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Special> Coping With the Global Financial Crisis> Beijing Review Exclusive
UPDATED: October 30, 2009 NO. 44 NOVEMBER 5, 2009
Revitalizing China's Industrial Cradle
New efforts are being taken to build northeast China's old industrial base into a prominent economic pole


WEIGHING ANCHOR: The first 10,000-ton freight vessel made by private enterprises in northeast China was launched in Liaoning Province in 2006 (XIE HUANCHI) 

The State Council released Some Opinions on Further Implementing the Strategy on Revitalizing Northeast and Other Old Industrial Bases (the Opinions) on September 9, vowing to build northeast China into the fourth economic pole, following Yangtze River Delta, Pearl River Delta and Bohai Economic Rim.

Northeast China, covering Heilongjiang, Jilin, Liaoning provinces and the eastern part of Inner Mongolia Autonomous Region, was once dubbed the "cradle" of China's industry. The birthplace of New China's first car, airplane and 10,000-ton freight vessel, in addition to the origin of Chinese steel production, the northeast's old industrial base topped China's largest industrial concentration when the planned economy dominated before the 1980s. But its status in the national economy has declined partly due to a large proportion of old-fashioned production techniques used by state-owned enterprises.

The Opinions attaches great importance to the development of private and foreign investment and vows to help fund small and medium-sized enterprises. Different types of investment will be provided with a fair competition environment, according to the Opinions.

The market economy needs the participation of the non-public economy as a major driving component, otherwise there will be neither competition nor vitality, said Wang Yiming, Deputy Director of the Law Department of the National People's Congress.

The whole northeast region may even have too much concentrated state-owned capital. Zhang Guobao, Vice Minister of the National Development and Reform Commission, said in an October 20 conference that in 2004, northeast China's total state-owned assets accounted for 14.9 percent of the country's total, much higher than its share in the national GDP. By a sharp contrast, the private economy in the northeast remained considerably weak.

By now, the share of the non-public economy increased to 40 percent, but is still much lower than Guangdong Province's 67 percent, according to Zhang.

One example of highly concentrated state-owned capital can be found in Changchun, capital city of Jilin Province. The city is known as an "auto capital" with the automobile industry accounting for 70 percent of its total economy.

The prominent economic position that state-owned First Automotive Works (FAW) holds in Jilin Province has been turned into an interesting saying: When FAW coughs, Jilin gets a cold while Changchun has a high fever.

In the 1990s, the surging market economy left the northeast's industrial base a foundling of history. According to statistics, in 1978 the northeast's GDP accounted for 13.5 of the country's total, while in 1992, it declined to 10.9 percent. In 1978, Jilin Province was ranked 18th among 31 provinces, municipalities and autonomous regions on the Chinese mainland; while in 2008, Jilin fell to the 23rd.

State investment makes up the overwhelming majority of the northeast's industry, causing rigid management to abound and a stagnant economy to have emerged, said economist Mao Yushi of a Beijing-based research institute.

To date, northeast China still faces institutional, structural and ecological difficulties and requires more efforts for revitalization.

In 2003, the Chinese Government passed the The Plan of Rejuvenating Old Industrial Base in Northeast China, providing financial aid and preferential policies to the region.

In the past five years, the three provinces in northeast China scored a higher GDP growth rate than the national average, said Zhang.

Some Opinions on Further Implementing the Strategy on Revitalizing Northeast and Other Old Industrial Bases

1. Push forward vibrantly the development of the non-public sector of the economy and small and medium-sized enterprises (SMEs). Actively support the private capital access to infrastructure construction, public services, financial services and public welfare.

2. Enhance structural adjustment, eliminate backward production capacity and avoid redundant construction. Develop the advantageous industries in northeast China, including heavy castings and forgings, nuclear power facilities, high-speed motor train units, digital control machine tools, etc.

3. Promote the development of the Liaoning Coastal Economic Zone, Shenyang Economic Zone, Harbin-Daqing-Qiqihaer Industrial Corridor, and Changchun-Jilin-Tumen Economic Zone.

4. Add more aid to technological innovations for enterprises. Allocate newly added central budget funds to support the technological innovation in the northeast's old industrial base.

5. Start constructing passenger railways, including Beijing-Shenyang, Shenyang-Dandong and Harbin-Qiqihaer and other cargo railways.

6.Actively promote energy conservation and emission reduction. Close down high-polluting enterprises, including small coal-fired power plants, small steel mills, and small papermaking and cement factories.

7. Put employment on the top of the agenda, create public service jobs, improve the provincial-level old-age pension programs for urban residents.

8. Continue to open up to the outside world. Establish a border trade center, economic cooperation zones and export processing zones in suitable areas.


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