How to revitalize the old industrial bases in Northeast China has been a major topic of discussion at the ongoing sessions of the National People's Congress and the Chinese People's Political Consultative Conference. On March 7, renowned Chinese economist Xiao Zhuoji and several CPPCC members from northeast China attended a press conference at the capital's Great Hall of the People. The members pledged that their provinces will work hard towards implementing government strategies of revitalizing the Northeast. Meanwhile, Xiao, noted that more work needs to be done to ensure local governments and state-owned enterprises move away from outdated modes of thinking.

The traditional industrial bases in Northeast China were once as important as Shanghai is today in driving the Chinese economy. But now, they have fallen far behind the east coast city in terms of economic growth and competitiveness.

As the government endeavors to revitalize its Northeastern region, economist Xiao Zhuoji stressed that local governments and state-owned enterprises must turn away from outdated modes of thinking to ensure the provinces' successful revitalization. He said more work needs to be done in three areas.

Xiao said improved human resources are essential for the much-needed industrial transformation in the Northeast. In particular, he suggested that state-owned enterprises should be open to recruiting management experts from both home and abroad. He added that relying only on local human resources was not enough to realize the transformation.

During the press conference, CPPCC members revealed the difficulties involved in revitalizing the Northeast. They pledged that their provinces will work hard towards implementing the strategy outlined by Premier Wen Jiabao in his government work report.

Both the NPC deputies and CPPCC members have already submitted constructive proposals on the region's revitalization.

The Northeastern provinces of Jilin, Liaoning and Heilongjiang are home to a number of key state-owned industries, including oil, gas, iron and steel, auto making and shipbuilding. Some are losing their market competitiveness due to poor management and the use of obsolete technology. The Chinese government views the establishment of a competitive industrial base in northeast China as conducive to maintaining social stability. And it has pledged to put more efforts into the strategic adjustment and technical innovation for such industries in the region.

Government to revive the northeast's economy

The Northeast, consisting of the three provinces of Heilongjiang, Jilin and Liaoning, was once the region of wealth and opportunity during the first 30 years of the People's Republic.

But in the early 1980s, this once mighty economic engine started to stall.

In analyzing how it all went wrong, structural weaknesses account for much of the decline.

Though the businesses in the region managed to function in a planned economy, problems started to crop up when the economy became more market oriented. The low efficiency rate and ill-defined product structure, caused them to fall behind their market-oriented competitors. Factories deep in debt were forced to close and workers were laid off by thousands-- creating a social security nightmare for the businesses.

To reverse the northeast's decline, China's central government launched a fresh initiative last October.

Prof. Li Qiang from Humanities & Social Sciences Dept., Tsinghua University, said, "New points of growth must be cultivated if the economy of the northeast is to be revived. To do this, the region should make full use of its existing competitiveness. For instance, it has the best foundation for heavy industry. Sectors such as heavy machinery, petrochemicals and car manufacturing should be considered."

But questions remain about actual reform efforts. Should the highly concentrated state sector give way to non-state capital and overseas investment, or should ways be devised to revive the public sector?

Wang Xiaoguang, Senior Research Fellow with State Development and Reform Commission, said, "It's important to reform the existing state structure, for example, by way of changing them into share-holding businesses. But more importantly, non-state firms and overseas investment should be encouraged, especially in sectors that favor competition. Combining state assets with non-state and overseas investment should also be looked into."

Many areas in the northeast have already started to experiment with new forms of ownership. But 50-year-old state structures and habits are hard to break. Nevertheless, investors from southern China and outside the country are beginning to look at the possibilities in the northeast.

It's been almost half a year since the central government announced its plan to revive the northeast. Since then, the consensus seems to be that, with the right approach, it can definitely work.

(CCTV.com March 8, 2004)