Abstract: This paper explores the phenomenon of industrial recession in Northeast China under the background of China's entry into the global economic cycle. Based on China's interregional input-output data from 1987 to 2015, the paper decomposes the interregional trade and output value of Northeast industry. The research findings are as follows. From the perspective of regional linkage, the fact that Northeast industry is decoupled from the domestic value chain is confirmed through the dynamic research on the indicators of value-added share, interaction, and flow form in the interregional trade of Northeast industrial zones. From the perspective of spatial dependence, Northeast industry shows the characteristics of produce-consume self-circulation. Moreover, the Northeast and other parts of China show a strong phenomenon of spillover asymmetry and the characteristics of high sensitivity and low dispersion in the industrial production, reflecting the weakening trend of Northeast industry in the domestic value chain. The empirical research has shown that the existence of marginalization in the domestic value chain can to some extent explain the decline of Northeast industry and the dilemma of revitalization but not prosperity, as well as its mechanism.
