more suitable for developing export-oriented manufacturing, and some big cities have the advantage of developing modern service industries, thus forming a new regional development pattern.
Of course, while seeing the differences in natural conditions between the north and the south, objectively speaking, the level of marketization, the protection of private property rights and the business environment in the south are better than those in the north, and the pace of reform is faster than that in the north. Some places in Northeast China and North China were once developed with the help of the state during the planned economy period, which largely left the strong intervention of the government during the planned economy period, and the market rules and market awareness were relatively weak. On the one hand, these problems should be solved by deepening reform; On the other hand, the reform can be accelerated through the flow of local government personnel. In recent years, many cadres from southern provinces have been transferred to the north, which has effectively promoted the reform of the northern system and brought positive changes to the business environment.
In the process of reform, the construction of the rule of law environment is also very important. The essence of market economy is fair competition based on the rule of law. If we can rely on the rule of law to solve contradictions in investment and financing, enterprise development, bankruptcy liquidation and market disputes, the business environment will be effectively improved.
Whether the development is balanced or not depends on the gap of per capita GDP and other indicators in various regions.
Joining globalization has had a great impact on the development pattern of the whole region in China. Seeing the differences in objective conditions, we can’t simply say that the regional economic structure can be changed through some preferential policies and support from the state, that is, for places with slow economic development, preferential policies need to be given to encourage investment, otherwise it will easily lead to the deterioration of resource allocation efficiency for the whole country. In the past decade or so, some underdeveloped areas (especially some population outflow areas) have built a large number of idle industrial parks, new towns and infrastructure in violation of economic laws and their own comparative advantages, resulting in not only unsatisfactory investment efficiency, but also serious government debts. There are similar examples all over the world, which are worthy of reflection. Detroit, the United States, once thought that the situation could be reversed by increasing investment when the industry declined, so many public works were built, but the population continued to flow out. Finally, the Detroit government was in debt and went bankrupt. Therefore, more measures should be taken: let places with advantages continue to maintain their advantages, so as to make greater contributions to national economic growth and job creation; Let the places with poor geographical and natural conditions find their own comparative advantages and develop themselves.
Development is a comprehensive concept, and the most important thing for local economy is not the total GDP, but the per capita GDP. In addition to economic indicators, from the perspective of comprehensive development, we should also consider health, education, environment, income gap and other aspects. Whether the development is balanced or not depends not on the gap in the total GDP between regions, but on the gap in indicators such as per capita GDP.
Since the reform and opening up, the economic center of gravity has gradually moved south, and a large number of people in the north have moved south. This process conforms to the laws of the market economy. If the proportion of the economy in the south and the proportion of the population in the south can be roughly equal, then there is no contradiction between economic agglomeration and regional balance, which is the road of "moving towards balance in agglomeration" and "creating balance in development".
With the gradual removal of the institutional obstacles to the free movement of population, the gap between different regions in China is actually narrowing in terms of per capita GDP. The per capita GDP level in developed areas is relatively high, but the work pressure is also relatively high, and the living costs such as house prices are also relatively high; In places where the level of economic development is relatively low, the environmental quality is better and the pressure of life is not so great. Therefore, on the whole, in fact, the difference in quality of life across the country will be less than the difference in per capita GDP, which is a relatively benign result.
In a word, when we look at the development gap between regions, we should pay more attention to the per capita development level, including the quality of life, the level of public services and so on, instead of "talking about heroes" with the total economic output. From the perspective of national development, on the one hand, we should further deepen the reform, break down the institutional obstacles to the free flow of population, and let the population within a country flow more smoothly to places that individuals think can improve their income level and quality of life; On the other hand, the policy should pay more attention to the equalization of quality of life and public services between different regions, and further narrow the differences in per capita GDP between regions.
Geographically disadvantaged areas should find their own advantages, foster strengths and avoid weaknesses.
Export-oriented economy has a profound impact on China’s regional economy, but it is only a part of the whole national economy. For the development of regional economy, the most crucial thing is to find our own comparative advantages and foster strengths and avoid weaknesses. For areas lacking favorable conditions for developing export-oriented economy, such as inland areas with poor seaport conditions, it is suggested to find comparative advantages for development from the following points:
First of all, under the new development pattern of internal circulation, there are many industries serving domestic demand in China’s vast market. For example, some manufacturing industries are specialized in serving the domestic market and do not have strong economies of scale, so they can be developed in cities in the central and western regions. Tourism and other service industries can develop well in the Northeast. Northeast China is a very important ecological conservation area, which is an opportunity to develop tourism. If there were no epidemic, many tourists from China would travel to Hokkaido every year. Under the impact of the epidemic, international tourism has basically stopped, and in China, the northeast is the most likely to compete with Hokkaido, and the northeast (especially Heilongjiang) is entirely possible to build a tourist resort that enjoys flowers in summer and skiing and enjoying ice in winter; Some areas in Northeast China and North China are important grain producing areas, so we can make greater efforts to develop agriculture. In animal husbandry (including pig raising) and other industries, the scale of Northeast China in the whole country can also be continuously expanded.
Second, when developing an export-oriented economy, some products are not transported by ships and are suitable for the inland economy. The author emphasizes that the transportation capacity of seaport is the driving force for regional economic development, because most manufacturing products rely on sea transportation and inland river transportation in international trade. But in fact, some manufacturing products do not necessarily need to be transported by sea. For example, some products with high added value but small size, such as computer chips, are completed by air. Software industry, game industry and other "digital+"industries, their products or services can be transmitted through the network without ships and railways. These are very important development opportunities for inland cities. In this respect, central and western cities like Chengdu and Xi ‘an have developed well.
Third, some cities in the midwest and northeast still have some development advantages left over from history. For example, some "big countries and heavy equipment" industries are still very important areas in the development of China, and these advantages can be further maintained and carried forward. In the future, we can also consider transferring some technologies from military industry to civilian use to gain new development opportunities.
Fourthly, some big cities in central and western China have abundant higher education resources, such as Wuhan, Xi ‘an, Chengdu and Chongqing. If these higher education resources can better serve the national development and regional economic development with the help of Industry-University-Research’s cooperation, it is also a very important opportunity.
Of course, the development and transformation of regional economy is a long and painful process. In the history of developed countries, there are many experiences similar to those of China in industrial transformation.
A relatively successful situation is to realize industrial transformation, such as Pittsburgh in the United States, which has successfully changed from a steel city to a city with developed modern technology and education. Some northern areas of China have such conditions, such as Shenyang and Harbin, which have good educational resources and the layout of "big country and heavy weapon" industries. If you work hard, it is likely to become a place where new science and technology industries gather.
In other cities, when the proportion of industry in the overall national economy is gradually shrinking, or when heavy industry loses its competitiveness, or when resources are exhausted, moderate population outflow itself is also a means to solve the problem. China is so vast, except for a few big cities in the central and western regions, which mainly develop manufacturing and service industries, the comparative advantages of more inland areas are to develop industries such as agriculture, tourism and natural resources. In these industries, the moderate outflow of population is also conducive to improving the per capita resource possession or per capita output, that is, it can improve the per capita development level in disguise. Therefore, population outflow is not an absolute problem, and it may be a solution to the problem. On the one hand, the outflow population must hope that their income level and quality of life will improve before they flow out. On the other hand, while a part of the population flows out, the per capita resources of the remaining population can be improved, so don’t be too negative about the phenomenon of population outflow. When the population flows out, the problems such as insufficient infrastructure, public services and social security resources can be solved by various means such as financial transfer payment from the central government to the local government under the background of "making a big cake" in the whole national economy.
Generally speaking, each place has different conditions, so we should give full play to our own advantages. No matter where you are, developing your own industry and improving people’s quality of life are all contributing to the overall development of the country, and the well-being of each individual can also be improved in the process.
