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Trouble in the Heartland
Millenials Abandon China’s Rust Belt

China is facing an internal brain drain from its northeastern Rust Belt, as economic woes compel the region’s young, educated workforce to seek jobs elsewhere. Financial Times:

North-eastern China is facing a demographic crisis as educated millennials abandon the industrial heartland, the country’s worst-performing region. 

Planning officials revealed this month that the economy of Liaoning, one of the three northeastern provinces, had shrunk 2.2 per cent in the first nine months of the year — the largest regional contraction in China in seven years.  

The depletion of the educated workforce has “worried” the central government, according to Zhou Jianping, director of the office in charge of transforming the north-east’s economy at the National Development and Reform Commission. “Most of the people who left that region are elites, at the management level or the backbone of production lines,” Mr Zhou said.

Beijing certainly has reason to worry. The mass exodus of young people from the northeast threatens to dry up the talent pool in a beleaguered region that China has been trying desperately to revitalize. And as more and more young people depart, they leave behind an aging population with fewer social supports. Not only will aging workers lose family members who might have helped take care of them; they also face a pension crisis that looms nationwide but has already hit the steel mills and industrial enterprises of the northeast with particular force.

China’s Rust Belt is a key testing ground for Beijing’s attempts to transform the state-run, manufacturing-heavy economy of the past. China’s economic slowdown has hit the industrial northeast especially hard, underlining the need to reform inefficient state companies and transition to a service economy. China has also faced international pressure to scale back its coal and steel production, with the West punishing China for dumping its excess steel in international markets at low prices.

Still, Beijing has few good options when it comes to reforming the region’s overstaffed and debt-ridden state enterprises. Efforts to lay off workers, shift to private management or retool pension obligations have been met with major protests. Lately, the government has poured cash into the northeast as stimulus, and the authorities are pushing a new private bank to boost growth and investment. It isn’t clear, however, that such top-down efforts can succeed in revitalizing the region. For now, young people are still voting with their feet.

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  • Jim__L

    OK, here’s the thing about economic transition that most people who throw around the phrase “transition from an industrial to a service economy” don’t look like they always understand…

    An industrial economy (that makes goods for consumption outside of the region that produces them) brings money *in*. Most peoples’ picture of a service economy (everyone selling one another hats, as the old joke goes) simply moves money *around*.

    If you’re going to be importing anything into any arbitrarily defined region — and when you want Chinese consumer goods, American food, Australian raw materials, German machine tools, etc, there’s a lot of that — you need to somehow bring the money *into* that region to pay for what you’re importing. Otherwise, the region will become impoverished. A service economy, as most people seem to understand the term (retail clerks and cashiers, dog-walkers, etc) — unless those services somehow bring money in from elsewhere (and you can do that, such as with call centers, telecommuters, military bases, or tourism) will not bring money in.

    The inherent morality and self-sustainability of capitalism is its reliance on *doing something someone else wants done, in exchange for your own right to consume what someone else creates*, depends on EVERY arbitrarily defined region balancing out what it produces for other regions, and what it consumes from other regions.

    Middle America — and the Middle Kingdom — cannot survive if their industries are destroyed. A “service economy” where people exchange increasingly threadbare hats will not do. People who live there are right to fight back against the elites to do what they can to keep the factories open, and bring the jobs back.

    • Tom

      “Most peoples’ picture of a service economy (everyone selling one another hats, as the old joke goes) simply moves money *around*.”

      I think the theory is that you can bring the money from the people who make things and charge for the services you provide, which provides the necessary cash infusions and extra goods to avoid the threadbare hats problem.

      • Jim__L

        Yes — ideally you have *both* the industry and the services. The industry is the foundation, though — without that foundation, everything else withers.

        • Tom

          The main thing is just to have *something.* Fortunately, given the amount of food and resources the United States can produce, we’ll always have *something.*

          • ——————————

            Unfortunately, providing much of that ‘something’ has become quite exclusionary at the expense of millions of the working class whose education in life doesn’t come from the arrogant halls of a college campus….

  • Most millennials in China today seem to prefer studying or finding work abroad, especially in the United States:

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