By Li Shantong & He Jianwu, Department of Development Strategy and Regional Economy, DRC & Tang Zedi, School of Public Policy and Management, Tsinghua University

Research Report, No.219, 2018 (Total 5494) 2018-12-18

Abstract: In recent years, a widening gap between the economic development of northern and southern China is looming up. The economic ties between regions have become closer due to the integration of local economies into global value chain division. Thus, the impact of other regions’ economic development on a certain region needs to be considered when relevant economic issues of that region is to be analyzed. Viewing from the perspective of global value chain division, the development gap between northern and southern China is mainly manifested in the fact that under the notable decline of investment across the country, the economic development of northern China which relies heavily on the value chain of investment-driven heavy and chemical industries is becoming less resilient and its decelerated growth is hardly to be checked. With the further development of China’s economy, investment ratio tends to become stable, and the development of heavy and chemical industries will go beyond the trajectory of high-speed development. Hence, the authorities in northern China need to be prepared with long-term plans for their economic transformation drive, and make efforts to explore ways for the transformation and upgrading as well as restructuring of heavy and chemical industries’ value chain. In the meantime, work needs to be done to push ahead with the coordination and upgrading of domestic regional value chain division.

Key words: global value chain, the gap between northern and southern China, investment-driven, value chain of heavy and chemical industries