Liaoning Slashes Development Zones by Half in Reform Push

Liaoning Province, a historic industrial heartland in Northeast China, has merged or abolished 49 provincial-level economic development zones across two rounds of consolidation—a reduction of more than 50%—as part of a sweeping reform aimed at streamlining bloated administrative structures and refocusing zones on core economic functions. The initiative, reported by Xinhua News, reflects a broader push under the banner of “correct view of political achievement” to prioritize long-term quality over short-term quantity.

Context: A Legacy of Over-Proliferation

Liaoning, home to major industrial cities such as Shenyang, Anshan, and Dalian, was once the engine of China’s planned economy. However, in recent decades, the province—and the broader Northeast region—has struggled with outdated industrial structures, state-owned enterprise inefficiency, and population outflows. In an effort to spur growth, local governments established numerous development zones, but many suffered from over-proliferation, industrial overlap, inefficient land use, and bureaucratic bloat.

According to Xinhua, some local governments had treated the number of zones as a “political achievement label,” leading to a landscape where zones were numerous but underperforming. The reform directly confronts this legacy.

Key Reforms and Results

The consolidation has been carried out in two batches, reducing the number of provincial-level economic development zones from over 90 to just 43. But the reform goes far beyond simple numerical reduction. Key institutional changes include:

Functional divestiture: 54 provincial-level and above development zones have fully shed social management functions—such as education, healthcare, and community services—to concentrate purely on economic development.
Department streamlining: Internal departments across these zones have been cut by 13.3%.
Mission refocus: Investment promotion and enterprise service departments now account for 83.1% of all departments, up significantly from before the reform.
Performance incentives: All retained development zones have adopted performance-based compensation plans, linking pay to results.

Wang Wei, Deputy Director in charge of daily operations at the Tai’an Economic Development Zone, told Xinhua: “Department streamlining is not simply about reducing staff; it is about liberating capable personnel from繁杂 social affairs so they can fully devote themselves to project attraction and enterprise services, making the parks more competitive.”

Case Study: Tai’an County

The practical impact of the reform is illustrated by the experience of Anshan Jiuguhe Food Co., Ltd. in Tai’an County. The company had a livestock waste utilization project stalled due to spatial and industrial positioning constraints of the original Tai’an High-Tech Agricultural Industry Development Zone. After consolidation, that zone was merged into the Tai’an Economic Development Zone, freeing up idle land for the project.

“We have selected a plot in the Tai’an Economic Development Zone and are expediting the procedures. Construction is expected to start in August, allowing our enterprise to take another step forward,” said Ma Xiao, Deputy General Manager of the company. The company reported no disruption during the integration process and noted improved service efficiency.

Political and Economic Significance

The reform is explicitly framed within the “correct view of political achievement” concept promoted under President Xi Jinping, which emphasizes sustainable, long-term development over superficial achievements. As one anonymous grassroots official told Xinhua: “What is being reduced are the signs; what is being unloaded are the burdens. Only by not chasing short-term quantitative political achievements can we win long-term quality advantages.”

Cao Haijun, Dean of the National Governance Research Institute at Northeastern University, provided expert validation of the reform’s direction. “When development zones truly focus on economic functions, release market vitality, and stay close to enterprise needs, they can truly play the role of ‘main battlefield, main position, and main engine of economic development,’” he said.

What’s Next

A second batch of consolidation is currently underway, with provincial-level coordination, zone-specific policies, and departmental collaboration. An official from the Liaoning Provincial Department of Commerce emphasized that “development zone reform is not a gust of wind; it is a relay race.”

Looking ahead, retained zones will undergo annual “health checks” and face an exit mechanism if they underperform. The reform could serve as a template for other Chinese provinces grappling with similar issues of development zone proliferation and inefficiency, though questions remain about employee安置, asset handling, and the long-term sustainability of the restructuring.

Liaoning’s approach represents a significant test case for whether China can shift from quantity-driven to quality-driven economic governance at the local level—a challenge with implications far beyond the province’s borders.