Make Manchuria great again: Can China’s rust belt be revived?

A factory in Yanji, China, in 2007. Image: Getty.

In 1949, Mao gave China First the role of making China great again from its base in North East China. Ignoring his Soviet advisors, Mao believed that China’s path to prosperity was through heavy industry: that meant building on the industrial base left by the Japanese Empire in Manchuria.

For decades, China First and similar state-owned companies provided secure, well-paid employment to Manchurian workers whose ‘Iron Rice Bowl’ was the envy of the nation. Many of China First’s early recruits were still working there in the 1990s.

Today, things don’t look so good. After a decade of lay-offs, its losses are still growing, and stood at $850m last year. Chairman Wu was found hanged in his office during a corruption investigation in 2015. While the region’s GDP per capita is about average for China, it is in relative decline.  In 1978, China’s north east provinces of Liaoning, Heilongjiang and Jilin were the 4th, 5th and 8th richest. Now they are 14th,21st and 12th. What’s gone wrong?

The administrative divisions of China. Manchuria consists of the three provinces in the far north east. Image: Wikipedia.

Mao’s heavy industrialisation policy may have made Manchuria rich – but since his death, nowhere has followed the Manchurian path to prosperity. Instead, Deng Xiao-Ping’s model had privately-owned textile factories, rather than state-owned steel mills, in the vanguard.

These new factories didn’t come to Manchuria: investors were looking for cheap labour, and Manchuria had the most expensive workers in the country due to its Mao era economic success. Instead, they came, initially, to China’s coasts.

Now those regions that started off as sources of cheap labour for Japanese investors have moved on. Shanghai and Guangzhou are major global financial centres. Hebei Province is the steel capital of the world. So why was Manchuria, which started a few stations down the track, unable to get on the Deng Xiao-Ping train as it passed them by?

Firstly, imagine a combination of what John McDonnell thinks about bankers and what Ian Duncan Smith thinks about welfare claimants: that is how north-easterners are seen by large numbers of other Chinese people.  Most Chinese believe they worked for their own prosperity, but the three north eastern provinces were gifted prosperity by Mao, and now stay afloat via subsidy and corruption. Good Maoists make for bad capitalists. Whether this is fair is beside the point: it deters investment.

Secondly, geography. Being at the crossroads of the Communist world may have been an advantage in 1950; but now it puts Manchuria in the middle of an economic nightmare zone, between the crashing Russian economy and North Korea which keeps on North Koreaing.

Finally, demographics. Even before the One Child Policy of 1982, Manchuria’s fertility rate had fallen below the replacement rate. That policy was also more effective in Manchuria than anywhere else, with fertility rates falling to just 0.75 births per woman by 2010. It’s not surprising that, in the provinces with the highest rates of government employment, more people would obey government policy. On top of this, there has been huge net migration: 2m workers left the north east for southern provinces between the 2000 and 2010 censuses.

So, as Lenin asked, what is to be done?

The Chinese government has had two main strategies. First is transport. My hometown of Yanji (about the size of Bristol) boasts several 150mph+ services a day to cities in the region hundreds of miles away, as well as a daily service to Beijing (about as far as Bristol to Berlin).

Over 1,500 miles of highspeed railway has opened in Manchuria in the last 5 years, and more is being built. Buses to smaller towns in the region are cheap, regular and mostly travel along motorways built in the last 20 years.

No doubt this growing connectedness has helped the local economy – but it has not stopped Manchuria falling behind the coastal provinces, largely because new motorways and high speed rail are national megaprojects.

China’s rail network. Click to expand. Image: Howchou/Wikimedia Commons.

The second strategy is keeping the order books of local government-owned factories full. New trains roll off the production lines in Changchun, tanks in Qiqihar and steel pretty much everywhere. However, this has not closed the gap either.

Some have bold plans, but it is not clear they’d be effective. Justin Yifu Lin, former chief economist of the World Bank, argues that the region should target those light industrial businesses that set up on the coast decades ago and are now on the move again looking for cheap labour. He also suggests greater efforts to get workers out of the fields and into the cities.

But it is not really clear why a business owner would opt for remote, moderate wage Manchuria over better located, lower wage provinces further west – nor why farm workers shouldn’t just move south as they have been doing for decades.

Government economist Fan Hengshan hinted in an interview with the China Economic Times that he believes Thatcherite style shock therapy – privatise the state owned companies and fire the planners – will boost growth. It is not made plain why these companies would be better at updating the regions decaying industrial base than the government.

Economist Andrew Batson suggests opening branches of the China’s best universities to boost the local skills base and partially reverse the population decline.

But Manchuria already has three of the country’s top 25 universities. The problem is that local students see admission as their ticket out of Manchuria, while those from outside the region rarely stay. A brief non-scientific survey of undergraduates I know from my town’s university found no-one originally from outside the province who intends to stay after graduation: one laughed at the suggestion. 

Manchuria resembles the rust belts of the western world and the problems seem similarly intractable. Just like in the west, relative decline has provoked a political backlash, though it takes a different form than in the west. (As annoying as I am I have not yet sparked an anti-immigrant backlash.)

Industrial decline has created workers’ movements. As China is a worker’s paradise, trades unions are illegal, so keeping track of what are by definition wildcat strikes is hard. The government likes to pretend strikes afflict only foreign owned companies, and certainly never state ones.

Nevertheless thousands of strikes are recorded every year by the Chinese Labour Bulletin. The regions heavy industries were described as “a disaster area” for not paying employees on time by the People’s Daily in January. Miners have been striking and protesting in large numbers in the city of Shuangyashan. This may intensify as the government has announced ‘restructuring’ plans that will lay off almost 2m steel and coal workers.

In Manchuria it will be difficult for the newly unemployed to find work. Manchuria’s reign as China’s richest region is over – but after four centuries at the centre of Chinese history it might not be quite ready to step aside yet.  

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Was the decline in Liverpool’s historic population really that unusual?

A view of Liverpool from Birkenhead. Image: Getty.

It is often reported that Liverpool’s population halved after the 1930s. But is this true? Or is it a myth?

Often, it’s simply assumed that it’s true. The end. Indeed, proud Londoner Lord Adonis – a leading proponent of the Liverpool-bypassing High Speed 2 railway, current chair of the National Infrastructure Commission, and generally a very influential person – stood on the stairs in Liverpool Town Hall in 2011 and said:

“The population of Liverpool has nearly halved in the last 50 years.”

This raises two questions. Firstly, did the population of the City of Liverpool really nearly halve in the 50 year period to 2011? That’s easy to check using this University of Portsmouth website – so I did just that (even though I knew he was wrong anyway). In 2011, the population of the City of Liverpool was 466,415. Fifty years earlier, in 1961, it was 737,637, which equates to a 37 per cent drop. Oops!

In fact, the City of Liverpool’s peak population was recorded in the 1931 Census as 846,302. Its lowest subsequent figure was recorded in the 2001 Census as 439,428 – which represents a 48 per cent decline from the peak population, over a 70 year period.

Compare this to the population figures for the similarly sized City of Manchester. Its peak population also recorded in the 1931 Census as 748,729, and its lowest subsequent figure was also recorded in the 2001 Census, as 392,830. This also represents a 48 per cent decline from the peak population, over the same 70 year period.

So, as can be seen here, Liverpool is not a special case at all. Which makes me wonder why it is often singled out or portrayed as exceptional in this regard, in the media and, indeed, by some badly briefed politicians. Even London has a similar story to tell, and it is told rather well in this recent article by a Londoner, for the Museum of London. (Editor’s note: It’s one of mine.)

This leads me onto the second question: where have all those people gone: London? The Moon? Mars?

Well, it turns out that the answer is bit boring and obvious actually: after World War 2, lots of people moved to the suburbs. You know: cars, commuter trains, slum clearance, the Blitz, all that stuff. In other words, Liverpool is just like many other places: after the war, this country experienced a depopulation bonanza.

So what form did this movement to the suburbs take, as far as Liverpool was concerned? Well, people moved and were moved to the suburbs of Greater Liverpool, in what are now the outer boroughs of the city region: Halton, Knowsley, St Helens, Sefton, Wirral. Others moved further, to Cheshire West & Chester, West Lancashire, Warrington, even nearby North Wales, as previously discussed here.

In common with many cities, indeed, Liverpool City Council actually built and owned large several ‘New Town’ council estates, to which they moved tens of thousands of people to from Liverpool’s inner districts: Winsford in Cheshire West (where comedian John Bishop grew up), Runcorn in Halton (where comedian John Bishop also grew up), Skelmersdale in West Lancashire, Kirkby in Knowsley. There is nothing unique or sinister here about Liverpool (apart from comedian John Bishop). This was common practice across the country – Indeed, it was central government policy – and resulted in about 160,000 people being ‘removed’ from the Liverpool local authority area.

Many other people also moved to the nearby suburbs of Greater Liverpool to private housing – another trend reflected across the country. It’s worth acknowledging, however, that cities across the world are subject to a level of ‘churn’ in population, whereby many people move out and many people move in, over time, too.

So how did those prominent images of derelict streets in the inner-city part of the City of Liverpool local authority area come about? For that, you have to blame the last Labour government’s over-zealous ‘Housing Market Renewal Initiative’ (HMRI) disaster – and the over enthusiastic participation of the then-Lib Dem controlled city council. On the promise of ‘free’ money from central government, the latter removed hundreds of people from their homes with a view to demolishing the Victorian terraces, and building new replacements. Many of these houses, in truth, were already fully modernised, owner-occupied houses within viable and longstanding communities, as can be seen here in Voelas Street, one of the famous Welsh Streets of Liverpool:

Voelas Street before HMRI implementation. Image:

The same picture after HMRI implementation Image: 

Nonetheless: the council bought the houses and ‘tinned them up’ ready for demolition. Then the coalition Conservative/Lib Dem government, elected in 2010, pulled the plug on the scheme. 

Fast forward to 2017 and many of the condemned houses have been renovated, in a process which is still ongoing. These are over-subscribed when they come to market, suggesting that the idea was never appropriate for Liverpool on that scale. 

At any rate, it turns out that the Liverpool metropolitan population is pretty much the same as it was at its peak in 1931 (depending where the local borough boundaries are arbitrarily drawn). It just begs the question: why are well educated and supposedly clever people misrepresenting the Liverpool metropolis, in particular, in this way so often? Surely they aren’t stupid are they?

And why are some people so determined to always isolate the City of Liverpool from its hinterland, while London is always described in terms of its whole urban area? It just confuses and undermines what would otherwise often be worthwhile comparisons and discussions. Or, to put it another way: “never, ever, compare apples with larger urban zones”.

In a recent Channel 4 documentary, for example, the well-known and respected journalist Michael Burke directly compared the forecast population growths, by 2039, of the City of Liverpool single local authority area against that of the combined 33 local authority areas of Greater London: 42,722 versus 2.187,708. I mean, what bizarre point is such an inappropriate comparison even trying to make? It is like comparing the projected growth of a normal sized-person’s head with the projected growth of the whole of an obese person, over a protracted period.

Having said all that, there is an important sensible conversation to be had as to why the populations of the Greater Liverpool metropolis and others haven’t grown as fast as maybe should have been the case, whilst, in recent times, the Greater London population has been burgeoning. But constantly pitching it as some sort of rare local apocalypse helps no one.

Dave Mail has declared himself CityMetric’s Liverpool City Region correspondent. He will be updating us on the brave new world of Liverpool City Region, mostly monthly, in ‘E-mail from Liverpool City Region’ and he is on twitter @davemail2017.