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.
China has seen its share of counterfeits, from fake Apple stores to fake reporters to fake Gucci. Now add fake government to that list.
State media recently reported that a “People’s Government of Dengzhou” set up in central Henan province was toppled after it was found, in fact, to be a fraud.
According to reports, the government was set up late last year by three residents who had gone so far as to counterfeit fake government seals and issue papers in the bogus government’s name. They also tried to build up their own “civil service,” sending out recruitment ads that attracted more than 10 applicants before the real government shut it down.
Apparently the trio wanted to independently annul their existing government on the basis of its “nonperformance.” They located the headquarters of their faux government adjacent to the real one.
China's resource-dependent and manufacturing-heavy provinces suffered the sharpest growth slowdown in the first quarter as the government pushed to reduce overcapacity and pollution, adding to signs of protracted weakness in the economy.
Annual economic growth in Hebei province, the nation's top steel producer, tumbled to 4.2 percent in the first quarter of 2014 from 8.2 percent in the previous quarter, according to data
released by government websites and official newspapers.
Inner Mongolia, which provides one-third of the coal supply in the country, saw gross domestic product (GDP) growth dipping to 7.3 percent in the first quarter from 9.9 percent a year earlier.
Growth in Heilongjiang was 4.1 percent in the first quarter, the lowest among 30 of 31 provinces and municipalities, according to the data.
Economic growth was 5.5 percent in Shanxi, a major coal producing province which has been hit by slumping coal prices.
Shaanxi province has yet to publish its first-quarter growth data.
First-quarter growth in almost all Chinese provinces was below their annual targets, according to local media.
CHINA’S provincial administrations are often referred to as “local” governments. But the phrase does not do them justice. The province of Guangdong, for example, boasts more than 105m people and a GDP worth more than $1 trillion. Only 11 countries (including China itself) have a bigger population and only 15 have a larger economy.
Equally impressive is the scale of provincial debts. At the end of 2013 China’s national auditor revealed that the liabilities of local governments had grown to 10.9 trillion yuan ($1.8 trillion) by the middle of last year, or 17.9 trillion yuan if various debt guarantees were added. That was equivalent to about a third of China’s GDP. These “local” debts, in other words, had grown fast enough to become a national burden and an international concern.
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