How Tianjin, once China’s fastest-growing region, became its slowest

TIANJIN, a northern mega-city, has produced some of China’s wittiest comedians. It is a good thing that its 15m residents have a sense of humour. Their hometown was, at points over the past decade, the fastest-growing of China’s 31 provincial-level regions. Since the beginning of last year it has been the slowest (see chart). Businesses joke that the sole part of the local economy that is expanding these days is the value of assets seized from corrupt officials. The city’s sharp deceleration serves as a stress test of China’s economic problems, and as a warning of the difficulty in fixing in tianjin

Other areas of China are also grappling with subdued growth. Commodity-producing regions have struggled to adapt to a modernising economy, as has the rust-belt north-east. But Tianjin stands out as a place that should be doing better. It boasts a busy port and good universities. A skilled manufacturing hub, it has attracted firms from Airbus to Motorola. Just half an hour from Beijing by train, it is well situated.

The problem is that the city’s planners got far ahead of themselves. They built a big new financial district, which they billed as China’s Manhattan, in the Binhai district, on the city’s far-east side. Nearly 70% of offices there are vacant, according to Jones Lang LaSalle, a property-services firm. That flatters the reality. One whole floor of the New Finance Building, a glistening complex, has been converted into “escape rooms” for adventure games. “The buildings are great,” Zhang Junkai, a port worker who lives nearby, says with a wry smile. “It’s just that we don’t have enough people in them.”

Some 60km away, on the city’s western fringes, the waste is even more striking. A private developer wanted to create a high-tech zone, anchored by the world’s fifth-tallest skyscraper. Construction all but stopped a few years ago. The skyscraper’s skeleton is nearly 600 metres tall, and surrounded by a dozen other abandoned building sites, which are a short drive from a fledgling polo club, itself ringed by empty luxury residences.

Corruption fuelled the excesses. In the city centre, Zhao Jin, a property magnate, paid off bureaucrats to flout zoning rules. He had permission to build three towers of no more than 35 storeys, but instead went for 66 storeys. He and the bureaucrats (some of them, anyway) are now in jail; his development, an unfinished eyesore, was listed for demolition. In another case, at the port, managers of a chemical warehouse exploited connections to pass inspections on matters from fire safety to chemicals handling. In August 2015 a massive explosion obliterated the warehouse and the surrounding area, killing 173.

The deadly blast seems to have marked a turning point. Huang Xingguo, mayor since 2007, was jailed last year for corruption. Li Hongzhong, Tianjin’s new Communist Party boss, has presided over a clean-up. Corruption investigations in the first half of this year have already exceeded the total for 2015. The government has also changed its economic course. It has tightened its belt, budgeting nearly 15% less spending this year. Once-busy building sites have attracted scavengers. Ads for metal-recycling services are plastered on construction walls in the high-tech zone.

Tianjin, along with a handful of other Chinese regions, has admitted that its economic record was grossly inflated. Binhai, which accounts for half the city’s output, declared in January that its GDP was a third smaller than previously reported. Partly as a result of correcting for past fabrication, Tianjin’s annual GDP growth has averaged just 3.5% since 2017, compared with 13.5% under Mr Huang, a precipitous drop.

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