The Geopolitics of the Yangtze River: Developing China’s Interior

The Geopolitics of the Yangtze River: Developing China's Interior

Editor’s Note: This is the first piece in a three-part series on the geopolitical implications of China’s move to transform the Yangtze River into a major internal economic corridor. Part one provides a broad overview of the geography and history of the Yangtze River region and its role in shaping Chinese politics and statecraft. Part two examines the strategic river city of Wuhan, and part three considers the political economy of Beijing’s push to develop the Yangtze River corridor. 

As the competitive advantage of low-cost, export-oriented manufacturing in China’s coastal industrial hubs wanes, Beijing will rely more heavily on the cities along the western and central stretches of the Yangtze River to drive the development of a supplemental industrial base throughout the country’s interior. Managing the migration of industrial activity from the coast to the interior — and the social, political and economic strains that migration will create — is a necessary precondition for the Communist Party’s long-term goal of rebalancing toward a more stable and sustainable growth model based on higher domestic consumption. In other words, it is critical to ensuring long-term regime security.

Einhorn’s FOF Re-positions Portfolio, Makes New Seed Investment In Year Marked By “Speculative Exuberance”

david einhorn, reading, valuewalk, internet, investment research, Greenlight Capital, hedge funds, Greenlight Masters, famous hedge fund owners, big value investors, websites, books, reading financials, investment analysis, shortselling, investment conferences, shorting, short biasIt has not just been rough year for David Einhorn's own fund. Einhorn's Greenlight Masters fund of hedge funds was down 3% net for the first half of 2020, matching the S&P 500's return for those six months. In his August letter to investors, which was reviewed by ValueWalk, the Greenlight Masters team noted that Read More

The concept of developing the interior is rooted in the dynastic struggle to establish and maintain China as a unified power against internal forces of regional competition and disintegration. Those forces arise from and reflect a simple fact: China is in many ways as geographically, culturally, ethnically and economically diverse as Europe. That regional diversity, which breeds inequality and in turn competition, makes unified China an inherently fragile entity. It must constantly balance between the interests of the center and those of regions with distinct and often contradictory economic and political interests.

Currently, the Party’s stated intent is eventually to achieve greater socio-economic parity between coastal and inland regions, as well as between cities and the rural hinterland. But Beijing also recognizes that underlying broad categories like “inland,” “central” and “western” China is a complex patchwork of regional differences and inequality. Mitigating these differences will require more varied and nuanced policies.

Against this backdrop, the central government has targeted the Yangtze River economic corridor — the urban industrial zones lining the Yangtze River from Chongqing to Shanghai — as a key area for investment, development and urbanization in the coming years. Ultimately, the Party hopes to transform the Yangtze’s main 2,800-kilometer-long (1,700-mile-long) navigable channel into a central superhighway for goods and people, better connecting China’s less developed interior provinces to the coast and to each other by way of water — a significantly cheaper form of transport than road or railway. By positioning this “second coastline” to become one of the nation’s new economic cores, Beijing seeks to build what no previous dynasty could: a truly unified Chinese economy.

The Yangtze as a Core

The Yangtze River is the key geographic, ecological, cultural and economic feature of China. Stretching 6,418 kilometers from its source in the Tibetan Plateau to its terminus in the East China Sea, the river both divides and connects the country. To its north lie the wheat fields and coal mines of the North China Plain and Loess Plateau, which unified China’s traditional political cores. Along its banks and to the south are the riverine wetlands and terraced mountain faces that historically supplied China with rice, tea, cotton and timber. The river passes through the highlands of the Yunnan-Guizhou Plateau, the fertile Sichuan Basin, the lakes and marshes of the Middle Yangtze and on to the trade hubs of the Yangtze River Delta. Its watershed touches 19 provinces and is central to the economic life of more people than the populations of Russia and the United States combined. The river’s dozens of tributaries reach from Xian, in the southern Shaanxi province, to northern Guangdong — a complex of capillaries without which China likely would never have coalesced into a single political entity.

The Yangtze, even more than the Yellow River, dictates the internal constraints on and strategic imperatives of China’s rulers. The Yellow River may be the origin of the Han Chinese civilization, but on its own it is far too weak to support the economic life of a great power. The Yellow River is China’s Hudson or Delaware. By contrast, the Yangtze is China’s Mississippi — the river that enabled China to become an empire.

Just as the Mississippi splits the United States into east and west, the Yangtze divides China into its two most basic geopolitical units: north and south. This division, more than any other, forms the basis of Chinese political history and provides China’s rulers with their most fundamental strategic imperative: unity of the lands above and below the river. Without both north and south, there is no China, only regional powers. Only after the Qin captured the Yangtze’s three primary regions — the Upper, Middle and Lower stretches — in 221 B.C., thereby gaining access to the southeast coast, did “China” as a single unit come into being. In the