The Central Office of the Communist Party of China and the State Council Office recently released the “20 Measures for the Revitalization and Development of Revolutionary Old Areas,” covering arrangements for industry support, infrastructure construction, fiscal transfers, and paired support, among others.
Several observers pointed out that against the backdrop of the continued decline of the Chinese economy and widespread fiscal tensions at the local level, this document seems more like a system arrangement demanding developed areas to continue “transfusing” impoverished old areas, in order to prolong the legitimacy of the remaining Communist Party regime.
Retired professor Liu Siqi (pseudonym) from Renmin University of China told reporters that the core of such policies lies in fiscal transfers, using institutional design to make other regions share the costs of developing old areas. He believes that this practice has long existed in China.
Liu Siqi said, “Similar plans have been abundant for over twenty years, yet many old areas still struggle economically without substantial improvement.”
Regarding the present situation, Liu Siqi revealed that in many places like Jiangxi, there are abandoned luxury houses known as “ghost cities” alongside prevalent grassroots corruption. He believes that these massive allocations rarely truly benefit the people but instead become resources for local interest groups to exploit, ultimately burdening taxpayers.
According to the document, Beijing proposes to promote the development of old areas through industry support, regional cooperation, and also attempts to incorporate some regions into national strategic frameworks like the Beijing-Tianjin-Hebei coordinated development, the Yangtze River Delta integration, and the Guangdong-Hong Kong-Macao Greater Bay Area.
In response, Mr. Lu, an economist from Nanjing, analyzed to reporters, “Such regional cooperation essentially often involves administrative forces driving resource redistribution, allowing relatively developed regions like Shanghai, Jiangsu, and Zhejiang to provide financial support to impoverished areas. With economic growth slowing down, this arrangement may further increase local fiscal pressures.”
Senior media figure Mr. Zhang, on the other hand, believes that Beijing’s introduction of the “20 Revitalization Measures” signifies an increasing burden on central finances.
Mr. Zhang said, “In the past, the Communist Party has always provided financial aid to these old areas. This document marks the CCP’s inability to support huge expenditures alone and openly implements ‘shared financial responsibility,’ forcing financially sound provinces to take on the burden. This costly political support disregards the welfare of the people, serving only to prolong the legitimacy of the surviving regime.”
The document also proposes driving the economy of old areas through the construction of large-scale infrastructure like railways and energy projects. However, some scholars point out that amidst the continued expansion of local debt and a sluggish real estate market, many regions are experiencing significant declines in fiscal revenues, and large-scale infrastructure investments may further exacerbate local debt risks.
Scholar Mr. Wang, residing in Australia, told reporters that “Revolutionary old areas” hold symbolic significance in the political narrative of the Communist Party; these regions have long received special financial care from the central government.
Mr. Wang said, “Many old areas lack industrial foundations, thus relying on fiscal support for an extended period. Without a genuine market-oriented industry, it is challenging to develop independent economic capacity.”
Several scholars note that this reliance on administrative directive-driven “transfusion mode” lacks a market-oriented industrial base, casting doubt on its long-term sustainability.
The so-called “Revolutionary Old Areas” officially designated by the CCP encompass over 400 counties with a population exceeding 200 million. Ministry of Finance data shows that in 2023, central transfer payments to local areas reached 1 trillion yuan, becoming a crucial fiscal source for sustaining operations in the central and western regions and old areas.
Public data reveals that many so-called “Revolutionary Old Areas” have a single economic structure with limited employment opportunities, leading to a significant outflow of young labor forces to coastal areas like Jiangsu, Zhejiang, and Guangdong. Some regions have gradually formed a long-term dependence on central finances.
Some analysts believe that in the face of weak industrial foundations and continuous population outflow, solely relying on fiscal inputs and administrative mobilization makes it challenging to alter the persistent economic downturn in old areas.
Observers conclude that as long as the CCP does not abandon its monopoly on power and planned directives, the so-called “revitalization” will perpetually be an illusion. As the economic tide recedes, this rule-defying “transfusion policy” will ultimately fade away along with the collapse of the CCP’s fiscal black hole.