An exodus of talent: The brain drain in China's northeast

An exodus of talent: The brain drain in China's northeast

In the final part of his 3-part series from China's "rust belt", Jeremy Koh visits Jiamusi to examine the impact of Soviet-style planning on the region's economy.

In the final part of his 3-part series from China's "rust belt", Jeremy Koh visits Jiamusi to examine the impact of Soviet-style planning on the region's economy. 

JIAMUSI, China: A third-year university student in the northeastern city of Jiamusi, Wang Xupeng really likes the winter sports it has to offer.

The dentistry major says home prices in Jiamusi, a city of 2.4 million in Heilongjiang province near Russia, are also lower. And life is not as stressful when compared with the more bustling coastal regions in the south.  

And yet, these are not enough to keep him in Heilongjiang when he graduates.  

"The majority of my friends, they went to places like Hangzhou, Ningbo, and some even farther to Guangdong,” he said. “My seniors, many would choose to go to the southern region, because there aren't many jobs here, especially for dental graduates."

China’s northeastern “rust belt” is home to some of its most renowned universities. But while the region is still able to attract students from across the country, it increasingly fails to retain them.

Jiamusi is not the only city that is experiencing a brain drain.

The three “rust belt” provinces, Liaoning, Jilin and Heilongjiang continue to suffer from an exodus of talent.

According to the country’s top economic planner, more than one million professionals and company executives have left the three provinces over the past decades.

And it is not just the elites.

The average age of new hires at a graphite factory in neighbouring Hegang city have gone by at least 20 years in the last decade.

"Back in 2006, factory workers we hired were very young, many were teenagers or in their 20s, many fresh graduates too," said Chen Rui, the Operations Director of Aoyu Graphite Group. "Now, new employees are mostly in their 40s or 50s, there are very few young people."

The exodus from China's “rust belt” is exacerbated by the region's extreme reliance on the state.

Unlike other parts of China where most new jobs are created in private companies, this part of the country is home to large state-owned firms and state-backed heavy industrial companies.

And many of these firms are ailing due to rampant bureaucracy and a lack of innovation.

Growth in these three provinces also continue to fall below the national average of 6.9 per cent in the first three months of the year.

Back in Jiamusi, Yang Shuang, the founder of Jiufu Internet Technology was initially hesitant to discuss the brain drain issue in the northeast. But he eventually let on that he was having problems retaining staff.

"When we first launched our app, we paid our staff about 1.5 times more than in Harbin, but we still couldn't retain them,” he said.

It has been more than three decades since China opened itself up with what it terms a market economy with Chinese characteristics. Today, much of the country has moved away from a Soviet-style planned economy.

But large parts of the northeast provinces have not progressed with the times.

When economic growth in the region fell off a cliff in the last few years, analysts blamed it on state-owned companies’ dominance of the regional economy.

They said it has stifled the kind of entrepreneurship that has helped propel economic growth in the southern coastal region.

"The Northeastern region failed to catch up with the country's market reform, it's still very much a planned economy, and the state-owned enterprises also lack efficiency," said Bian Yongzu, an expert at the Chongyang Institute of Financial Studies at Renmin University of China.

But state media recently declared that state-owned companies remain the foundation of China’s socialist system and the ruling party’s grip on power.

And last year, the central government pledged to pour in about US$250 billion to revive the region.

But while the northeast has long been on the government's priority list, policy measures over the years appear to have done little to improve the overall environment.

Historian Zhang Lifan explained that was because China's northeast is the last vestige of a Soviet-style centrally planned economy.

"A Soviet-style planned economy means there's an over focus on heavy industry at the expense of light industries and people's livelihoods, and all workers belong to a work unit,” he said.

"Actually at the start of the 21st century, the government tried to change this, but the efforts at revitalising the region failed because of the adherence to the Soviet model."

While the verdict is still out on whether massive state support is the answer for China's ailing “rust belt”, the residents may continue to vote on the region’s existing economic model with their feet.

Source: CNA/rw