Northeast rejuvenation gets policy support

State Council issues guideline to prop region's growth

China's State Council rolled out a guideline on Tuesday, proposing 11 measures to further support the rejuvenation of three northeastern provinces, the traditional industrial base of the country.

The guideline, which includes measures such as streamlining administration and introducing private capital into the State-owned enterprises (SOEs), is seen as a response to sagging growth in the region.

The announcement followed a statement by Chinese Premier Li Keqiang at a State Council meeting on July 31 that local governments in Northeast China must deepen reform, expand opening-up and be more innovative.

The National Development and Reform Commission, the country's top economic planner, also said on August 4 it will take more targeted measures to reverse the economic downturn in Northeast China in the second half of this year.

The three northeastern provinces - Liaoning, Jilin and Heilongjiang - have been feeling downward pressure since 2013.

Latest statistics show that -Heilongjiang ranked last in terms of the GDP growth rate among the 31 provinces, regions and municipalities in the first half of 2014.

Liaoning's half-year GDP growth rate retreated from 7.4 percent in the first quarter to 7.2 percent. The GDP growth rate of Jilin slipped to 6.8 percent from first quarter's 7 percent.

Heilongjiang, China's northernmost province, saw the slowest growth at 4.8 percent, far short of its annual target of 8.5 percent, data from the provincial government showed.

Experts said proposed measures such as deepening SOE reform and locating new growth engines are vital to revitalize the region's battered economy.

Zhang Chunxiao, a researcher with the Chinese Academy of Governance, said northeastern provinces stood a good chance both in revitali-zing their traditional industries and upgrading the growth model if they could remove some major obstacles.

"Northeast China has a solid foundation, and its potential is not fully tapped," Zhang told the Global Times Tuesday.

"The sheer size of the industrial base and an extensive industrial chain means Northeast China has more options to choose from during its upgrade. Decades of industrialization means the region possesses one of the country's most seasoned industrial workforce," Zhang said.

Wang Zhonghong, a researcher with the Beijing-based Development Research Center of the State Council, said that the region has many industry leaders, such as the Shenyang-based Siasun, a leading manufacturer of industrial robot in China, and Shenyang Blower Works Group Corp.

These advantages are reflected in the central government's guideline, which said more support is needed to foster the region's leading industries into new growth engines, such as robots, gas turbines and high-end marine engineering equipment.

"However, although the size of these companies is big and their operating income sizeable, their profitability remains low as their innovation ability is weak, so they still lag behind leading multinational companies," Wang told the Global Times Tuesday.

"Provincial chiefs have a real responsibility in finding the right match between their provinces' advantages and opportunities in the new round of upgrade," Zhang said.

The Northeast China region posted high economic growth in the past decade thanks to a batch of supportive policies from the central government and robust demand for raw materials and machinery products, but the revival slowed starting from 2013 as the country's economic growth fell a two-decade low.

To revitalize the region, efforts to address the challenges, such as structural problems concerning SOE management, need to be continued, experts said.

"The emphasis on an enhanced role of the private sector will also help the region improve its vitality, efficiency and flexibility," Zhang noted.