Old Industrial Cities Seeking New Road Of Industrialization: Models Of Revitalizing Northeast China

Models of Revitalizing Northeast China

Mark Wang, Zhiming Cheng, Pingyu Zhang, Lianjun Tong, Yanji Ma

• Publisher: WSPC
• Year: 2013
• eBook ISBN: 9789814405805
• Topic: Biological Sciences
• Subtopic: Science General
• Index: Biological Sciences

This book aims to investigate how cities in China's rust belt restructure their urban industries and economies. Over the years, China's “economic miracle” has been mainly attributed to rapid development in its coastal region, where the majority of research into the country's development has originated from. Development in the rest of China seems to be attracting relatively scant research attention, especially in China's rust belt. In fact, the urban industrial restructuring process is an ongoing process in inland China, notably in the recent decade in terms of the scope, scale and speed of restructuring.

The old industrial cities in northeast China (Manchuria) were the cradle of China's industrialization and had significantly contributed to the industrialization of the nation during the Mao era. Deng's open door policy and economic reform disadvantaged the region and left it behind others. In the context of market economy and competition from rapidly growing coastal areas, northeast China became the burden to China's overall economic development. With a high concentration of state-owned heavy industries, cities in this region suffered from heavy losses in revenue and massive layoffs of millions of former state-owned enterprise workers, known as the “Northeast Phenomenon” or “Neo-Northeast Phenomenon”. The once towering economic giant was down. Such a “phenomenon” is not uncommon in other “rust belt” regions in industrialized economies.

However, since the implementation of the Chinese Government's “Revitalisation Strategy of Northeast China” in 2003, cities in northeast China have gone through various transformations. Their recent economic performance has made many Chinese economists predict that northeast China will become China's new growth engine and catch up with the economic performance of other prosperous regional economies such as the Pearl River Delta, Lower Yangtze River Delta and Beijing-Tianjin region.

This book investigates how cities in northeast China are shaking off their economic disadvantages and implementing various forms of restructuring in their industries. The authors identify six different reindustrialization models, namely Shenyang Tiexi Model — repacking old industries; Dalian Model — beyond the China's coast development model; Daqing Model — extension of industrial chain; Fuxin Model — modern agro-processing saved the coal mining city from “ghost town”; Jilin city — low carbon-oriented model; and Central Liaoning Urban Cluster Model — negotiated/agreed industrial division. All these models will be explained through analysis of their approaches, key actors, and mechanisms.

Contents:

• Introduction: Urban “Catch Up” Strategies for China's “Rust Belt” Region
• From Mao's Pet to Deng's Burden
• Revitalization Strategies of Old Industrial Cities Under Hu
• Shenyang Tiexi Model — Repacking Old Industries
• Dalian Model — Beyond the China's Coast Development Model
• Daqing Model — Extension of Industrial Chain
• Fuxin Model — Modern Agro-Processing Saved the Coal Mining City From “Ghost Town”
• Jilin City — Low Carbon-Oriented Model
• Central Liaoning Urban Cluster Model — Negotiated Industrial Division

Readership: Researchers, academics, graduates, 3rd and 4th year undergraduates who are interested in revitalization strategies of old industrial cities in China, economic and industrialization development and China's urban labor market, such as hukou, housing, urban welfare programs, minimum wage, etc.; policy makers who seek to comprehend the changes taking place within China.

1

Introduction: Revitalization
of China’s Industrial Cradle

Since the mid-1970s, the notion of “restless landscape” has been used to describe the radical economic and socio-cultural changes that occurred in the metropolitan areas in Europe and North America (Knox, 1991, 1993). Since the opening-up reform, the notion has also been used to examine the dramatic changes in the post-Mao urban China (Lin and Wei, 2002). Prior research has particularly focused on more developed cities and regions such as Shanghai and the Lower Yangzi Delta along the Southern Coast (Marton, 2000; Shen and Wu, 2012). This is partially due to rapid economic growth along the coastal regions. In fact, the development of Chinese economy was typified by significant regional inequality and disparities between the coast and interior, and some regions were clearly left behind (Fan and Sun, 2008). Before the early-2000s, the notion of restless landscape was inapplicable to most cities in Northeast China (consisting of Liaoning, Heilongjiang, and Jilin provinces) that experienced economic stagnancy. In the mid-1990s, the region suffered from more negative shocks such as the massive state-owned enterprise (SOE) reforms which led to the retrenchment of millions of SOE workers in the region. Layoffs became an everyday topic and enraged many Northeastern Chinese workers to restlessly fight for their rights and benefits, and search for new employment (Won, 2004; Cai, 2005).

This negative first wave of restlessness was followed by a positive wave that resulted from the Chinese Government introducing the Northeast China Revitalization Program (NCRP) in 2003. Existing research has examined the impact of the SOE reforms on laid off workers in the region (Won, 2005). However, research on the outcomes of the NCRP — the second wave of restlessness — in Northeast China is relatively scant. Aiming to fill the gap in knowledge, this book studies the second wave of restlessness that demonstrates different ways through which the once left-behind cities in Northeast China restructured their individual urban economies.

NCRP is an integral part of the program to amend the former leader Deng Xiaoping’s coast-biased development strategy. When Deng introduced the open door policy, the coastal region was the center of attention (Lu and Wang, 2002). Over the course of the opening-up reform, the coastal region became the engine of China’s economic growth, the major destination of foreign investment, and the manufacturing base of made-in-China products. The majority of the interior — including central, western, and northeastern regions — was, however, left behind. The focus on the coastal region was supported by an uneven regional development strategy and was further intensified after Deng’s historical and influential tour of several cities in Southern China in 1992 (Tian, 2001). As a result, the socio-economic gaps between coastal and inland regions gradually became one of the major issues in China’s development.

To correct the negative consequence of Deng’s “letting the coastal region get rich first” in China’s regional development, his successors have redirected China’s regional development focus on a major scale. For example, the then president Jiang Zemin implemented the Great West Development Program (GWDP), or the “Go West” strategy, which aimed to deal with the regional inequality on the way to economic development by gradually eliminating the East–West disparities, consolidating the unity of ethnic groups, and promoting social development. In 2002, Hu Jintao, the then new president, introduced the policy on the revitalization of Northeast China; and later in 2005, he introduced the policy on the “rise of the central region”, as an important element of his endeavor to build a “harmonious and balanced society”. This book focuses on the former initiative.

To understand how individual cities, under the relatively new national priority policy, have transformed their urban economies, this book examines the various approaches adopted by six major cities in Northeast China which was once called the rust belt of China. This book carries some characteristics.

First, this book explains how a group of cities in China’s industrial region avoided becoming ghost towns, and instead restructured and restored their flagging economies after the introduction of the Chinese Government’s new regional development strategy. It outlines the Chinese version of how the rust belt revitalization model occurred in a region which was the cradle of China’s industrialization since the 1930s but had been left behind after the economic reform in the late 1970s. The six different urban transformation models discussed in this book are less revealed in academic literature especially in English. In fact, they are products of the Chinese Government’s new strategy of revitalizing Northeast China, and represent how cities dominated by the state sector (in terms of, for instance, local economy and employment) have found a new road to reindustrialization.

The transformation of resource-dependent and/or heavy industrial cities in Northeast China shares some characteristics with other countries’ transformation experience. But, it is distinctive in terms of the key driving forces and mechanisms of transformation that are embedded within the various types of transformation models. One common feature of all the models implemented in Northeast China is that they are mainly incubated from inside rather than driven by external forces. This is different from the development models in the western region in which many cities are less industrialized before the implementation of GWDP and therefore, they have to rely on more external input. This also differs from the models that have shaped China’s coastal region.

Second, this book analyzes specific places by focusing on how old industrial cities in Northeast China have sought new roads of reindustrialization. It suggests that these models of revitalization, though different in their own forms, should be examined in the context of the debatable China model of economic development and success (or the China model for short) which is typified by an (seemingly) effective mixture of authoritarian regime and market economy in achieving economic growth, or “authoritarian capitalism”. The China model, in the name of “socialism with Chinese characteristics”, is regarded as a potent alternative for economic governance rivaling those models from the West especially after the recent global financial crisis (Breslin, 2011).

Nonetheless, the conceptualization of the China model has largely drawn from the development experience of the coastal region. This book argues that the conceptualization and theorization of the China model, however, should not just be based on the experience of the coastal region which was more significantly influenced by external forces such as foreign investment and export-oriented manufacturing enterprises. The China model will be more distinctive if it is inclusive of the experience of local economies which were once heavily dominated by the state sector. In other words, the China model of development is sophisticated, not a black–white dichotomy of liberty against tyranny or democracy against authoritarianism. It exists in neither a liberal market economy, nor a social market economy. It is not a Stalinist command economy. It is an economy with an increasingly competitive labor market, free markets of commodities, and limited (but very soon freer) capital flow. What would have made the China model more distinctive after the inclusion of the Northeastern transitional model is the role played by the state. This book explains how governments interact with markets and enterprises, and more interestingly how governments work with other governments to transform their urban economy. To this end, we hope that this book will shed some lights on the strength and limits of the China model which has been under-researched to date (Peerenboom, 2008).

1.The “Northeast Phenomenon”

The transformation and development of resource-dependent cities is a key topic and a problem facing many countries (Yigitcanlar et al., 2008; Yigitcanlar, 2010; Wong et al., 2006; Inayatullah, 2011; Weisz and Steinberger, 2010; Engel, 2006; Cohen, 2006; Greg and Palmer, 2010; Qian and Li, 2009; Wang and Cheng, 2010; Zhang and Tong, 2011). In the West, cities in the rust belt areas have struggled to adapt to a variety of adverse economic conditions, such as the reallocation of capital and manufacturing facilities to overseas or other areas in their countries where lower labor cost was provided, the rise of automation in industrial processes, a decreased need for labor in the production of heavy industrial products, and the liberalization of existing foreign trade policies. Many resource-mining cities or cities from where economic activities shifted elsewhere have become ghost towns which were abandoned after mining activity failed to survive (e.g., Dallas, 1985). Classical examples include “boomtowns” where the single economic activity or resource (e.g., nearby mine, mill or resort) that created it has been depleted or the resource economy undergoes a “bust” (e.g., catastrophic resource price collapse). These boomtowns often shrank as quickly as they initially grew. In many cases the majority or even the entire population deserted the town, resulting in a ghost town. Increasing economic globalization also contributes to the dismantling of boomtowns due to the key economic sector in a boomtown shifting elsewhere for cheaper labor or access to a larger market, leaving behind economic collapse in the former town.

In industrialized countries, the notion of the rust belt has gained much research attention since the 1980s, especially in the U.S., where the rust belt refers to the area straddling the Midwestern and Northeastern U.S. in which the local economies traditionally specialized in large scale manufacturing of finished medium or heavy consumer and industrial products, including the transportation and processing of the raw materials required for heavy industry (High, 2003). After several periods of economic boom and prosperity between the late 19th and mid-20th century, cities in these areas struggled to adapt to a variety of adverse economic conditions thereafter in the late 20th century, such as the reallocation of manufacturing businesses to the Southeastern states due to their lower labor costs, the rise of automation in industrial processes, and the liberalization of foreign trade policies (Lopez, 2004; Meyer, 1989; Daniel and Stuart, 1987). Cities that struggled the most with these conditions soon encountered more difficulties including population loss, high unemployment, and a declining local economy (James, 1999).

Nonetheless, there are some examples of successful transformation of world-renowned resource-dependent cities. The examples include the Ruhr industrial area in Germany, the Wales region in Britain, the Los forest area in France, the Liege province in Belgium, and the Kitakyushu region in Japan. Some of the manufacturing sectors in the Northeast U.S. and Southern Ontario, Canada actually recovered faster from the late 2000s recession than other sectors of the economy. A number of public and private initiatives encouraged the development of alternative fuel technologies (Economist, 2011). The purpose of various reindustrialization programs is to generate new industry in the place of old industry, or in other words, to create new job opportunities for old.

In China, the economic miracle achieved since the economic reforms in the late 1970s has been mainly attributed to the rapid development of the coastal region. Most research into the country’s development — and the China model — has focused onto this region. Development in the other regions of China, especially the rust belt, seems to be attracting relatively less research attention. In fact, the urban industrial restructuring is an ongoing process in inland China, notably in the recent decade, in terms of the scope and speed of restructuring. The old industrial cities in Northeast China were the cradle of China’s industrialization, having significantly contributed to the industrialization of the nation during the Mao era. After the reform, their competitive advantages were challenged by natural resource depletion, diminished demand of products, and a changing market structure which was no longer dominated by state orders. Meanwhile, China’s international trade has grown in importance and drastically changed regional comparative advantages. Other regions, especially the coastal region, have shown a more dynamic and effective adjustment to these changing environment and opportunities. The initial specialization and lower susceptibility to investment inertia, as well as the flexible and business-friendly local government policies have contributed to the successful adjustments in the coastal region. In any case, the Northeast provinces, with an ageing population of skilled workers and less competitive industries in the emerging market economy, were on the path to becoming a rust belt region and became a burden to China’s economic development. With a high concentration of state-owned heavy industries, cities in Northeast China suffered from heavy losses in revenue and a massive retrenchment of millions of state workers. Such phenomenon was labeled the “Northeast Phenomenon” or “Neo-Northeast Phenomenon”. The once towering economic giant was dragged down. There was clearly a need for a major transformation in order to recapture the strong economic performance that once characterized the region’s industrial history.

Since the implementation of the Chinese Government’s Revitalization Strategy of Northeast China in 2003, cities in Northeast China have gone through various transformations. Based on their recent economic performance, some observers predict that Northeast China will become China’s new growth engine and, in the longer term, catch up with other thriving regional economies such as the Pearl River Delta, Lower Yangzi Delta, and the Beijing–Tianjin region.

2.The Existing Transformation Models for Resource-Dependent and Heavy Industrial Cities

Three major types of industrial restructuring models are applied in the industrialized countries. The first type involves further diversification of the existing industrial sectors by transforming the urban economy from a single or a few dominant sectors to a combination of manufacturing, high-tech and modern service sectors. Examples of this restructuring model can be seen in the Ruhr industrial area of Northwestern Germany. The Ruhr area was famous for its coal and steel production. Both industries faced massive restructuring challenges due to the changes in global demand patterns and the loss of competitiveness to lower-cost international producers. After downsizing its large firms and establishing new economic activities, the Ruhr area has attracted many small and medium enterprises specializing in information technology, microsystems, solar energy technology, bio-medicines, and e-logistics (Hospers, 2004).

The second type of industrial restructuring model adopts an approach to replace existing urban industrial sectors by a new set of industrial chains which are not linked to the old ones. For example, high tech industries replace traditional industries and high valued-added industries replace low value-added ones. The capital, technology, and human resources needed for development of new industrial chains are either sourced by accumulation, by exploration of local natural resources, or through the attraction of outside investment. Industrial bases of Lorraine in France and Kyushu in Japan are good examples of this restructuring model (Case summary of old industrial bases in Ruhr of Germany and Lorraine of France, 2011). Both of them were heavily industrialized areas. Lorraine was one of the most heavily industrialized areas of France. But after industrial restructuring, certain traditional industrial activities lost their former importance. Iron ore, once being mined on a large scale, was no longer extracted. The steel industry that depended on this raw material has declined and steel-making is now limited to the area south of Thionville. The areas of Forbach and Vosges within this region have also experienced deterioration in coal mining and textiles industries, respectively. Other long-standing but smaller industries, however, have adapted better to a changed economic environment. For example, producers of glassware and crystal, food and beverage products, faience (earthenware), paper, and furniture have managed to stay afloat. Though many traditional industries are in decline, industrial conversion has nevertheless brought many new industries into Lorraine, including mechanical engineering, electronics, and electrical equipment manufacturing, and, above all, the vehicle assembly and components industry. Much of this investment has originated from economies outside of France — notably Germany. Funding from the French authorities and the European Union has also supported the development of new industries. Restructuring of the economy has also occurred with the development of science parks at Nancy and Metz, the establishment of a theme park in the Moselle Valley, and various other tourist attractions in this region (Case summary of old industrial bases in Ruhr of Germany and Lorraine of France, 2011; Xiao, 2010).

The third type of industrial restructuring model is the “rust belt revitalization” model. Besides the aforementioned rust belt cases in the U.S.,...

Table of contents

• Cover Page
• Halftitle Page
• Title Page
• Copyright Page
• Contents
• Acknowledgements
• 1 Introduction: Revitalization of China’s Industrial Cradle
• 2 From Mao’s Pet to Deng’s Burden
• 3 Revitalization Strategies of Old Industrial Cities under Hu: Overview
• 4 Tiexi’s Reborn: The Revitalization of the City’s Old Industrial Zone
• 5 Dalian Coastal New Industrial Base Development Model
• 6 Daqing Model of Industrial Chain Extension
• 7 Economic Transformation and Continuous Industry Development Model of Fuxin City
• 8 Jilin City’s Low Carbon Economy
• 9 Regional Integration Development in Central Liaoning Urban Agglomeration
• 10 Towards a Northeast China Model?
• References
• Index