CHINA’S economy is slowing: GDP grew by 7.4% in the first three months of this year, compared with 7.7% in the final quarter of 2013. Just one of 31 provinces hit its growth target. The pain is being felt most keenly in the underdeveloped if resource-rich west and south-west of the country; Yunnan saw the biggest drop in growth of any province.
Trumpeted campaigns to “develop the west” and speed the “rise of central China” have been designed to narrow the gap with richer coastal regions. But the difference in growth between western and central China and the coast, wide just a few years ago, has steadily narrowed (see chart). The ten biggest first-quarter decelerations all occurred in provinces with below-average GDP per person.Entrenched inequality is a concern for China’s leaders, yet their own policies add to the headwinds these regions face. The government wants to move the economy away from inefficient, polluting growth that depends on debt-financed investment—just the sort of thing that has been driving inland provinces along.
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