Can the Beijing-Tianjin-Hebei Cluster become the “Dragon Head” of the North?

An official plan for the development of an economic cooperation zone, bringing together Beijing, Tianjin and the surrounding Hebei province, should appear in the coming weeks. An article from The Economist relayed by Business Insider gives us an overview of the project, scheduled for the beginning of 2014, and the challenges of establishing a coherent economic hub at the deltas of the Yangtze and Pearl Rivers in a superbly detailed article.

Recent economic developments, including the relocation of industries in Hebei and Tianjin’s increasing specialization in port facilities, facilitated the establishment of the area under the leadership of the Chinese capital in the tertiary sector. However, political rivalries between cities remain and could alter the effective coordination of their future economic conurbation.

One cause for concern is the relative delay in the development of Hebei, which could significantly handicap the economic dynamism of the region if efforts are not made to rectify the situation. Mainly, this will involve enabling the area, conveniently located adjacent to neighboring urban centers, to fully realize its role as a prime site for industrial clusters and workshops. Currently, 80% of suppliers in the automotive industry of the Beijing-Tianjin-Hebei region are based outside the region, largely in the delta of the Pearl River.

Finally, The Economist reminds us that the economic, industrial, and urban development of China’s current “dragon heads” (leading economic power centers) in the south are largely the result of the market stipulations of Special Economic Zones.

Those rules, established by reforms of the late 1970s in an attempt to encourage export-led growth, allowed the entry of foreign direct investment (FDI) to facilitate the development of core cities and their peripheries in these areas. The development of Guangzhou, for example, has led to the movement of polluting industries and industries with low-added value to neighboring towns, which were then themselves industrialized in the process.

Leaving aside the difficulties of drawing new borders around the future economic hub (for instance, which cities in Hebei can be integrated without adversely affecting more developed metropolitan areas?), concerns also arise around the potential rigidity of a centralized development plan. Unlike the “dragon heads” formed by the two river deltas, the Beijing-Tianjin-Hebei economic megapolis is the product and project of a centralized state-level plan that will oversee its development as a cohesive and functional economic entity.