Provinces must attract people, be it young professionals or rich retirees, to prosper; without people, stagnation is not far behind

Some forecasts say the Chinese economy will go through greater difficulty in 2016 than last year. That may not be the case for many private-sector companies. It's because for many of them, 2015 was already hard enough and the only way to go is up.

In 2016, without hope for any government bailout, they may be able to develop one or two new tricks to adapt to the changing market. Entrepreneurship will keep flourishing in bad times just as well as in good times. There is no question about it.

For their counterparts in the state sector, things wouldn't be much more complicated either. If they suffer from overcapacity, all they have to do is to wait for the government to help relocate their workforce before they shut down.

There are steel workers and coal miners already earning minimum wages who wouldn't be earning considerable less if they were to officially start receiving unemployment benefit or be recruited for new jobs.

The real difference, or the most challenging reality, will be at the regional level. It will be the widening gap between the increasingly rich and capable regions and their worse-off counterparts.

Economic geography is reflecting the transition that is slowly developing. When the transition is only in its beginning stage, as it is now, geography can sometimes reveal more than the situation of a single industry or a single index.

Some provinces, which had overexploited their industrial resources during the manufacturing boom in the past few decades, have been in a more rapid eclipse in their income from taxes and fees than even the traditionally agricultural provinces.

Out of 31 provincial-level divisions of China, 24 saw a decline in local government income, and 11 failed in 2015 to meet their budgeted revenue target, according to data compiled by Caixin.com, a financial information website.

Liaoning, in northeastern China, experienced a second year of decline in the province's tax revenue. Its budgetary revenue (totaling 212.56 billion yuan, which is $32 billion or 29.6 billion euros) fell as much as some 33 percent from a year earlier.

In another northeastern province, Heilongjiang, local budgetary revenue also tumbled in 2015 by more than 10 percent - as its main revenue generators of the past, oil and gas extraction, coal mining, grain production, and lumber, all saw declines.

In Shanxi province, by far the largest coal producer of the country, local revenue saw a setback of nearly as much, also as a result of falling energy prices, Caixin.com reported.

By contrast, revenue income remained strong in many provinces along the eastern and southeastern coasts. The southern province of Guangdong saw a growth of more than 16 percent year-on-year. And Beijing, Shanghai, Jiangsu, and Shandong all reported increases above 10 percent from a year earlier, thanks to contributions from technology industries, financial services, and a real estate recovery.

Soon enough, one may expect, a divide will occur. It will be a significant factor to help investors determine where China's future opportunities will be.

The divide will be unlike the past one between the country's modern industrial centers and its vast agrarian hinterlands. Some agrarian provinces, such as Yunnan and Guizhou, are likely to lift their economic positions by generating more tourist incomes.

Subtropical Hainan Island is setting an example for them already by attracting tourists from northern places for the winter holidays.

Despite all the public infrastructure built in recent years to encourage a more integrated national market, such as the telecommunications networks and high-speed railways, the new divide will grow into a more salient feature of China's economic geography.

Ultimately, which regions are to lead China's transition and which are to lag behind will be determined by one factor. That is how much attraction they can hold on people, which is the most important and certainly most creative factor to generate economic growth.

Regions that can attract a large number of university graduates for work will have the best chance to finance their own growth. That explains the situation of Beijing, Shanghai, and the southern province of Guangdong - the latter driven to a large extent by the opportunities from Guangdong's new industrial city of Shenzhen.

Regions that can host a large number of small and medium-sized enterprises will stand a good chance to renew their local economy, especially when they are connected by high-speed railways.

Some regions can be adopted homes of retired people, people with chronic conditions, or people devoted to certain sports or recreational activities.

But regions that can't prove attractive to any particular group of people will run into a major problem, no matter which industrial base they used to claim. This is the problem seen in Liaoning, Heilongjiang and Shanxi provinces.

Campaigning for population, especially in a time when population growth has passed its nationwide peak, will be a new game for all local governments in China in the years to come.

The author is editor-at-large of China Daily. Contact the writer at edzhang@chinadaily.com.cn

(China Daily European Weekly 02/05/2016 page11)