China's Northeast In Trouble

Back in May: Heilongjiang Oil Field Depression; Firms Shut Doors As Market Forces Begin Reshaping the Industry. Recent events in the oil market haven't helped.

In July: Xilin Steel on Verge of Bankruptcy. Xilin is the largest steel company in Heilongjiang.

In October: Liaoning Sounds Warning on Chinese Economy

In December: Why Is Oil Down? China's "Open Secret" Slowdown

The Economist has noticed: Back in the cold (Alternate: Back In The Cold)

Those efforts have borne fruit: state-owned firms produced more than two-thirds of the region’s GDP in the early 2000s. That has fallen to about 50%, still above the national average of 30%, but progress nonetheless. The structure of the north-east’s economy, however, has worsened in a more important respect. It has become ever more reliant on investment and manufacturing, both geared to the now-slowing property market. State companies and private firms alike have poured into mining, heavy-equipment factories and construction. Even the car industry, in which the north-east has been a national leader, is closely linked to property, as buyers of new homes also tend to buy cars. In any case, home-grown car brands such as Hongqi and Jinbei are falling further and further behind foreign rivals in popularity.

Whereas the rest of China’s economy has become better balanced, with services now accounting for more of GDP than manufacturing, the north-east has gone in the other direction. Manufacturing’s share of the regional GDP rose to 50% in 2013 from 47% a decade earlier, and the contribution of services declined—the opposite of what the original revitalisation plan called for. Even more striking, investment accounted for 65% of the north-east’s GDP in 2013, roughly double its contribution a decade earlier. The national average is a shade under 50%, which is already high by international standards.