Feb 12, 2019 (China Knowledge) - China’s economic development gap has continued to widen last year as the country fall on harder times with GDP growth falling to 6.6%, the slowest in 28 years.
Furthermore, more than half of the country’s provinces also missed their economic growth targets for 2018 as the effects of a Sino-US trade war and slowing economy set in.
Chongqing which had been one of the country’s fastest growing regions saw its 2018 growth rate fall by 3.3 percentage points last year to 6.0% from 9.3% in 2017, missing its 8.5% growth target by 2.5 percentage points.
Similarly, prosperous regions and economic heartlands such as Guangdong and Jiangsu also saw their growth rates falling last year to 6.8% and 6.7% respectively. Both regions had targeted growth rates of 7% for the year.
Among this, a worrying sign for policymakers is the widening gap between its richest and under-developed regions. Tibet which came in at the bottom of the list in terms of GDP last year saw it pull further away from the financial center of Shanghai with the gap widening from RMB 2.88 trillion in 2017 to RMB 3.13 trillion last year.
The widening gap highlights the difficulty in restructuring China’s economy as the country’s less developed regions have to contend with difficulties such as moving up the industry value chain and brain drain.
As China looks to build up its domestic market to support its economic growth, such fragmented regional economies may pose a setback in being able to efficiently stimulate domestic demand.
In response, the State Council has published a plan in November last year to better coordinate and rebalance regional development by improving infrastructure and financial support to its less developed regions.
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