Xi Jinping's Struggle: Bridging China's Vast Regional Wealth Gap
A New Chapter for Western Development
Prime Minister Li Qiang recently spent three days in Xinjiang, urging local authorities to boost incomes and employment. Concurrently, Deputy Prime Minister Ding Xuexiang visited Shenyang in the northeastern rustbelt, advocating for regional revitalization. Earlier, Xi Jinping led a symposium in Chongqing, heralding a “new chapter” in western development.
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The Persistent Problem of Regional Inequality
China faces a longstanding challenge: how to distribute wealth more evenly across its vast regions. GDP per capita in the west and northeast, which encompass much of China's land mass and a third of its population, stands at 70,870 yuan ($9,800) and 60,400 yuan, respectively. In contrast, coastal regions boast a GDP per capita of 124,800 yuan. Beijing, the richest provincial-level unit, is four times wealthier than Gansu, the poorest.
Historical Context and Infrastructure Initiatives
This inequality traces back to Deng Xiaoping’s late 1970s reforms, which established special economic zones along the coast. These zones thrived, but the hinterland lagged. To address this, China launched the “go west” strategy in 2000 and a similar plan for the northeast in 2003, focusing on massive infrastructure projects.
Western China has since seen the construction of 40,000km of railways, roads, bridges, and airports, often linked to the Belt and Road Initiative. Inland regions receive significant central government financial support, with 5 trillion yuan allocated last year, constituting over half the budget in some provinces.
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Mixed Results and Persistent Challenges
Initially, these policies narrowed the gap between regions. GDP per capita in western provinces rose from 35% to 54% of coastal levels, and in the northeast from 62% to 71%. However, in the past decade, regional inequality has persisted or worsened.
Residents of western provinces now earn about 57% of coastal incomes, while those in the northeast earn 48%. Emigration and low birth rates have further depopulated the northeast.
Future Directions: Education and Innovation
Experts suggest focusing on soft infrastructure, such as education and innovation, to foster long-term growth. Government spending per high-school student in the west is only 60% of that in the east, and just 16 of China’s top 100 universities are in the west. The resulting lack of dynamism hinders economic progress.
Conclusion: Uphill Battle for Common Prosperity
As China’s economic growth slows, regional inequality risks becoming more pronounced. Despite significant investments, achieving true regional equality remains challenging. Party leaders, however, remain committed to their vision, believing they can defy the odds and reshape China’s economic landscape.
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