The spatial pattern of China's economic development has long exhibited significant imbalances. To overcome these imbalances, China's policy authorities have made astonishing efforts. Despite tremendous changes, economic spatial imbalances still persist in hindsight. This can be explained through the concept of "Kung Chan Gradient".
For a long time, the Chinese scientific community's research and explanations regarding regional imbalances have mainly focused on factors such as population density disparities revealed by the "Hu Huanyong Line", regional development level disparities, as well as natural resources and climatic conditions. The "Hu Huanyong Line" refers to one of the most famous geographical dividing lines in modern Chinese population geography, proposed in 1935 by the geographer Hu Huanyong. It is a line running from Heihe in Heilongjiang to Tengchong in Yunnan, generally trending northeast-southwest.
This line was originally not intended to divide the rich and poor, but rather to describe the massive spatial disparities in China's population density. When Hu conducted his statistics back then, he found that on the southeastern side of the line, accounting for about 36% of the country's land, roughly 96% of the population was gathered; whereas on the northwestern side, accounting for about 64% of the country's land, the population was only about 4%. Therefore, this disparity is extremely striking.
Unlike the population issue emphasized by the Hu Huanyong Line, the "Kung Chan Gradient" refers to a more pervasive imbalance, emphasizing a differentiated "mountainous economic gradient" in regional spatial economic development and its ubiquitous presence. This differentiation in economic development goes far beyond "a single line" from north to south on the map of China. Instead, this spatial differentiation phenomenon of uneven economic development exists across a vast majority of mountainous regional spaces in China.
On both sides of China's mountain ranges, a problem frequently exists simultaneously. The core cities are not located on the mountain ranges, but in the basins and plains outside the mountain ranges. By simply observing the map of China, one can discover a noteworthy phenomenon. On both sides of the Taihang Mountains, there exists a clear North China Plain-Shanxi Plateau economic gradient. Then, on both sides of the Wuyi Mountains, there exists an economic gradient between the Fujian coast and inland Jiangxi. At the same time, both sides of the Greater Khingan Range show a population and economic density difference between the Northeast Plain and the Inner Mongolia Plateau. Likewise, when one looks at both sides of the Wu Mountains, one will see significant topographical and economic differences between the Sichuan Basin and the middle reaches of the Yangtze River. For the Qinling Mountains, the two sides display clear economic spatial differences between the Guanzhong Plain and the Qinba mountainous region. Therefore, it is very obvious that sandwiched between two economic center regions is a high-cost topographical barrier, i.e., mountain ranges, which can easily evolve into economic depressions.
The issue revealed by the "Kung Chan Gradient" is that the gradient of mountainous economies does not simply manifest as "poverty in the mountains and wealth in the plains", but rather as systematic changes in economic activity density that occur as the topographical relief increases and the spatial distance from the mountain ranges changes. The formation mechanism involves numerous factors such as population migration, land availability, transportation accessibility, city size, market radius, and industrial agglomeration. With higher infrastructure and transportation costs, mountain ranges limit the supply of continuous construction land and weaken urban economies of scale. This, in turn, affects the spatial agglomeration of population and industries, causing mountainous economies to lose their competitive edge relative to economically developed regions. Therefore, China's large mountain ranges not only constitute physical geographical units, but at the same time may also serve as spatial barriers to transportation, land use, urban expansion, and industrial agglomeration, causing economic density gradients with a certain degree of stability to form on both sides of the mountain ranges.
As ANBOUND is an independent think tank engaged in policy research, views on population and economic geography here serve merely as the foundation for policy research rather than the focus. What truly matters are economic policy solutions. To be precise, the aim is to resolve these economic gradients. In this regard, ANBOUND has put forward a related series of policies known as the "principle of reduction-oriented development".
This "principle of reduction-oriented development", put forward by ANBOUND’s founder Kung Chan, first appeared and was applied in the "Northeast Report" published by ANBOUND some years ago. It was proposed in contrast to the conventional "principle of increment-oriented development" and mainly consists of three core parts.
The first is to encourage regional migration, reduce population, lower the population base, and create space for population replacement. Population is constantly moving, but in the past it was natural movement and economic population movement. In contrast, now it is competitive population movement. The purpose of encouraging population migration is to lower regional development costs and to create spatial conditions for the orderly population replacement of inflowing consumer and investor populations.
The second part is to develop the economy around the concept of conservation, implementing protective development. The development of impoverished areas must give equal weight to conservation and development. To achieve this, the development experiences and goals of plain areas cannot be simply translated. Under the principle of reduction-oriented development, the idea of “giving equal weight to conservation and development” means that conservation should be treated as a requirement for development. This also means that areas or resources that cannot be developed should be conserved. Through conservation, natural resources are agglomerated, creating developmental conditions for the future.
Finally, emphasis is also placed on enhancing the relative wealth and economic well-being of the resident population within the region. Wealth agglomeration is based on population income. Population reduction and out-migration contribute to the improvement of wealth agglomeration levels and indicator improvements, thereby creating conditions for raising the level of economic development.
Judging from the three core principles of the “principle of reduction-oriented development”, increment-oriented development can be understood as adopting additive means. For decades, China’s economic growth and development have largely followed this approach. Industries that did not exist had to be created. Enterprises had to be established where none existed before, and infrastructure had to be built from the ground up. Wherever land was available, efforts were made to develop it. Everything was expected to be “aligned” with and “brought into line” with economically developed regions. In this sense, development has been driven by continuous expansion through “addition”. However, the results suggest that this model of development has not been entirely successful, as the “Kung Chan Gradient” still persists.
What would happen if the development mindset is transformed and subtractive means are adopted instead? This is the "principle of reduction-oriented development". The so-called "principle of reduction-oriented development" corresponds to and matches the realistic environment of the "Kung Chan Gradient". Because of the predicament of population geography, mountain barriers are an objective reality. Hence, the costs of doing anything are higher than those in the southeastern coastal areas or plain regions in China, and population migration is actually already in the process, yet for a long time it has always been considered a negative factor and therefore often met with massive investments to curb it. Viewed under the principle of reduction-oriented development, this kind of population migration is a positive factor that is worth encouraging, or even incentivizing. Because the population that migrates out reduces the burden and pressure on impoverished areas, while the population that flows in consists of wealthy populations such as tourists and investors who can drive economic growth. Therefore, this nature of population exchange and replacement will create developmental conditions for altering the economic depressions of the "Kung Chan Gradient".
Judging from historical experience, people in the relatively weak economic regions, i.e., regional economic depressions, within the "Kung Chan gradient", must cross the mountain barriers to venture outward.
To cite a historical anecdote, there once existed a type of local bank in parts of China from the 19th to the mid-20th centuries known as Piaohao. Shanxi Piaohao, for instance, was born on the Shanxi Plateau west of the Taihang Mountains. Their roots were in Shanxi, specifically in Pingyao, Qixian, and Taigu, which are all on the western side of the Taihang Mountains. Its initial business focus was the northern part, essentially operating as a trade bank. Later, after accumulating massive capital, it primarily developed eastward, attempting to connect with the financial and tax hubs of the North China Plain, the capital region, and the Jiangnan area. However, their headquarters still remained nestled in barren Shanxi on the western side of the Taihang Mountains, while the bulk of their profitable business crossed the Taihang Mountains toward the eastern side of the mountains and the Yangtze River basin. Barren local territory does not generate massive wealth. Shanxi relied on people venturing outward to establish cross-mountain and cross-regional financial networks, solving the issue of risk and extremely high costs in transporting physical silver nationwide.
Migration certainly involves uncertainty. Yet, not venturing outward is not a viable option.
Final analysis conclusion:
Although the "principle of reduction-oriented development" possesses disruptive characteristics across almost all traditional policy directions, reviewing historical development experiences, especially looking toward the future development environment, it is well worth pondering and researching. After all, building on the past while creating new possibilities for the future is difficult without meaningful policy innovation.
