Hard to tilt the balance back toward the north

Editor's note: China's resource-rich north took the lead over the south in multiple economic development indicators before the launch of reform and opening-up, but the balance gradually tilted the other way and has accelerated in recent years. A post published on the WeChat account of Qin Shuo, a financial commentator, says:

For a long time it was the northern provinces that were the most developed, while the southern provinces lagged behind. But since the launch of reform and opening-up, it is Guangdong, Jiangsu, Fujian and Zhejiang that have become the most dynamic provinces.

Due to faster economic transition, the GDP of southern provinces increased to 62.8 percent of the country's total in 2018, while that of the northern provinces decreased to 37.2 percent. According to the World Bank standard, seven cities and provinces in the Chinese mainland－Beijing, Shanghai, Tianjin, and Jiangsu, Zhejiang, Fujian and Guangdong－entered the ranks of high-income economies in 2018, of which only Beijing and Tianjin are in the north.

The main reason for the gap between China's northern and southern regions being further widened is that the large-scale investment package launched by the northern provinces after the global financial crisis further consolidated the structure of their resources and heavy industry-dominated economies. In contrast, China's southern region, which has long been engaged in international competition, has chosen to promote innovation and industrial upgrading, forming world-class industry clusters and boosting its economic takeoff.

The flow of population from the northern provinces to the southern provinces has further strengthened the advantages of the southern region and formed a positive cycle. Therefore, the trend of north-south differentiation is accelerating further. Especially from the current development of the northern and southern provinces, this trend is expected to continue to accelerate.

To change its waning economic status, the northern region must establish a fair and just business environment and stabilize public expectations of its industrial transformation and upgrading.