Editor’s Note: This translated article is an opinion piece by Renmin University economic researcher Gao Wang. Gao discusses the link between the economic growth of political centers in China and the nation’s shift from an industrial to a post-industrial economy. He concludes that Beijing will overtake Shanghai and become China’s economic center as the economy changes.
Let’s take a look at the economic strength and decline of Beijing and Shanghai. Ten years ago, I ran a comparison study concerning economic development in Nanjing, Suzhou, and Wuxi. However, the results of a comparison between Shanghai and Beijing’s make my case about China’s shifting economy and economic centers even clearer.
Where is China’s Economic Center?
People often ask: which city in China is the most economically powerful? I think that 90 percent of people would answer Shanghai. Few people think of Beijing. 100 years after the end of the Qing Dynasty and Shanghai has a strong position in China as the nation’s economic center. While people think of Beijing as China’s political and cultural center, and consumer center, they never think of Beijing as the nation’s economic center.
However, times are changing. Look at the chart pictured here:
The chart shows that in 1978, Beijing’s GDP was only worth 40 percent of Shanghai GDP’s. However, in 2013, Beijing GDP was worth 90.2 percent of Shanghai’s. In 2015, it was worth 92%. Shanghai’s growth rate was only larger than Beijing’s in the early 1990s and in 2004. At this rate, Beijing’s GDP will surpass Shanghai’s in six or seven years and Beijing will become China’s economic center.
How is This Possible?
Many people could not imagine this. Beijing is not an industrial city or the nation’s financial trading center. How could Beijing’s economy catch up with Shanghai’s?
This situation is not limited to Beijing and Shanghai. Many other places are experiencing a similar trend. Simply put, in the past, in many provinces, the political and economic centers were different cities. Now, in many provinces, they are in the same city. This can be seen in Jiangsu, Zhejiang, Hebei, and other provinces. Capital cities like Nanjing, Hangzhou, and Shijiazhuang are much economically stronger than non-capital cities like Suzhou, and Ningbo. In other cases the provincial capital completely dominate the political and economic spheres like Chengdu in Sichuan and Hefei in Anhui. Chengdu recently annexed Chaohu, while Hefei swallowed up Jianyang, both securing each city’s status as a true leviathan.
In Shanxi and Northeast China (Liaoning, Jilin, and Heilongjiang) many prefecture-level cities are experiencing economic recessions. Taiyuan, Shenyang, Changchun, and Harbin face economic difficulties but are still experiencing growth.
Does Geography Matter?
Therefore, the root of the growth and decline of Beijing and Shanghai comes from the fact that the China’s economy has changed. In the industrial era, capital was king. Port and trade cities with good geography, like those in the Yangtze River Delta and Pearl River Delta, grew quickly. Suzhou, Wuxi, and Nanjing developed more quickly than Hangzhou and Ningbo.
However, China has now entered a post-industrial period. Future economic development will come from the “light economy:” information technology and the service economy. These do not depend on a geographical advantage and often do not consist of tangible goods.
The “light economy” requires resources like human resources, education, administration, and the like. These are better in Beijing than in Shanghai, and better in a first-tier city than a lower-level city. Things like mineral resources, cheap labor, and low taxes matter less in the post-industrial era.
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Keywords: Chinese economics China economy
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