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China's rust belt is struggling to regain life

Inkstone logo Inkstone 5/21/2019
a man standing on top of a dirt field © Staff

For more than a century, coal was the center of life for the residents of Fushun, 30 miles from the Liaoning provincial capital of Shenyang, earning the city the nickname "capital of coal."

But with viable reserves exhausted and a lack of technology and money to safely operate deeper underground, its mines have been closing down one by one over the past two decades, leading to the neglect and eventual abandonment of the neighborhoods around them in northeastern China

Of Fushun's four main mines, Shengli was the first to shut, followed by the Longfeng mine. Last year, the city's coal production fell to 5.83 million tons, a fraction of what was produced in its heyday in the 1960s and 1970s. Industrial output also shrank by more than a third between 2010 and 2018, while its urban population declined as inhabitants left for other cities in search of better livelihoods.

Fushun's fate is representative of many other cities in China's northeast, which is made up of the three provinces of Liaoning, Jilin and Heilongjiang.

a close up of a map © Provided by South China Morning Post Publishers Limited

Boasting a rich concentration of natural resources, including coal, oil and iron ore, the region was the birthplace of China's industrialization, and drove growth in the early years of the People's Republic.

Now the region has earned the unenviable title of rust belt as its heavy industries fell into decline. This is due in part to a resistance to change engendered by a deep-rooted state planning mindset that dates back to the 40-year period of Japanese dominance after the end of the Russo-Japanese war in 1905.

More than half of the 85 cities in the three provinces have seen their populations shrink, and the outflow of people is being compounded by low birth rates and the aging of the population that remains behind.

a screenshot of a cell phone © Provided by South China Morning Post Publishers Limited

In addition, long-standing bureaucratic inefficiency and corruption, coupled with political meddling, have hindered efforts to revitalize these cities. Meanwhile, these cities' reliance on a single or a few core industries - around the immediate needs of which they were built - has deprived them of the proper urban and economic development planning critical to ensuring sustainable growth.

Their focus on churning out raw materials and low value-added commodities for industries meant little attention was paid to producing competitive high-value added products. The consequences of this became more pronounced when the global commodities boom ended earlier this decade, pushing down prices and affecting the profits of the giant state companies that dominated the region.

What has been harder to measure has been the damage to the region's environment. Decades of mining have caused pollution and degradation of the land. Little effort has been put into reversing the loss of biodiversity, erosion, the contamination of surface water, groundwater and soil and the problem of sinkholes in areas around abandoned mines.

But there are signs the authorities are taking note. Academics at the Unirule Institute of Economics, an independent Beijing-based non-profit think tank, have suggested that local governments in the northeast need to learn from China's southern and coastal regions, redraw the administrative jurisdictions to help prune overcapacity and the overlapping of industries, and innovate to create new engines for economic growth.

Beijing is also pushing mixed public-private ownership reform to bring in private capital to revive the region's declining state-owned companies (SOEs). Some 52 northeastern SOEs with total assets of $29 billion and a combined total workforce of 80,000 have been placed in the scheme, including Benxi Steel Group, around which the iron ore-rich city of Benxi in Liaoning province was built.

Meanwhile, in March last year the National Development and Reform Commission paired the northeastern provinces with three of their richer eastern and southern counterparts to boost cooperation and share resources.

Companies are also pitching in. Fushun Mining Group is turning to deep excavation techniques to mine for oil shale, while simultaneously looking at the recycling sector to develop an industry value-chain business.

Whether such changes can reverse the fortunes of the neighborhood around the Shengli mine, which was closed 20 years ago, remains to be seen.

This story originally appeared on Inkstone, a daily multimedia digest of China-focused news and features.

Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.

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