Northeast provinces look ahead

Workers polish the frames of railway vehicles at the Changchun Railway Vehicles Co in Jilin province. [Photo/China Daily]

China's northeastern rustbelt is expected to see a more rapid transition, with State-owned enterprise reform and manufacturing upgrading providing the uptick for growth in the region, economists said on Wednesday.

With several Chinese provinces having posted their GDP data for the first six months of the year, except for the northeastern provinces of Heilongjiang, Jilin and Liaoning, economists are not too optimistic about a short-term growth renaissance for the region.

The three provinces were ranked in the bottom five of China's 31 provinces and regions for GDP growth in 2014 and the trend continued in the first quarter. Jilin's 5.8 percent, Heilongjiang's 4.8 percent and Liaoning's 1.9 percent are all below the nation's average 7 percent growth in the first quarter.

Gao Guoli, deputy director of the Research Institute of Territorial Development and Regional Economics under the National Development and Reform Commission, said it is not realistic to expect the region's economy to rebound in the short term.

Frequent visits by China's top leaders to the region indicate policymakers' concerns on growth revival in the northeast, SOE reform and manufacturing industry upgrading, said economists.

President Xi Jinping and Premier Li Keqiang visited the same local manufacturing company in the past three months, a rare instance of the same facility being chosen in such a short time.

The company is Changchun Railway Vehicles Co, a subsidiary of China's biggest train maker China Railway Rolling Stock Corp Ltd based in capital city of Jilin province.

As a manufacturing base for vehicles, in the past it was the FAW Group Corp that attracted more attention, but obviously high-speed trains are now gaining more traction.

High-speed trains have become a pretty name card for China, said Xi during his visit, adding high-speed train technology and cooperation were talked about a lot during his overseas visits in the past two years.

Xi also witnessed the signing of a deal between China and Russia for strengthening high-speed train cooperation during a visit to Moscow in May.

In May, China Railway Group Ltd said it won a 2.4 billion yuan ($390 million) contract to build a high-speed railway line in Russia connecting Moscow with the city of Kazan, paving the way for Chinese construction and rolling stock companies to bid for follow-up projects.

Wang Run, chairman of the Changchun Railway Vehicles, said the company has exported products to more than 18 countries and regions including Thailand, Malaysia, Pakistan, the United States and Argentina.

CRRC, formed by last month's merger of CNR Corp and CSR Corp, has exported products to more than 80 countries and regions, including high-speed trains that run at up to 380 kilometers per hour and subway trains, trams and locomotives.

"In contrast, the development of China's auto industry has lagged behind and the market share of self-brand vehicles is rather small domestically, not to mention the overseas market share," said Zhou Minliang, researcher with the Institute of Industrial Economics under the Chinese Academy of Social Sciences.

Manufacturing industries weighs heavily on the region's economy and are dominated by SOEs. The proportion of foreign and private firms is very low as the region has deep structural issues.

However, the northeast region's industries are in line with the country's strategy of sharpening core competitiveness of the manufacturing sector, and have great potential for revival if it can perform well after the deepening SOE reforms, said Zhou.