New growth pole to coordinate regional growth

Since the 18th National Congress of the Communist Party of China in November 2012, China’s economy has entered a new normal, which comprises several characteristics including transition of the old and new driving forces, industrial upgrading, regional planning enhancement, and pollution prevention and control.

But since urban diseases such as traffic jams, air pollution and high housing prices continue to plague major cities including Beijing and Shanghai, the authorities have worked out new regional development policies that include Beijing shifting its non-capital functions to Xiongan New Area, about 100 kilometers southwest of Beijing, and promoting the Beijing-Tianjin-Hebei integration plan and coordinated development strategy.

These policies require population and labor transfer. Official data show last year Beijing’s permanent resident population reduced by 165,000 over 2017. In particular, Beijing’s working-age population (from 15 to 59 years old) fell more than 200,000 in 2018. Although last year saw the second decline in Beijing’s population, the rate of decline was sharper than in 2017.

It would be ideal if the people who shift from major cities are absorbed by other regions. If they are not, it will create new problems in society, which the authorities should take preventive measures to deal with.

The report to the 19th National Congress of the CPC in October 2017 says the regional coordinated development strategy and rural rejuvenation strategy are aimed at solving the problem of unbalanced and inadequate development in China.

Besides geographical factors, the main reason for the economic difference between less-developed central and western regions of China and the developed eastern region is the business environment. The business environment supports economic activities including production, operation and development, and it includes the rule of law, market supervision, intellectual property rights protection, government services, innovation environment, cultural orientation, as well as investment and financing convenience.