Regional decline and structural changes in Northeast China: an exploratory space-time approach

Literature on New Economic Geography (NEG) highlights the importance of spatial concentration and spillover effects in economic growth or decline. Northeast China, as an old industrial base, is experiencing a regional decline since its transition to the post-industrial stage. Therefore, what is the main sectoral composition in Northeast China and how does this influence regional decline? To what extent do spatial spillovers play a role before and during the regional decline of Northeast China? Based on these questions, we investigated the spatial connections between regional decline and structural changes in Northeast China over three development periods: Rust Belt (1995-2002), revival (2002-2015), and decline (2015-2019). The recent exploratory space-time data analysis was employed on prefecture-level income and its structural change components (sectoral output and employment ratio). We found that the possible reason for the regional decline in Northeast China is premature deindustrialisation. Spatial co-decline in the employment of industry and construction, the primary source of regional decline, facilitates most of the space-time patterns of the regional income. Agglomeration of the agricultural sector has shifted to the north, while industry and construction have gravitated towards the middle and south, with no clear spatial patterns in the service sector. Dependence on natural resources has a "lock-in effect" that inhibits the transition from industry to services, so industry and construction remain the most efficient in Northeast China. Strengthening spatial connections is essential for local governments to develop service sectors and overcome declining conditions.