The Northeast

General Overview

China’s northeast, an area historically known as Manchuria, encompasses Heilongjiang, Jilin, and Liaoning Provinces as well as the eastern half of the Inner Mongolia Autonomous Region. The region is home to more than 110m people—nearly a 10th of China’s overall population—as well as the bulk of the country’s heavy industry.

Market reforms came more slowly to the northeast than to other parts of China owing to the region’s preponderance of State-owned industries. By 2002, more than 40 percent of these industries were estimated to be losing money, prompting subsequent calls for reform that began the following year.

The Chinese government envisages the northeast as a lean, productive centre for industry without the vast inefficiencies that once plagued the region. In addition, the region’s proximity to several foreign countries suggests enormous potential for extensive links to key markets, not least of which is energy-rich Russia. The growth of the port of Dalian, located in Liaoning Province, will also factor into the long-term growth strategy of northeast China.

Logistical Overview

Recent years have seen extensive investment into northeast China’s logistics network, mostly centred on the region’s most prosperous city, Dalian. The city’s ice-free sea port plays a tremendous role in the regional economy, as transport links to other cities in the northeast emanate from Dalian.

The Dalian Port Group, in association with ProLogis, jointly own a new logistics centre in Shenyang, capital of Liaoning Province. The two companies are also planning logistics facilities in Changchun, Harbin, and Manzhouli, bringing further economic development to the region’s hinterland.

North-eastern China has also deepened its ties to countries on its perimeter, most notably Russia. The land port of Manzhouli facilitates trade between the region and Russia’s Far East, a region rich in natural resource wealth. Chinese shipments of machinery, electrical appliances, and high-tech goods also pass through the port. A USD 25bn energy cooperation deal signed in February 2009 between the two countries will only cement economic ties further.

Key Dynamics

  • The economic relationship between China and Russia, countries that share a coastline of over 2,000 km, will be centred in the northeast region. Continued improvements in logistical capabilities in Manzhouli and along the Tumen River are vital to the region’s strategy.
  • Much of the fat from the State-owned enterprises dotting the northeast has been cut, but more remains. Privatising and downsizing major industries while avoiding mass levels of unemployment will challenge the region’s leaders.
  • The rate of economic development in Dalian, the region’s most prosperous and only major coastal city, still contrasts sharply with that in the hinterland. Improved transport links—such as a train between Dalian and Mudanjiang in Heilongjiang Province—could revitalise the traditionally moribund inland parts of the region.