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China’s rust-belt regions at risk of being left behind as coastal economies surge


Traditional economic pillars of China’s rust-belt provinces – including property and the fossil fuel industry – have come under considerable pressure, leading to a widened gap with coastal provinces that are riding more lucrative waves of surging exports and technological advancements such as DeepSeek’s new artificial intelligence (AI) model.

Northern China’s Shanxi province, the country’s main coal producer, is a striking case illustrating the regional economic slowdown. It stood alone among China’s 31 provincial-level jurisdictions last year by reporting a decline in nominal gross domestic product (GDP), as its economy contracted by 2.14 per cent.

Nominal GDP measures economic output without adjusting for inflation, reflecting both price changes and real production shifts.

The coal-dependent region also registered the nation’s lowest real GDP growth – or nominal GDP growth adjusted for inflation – at 2.3 per cent, lagging behind the 2.7 per cent growth in the northwest’s Qinghai province and 3.2 per cent in the northeast’s Heilongjiang province, according to government data.

China’s three northeastern provinces – Liaoning, Heilongjiang and Jilin – are among the old industrial bases that have been struggling amid rising debt levels, the loss of market share to eastern regions, and population outflows since the 1990s.

More northern regions have become weighed down by debt and stagnation over the past decade, including the port city of Tianjin, which lies 100km (62 miles) east of Beijing.

Shanxi continues to heavily depend on coal-related industries, but its coal production fell 6.9 per cent in 2024, year on year. Meanwhile, the industrial output of its manufacturing sector dropped 1.1 per cent, while property investment declined 5.1 per cent, according to the province’s statistics bureau.


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