Could China’s north-east be home to its next banking disaster?

“CABBAGE HOMES” have brought some notoriety to Hegang in recent years. Flats in the small city in China’s far north-east have been selling for outrageously low prices—some for just $3,500 apiece—earning a comparison with the cheapest items in vegetable markets. The region’s economic outlook has been so poor for so long that it cannot retain residents. The city, which is in Heilongjiang province, has lost about 16% of its population in a decade. The cabbage homes were built by the government to help alleviate poverty, but they have found few takers. The local government is now struggling to make good on its debts and is restructuring its finances. In late December officials said they had stopped hiring new government employees in order to save money.Hegang is one of many gloomy stories from China’s rustbelt provinces of Heilongjiang, Jilin and Liaoning. The region bordering Russia, known for its long, bitterly cold winters, has slogged through years of depressed economic conditions as state-owned industrial plants have closed down and young people have migrated south. Poor energy infrastructure meant that companies in the area were disproportionately affected by an acute power shortage in 2021. In a desperate attempt to keep families from moving away and to spur population growth, Jilin has announced that it will hand out “marriage and birth consumer loans” of up to 200,000 yuan ($31,500) to couples.