Industrial Park Vacancy Rates Exceed 70% in China; Liaoning to Consolidate 49 Economic Development Zones

Liaoning province is vigorously consolidating provincial-level economic development zones, involving a total of 49 entities. In recent years, vacancy rates in industrial parks across China have soared, with some areas even reaching nearly 70%. Amid vicious competition, the past practice of stimulating local economies by attracting investment through economic development and industrial parks is facing a transformation.

China's state-media CCTV's "Focus Report" reported on the 6th that Liaoning province recently initiated the reform and integration of its economic development zones' systems and mechanisms. It has consolidated 21 provincial-level economic development zones and is promoting reforms in others, such as streamlining internal agencies and establishing fiscal revenue-sharing mechanisms with local governments. In the next step, Liaoning will consolidate another 28 provincial-level economic development zones, essentially completing its phased integration and optimization goals.

The report stated that the main purpose of establishing economic development zones is to promote industrial clustering, technological innovation, attract foreign investment, and foster regional economic growth. However, when every development zone offers similar policies, it easily leads to competition among them for the same projects, creating "policy involution" (vicious competition on policy).

The report pointed out that for some time, some places have had the problem of "only expanding without regard to quality." Some development zones are too small, of low quality and efficiency, have vague positioning, scattered layouts, and homogenized industries. Liaoning is therefore pushing for reform.

In the past, establishing an economic development zone allowed regions to secure policies from higher authorities and to formulate their own preferential measures on land, taxes, and fiscal subsidies to attract investment. Therefore, every county and district wanted to set up a development zone. Liaoning province, with its 100 districts and counties, had 92 provincial development zones at its peak.

Under vicious competition, an excess of such parks began to hollow out, and some companies came not for development, but solely to enjoy land and tax benefits.

After the government began emphasizing a "unified national market," there has been an intention to change this situation. China began implementing the "Fair Competition Review Regulations" in August 2024, which stipulates that without legal or administrative regulations as a basis, or without the approval of the State Council, no preferential treatment such as tax benefits or fiscal subsidies may be given to specific operators.

In addition to the consolidation of economic development zones, industrial parks in many places have also been facing rising vacancy rates over the past two years.

Fang Sheng Research, a firm specializing in industry consulting for industrial park companies, published an article in December 2025 pointing out that the comprehensive vacancy rate of industrial parks in first and second-tier cities is around 30%. Beyond these cities, the vacancy rate has surged significantly, with the overall vacancy rate in some cities' parks reaching over 70%.

On June 3, Fang Sheng Research posted again on its official website, stating that high vacancy is not because there is no market demand, but because there is too much "ineffective supply." When companies choose a park, they no longer just look at rent and location factors, but place more importance on whether the park can create value for their business. However, "for over 90% of industrial parks, the so-called industrial services are merely superficial."

The article states that when an industrial park has no irreplaceable value, it can only rely on price reductions to attract clients, ultimately falling into a vicious cycle of losing more money the more it recruits, and needing to recruit more the more it loses.