A potentially significant shift in China's domestic economic development is emerging as Beijing creates centrally coordinated regional economic zones encompassing multiple provinces with similar or potentially complementary industrial structures. This approach has emerged from the central government's struggle to negotiate and maintain relative parity among the often-conflicting interests of China's geographically, culturally and economically diverse regions.
These zones take their cue from the Yangtze and Pearl River delta regions, which emerged as the country's major economic centers in the 1980s and 1990s largely because of state-led investment into cross-provincial transport and logistics infrastructure. This infrastructure then enhanced interprovincial trade and facilitated the formation of region-wide industrial supply chains. After these successes, and in order to bolster the competitiveness of other politically significant regions, China's leaders have begun experimenting more widely with the notion of cross-provincial economic zones.
In the past five years, plans and proposals for economic macro-regions have taken shape. In many ways, these proposals build on the core aims of sweeping national programs such as the "Go West" and "Rise of Central China" initiatives, launched in 1999 and 2004, respectively. The regional plans fine-tune the general mandates of those initiatives to reflect the conditions and needs of specific provincial clusters.
The prospective Beijing-Tianjin-Hebei economic zone illustrates the need and potential for — as well as the constraints on — region-oriented development policy. The three regions (two centrally administered municipalities and a province) share strong geographic and cultural ties and have been associated politically throughout Chinese history. Likewise, their economies are deeply intertwined, with Hebei province serving as a key supplier of energy, electricity, steel, agricultural products and water to the two municipalities. On the surface there is strong precedent and rationale for policies that bring Beijing, Tianjin and Hebei closer together.
It is important to note that the process is in its infancy. Just as the Yangtze and Pearl River delta regions were not built overnight, their northern and inland successors will take time to develop. For now, it is simply worth noting that the central government's approach to regional economic development appears to be shifting, with potentially significant implications for economic growth, social and political stability, and investment opportunities in the coming years.
