China's rust belt seeks new growth engines

CHANGCHUN - China has approved plans for a city cluster in the northeast rust belt, another move to revive the traditional industrial base.

According to a post on the State Council website, the provinces of Heilongjiang and Jilin will restructure their urban distribution, scale and industries with the provincial capitals of Harbin and Changchun becoming the centers of a group of cities.

The post stressed coordinated development of the region across industry; environmental protection; opening up and reform; public services to improve the urban environment; people's living conditions; competitiveness of cities; and urbanization in surrounding areas.

The city cluster will help mitigate the competing friction among the neighboring provinces of Heilongjiang and Jilin, which have similar economic structure and the same development levels by optimizing resource allocation and industrial division, said Cheng Yao, deputy head of the institute of economy research under the Heilongjiang Provincial Academy of Social Sciences.

Strategic plans

The city cluster design is not the first government strategic plan to focus on the northeastern region recently.

Over the past two months, two new areas, Changchun and Harbin, have been approved respectively as the 16th and 17th state-level new areas approved by the State Council. Preferential policies to attract investment will be rolled out and lead development in the traditional industrial bases.

"The government wants to revive the northeastern region," said Song Donglin, president of Jilin University of Finance and Economics.

Song said the centers of Harbin and Changchun, which hope to attract high-end industries, will help promote development of nearby small cities, including Daqing, Siping and Qiqihar.

In the industry division, Harbin will focus on food and equipment manufacturing, while Changchun on automobile, agricultural product processing and trains, he said.

The northeastern region, consisting of Liaoning, Jilin and Heilongjiang provinces and part of Inner Mongolia Autonomous Region, was among the first regions in China to become industrialized. Traditional industries include steel, automobile, shipbuilding, aircraft manufacturing, and petroleum refining.

The provinces saw double-digit economy growth until 2012 and 2013, when the region faced shrinking resources and industrial overcapacity amid global economic slowdown.

In 2015, economic growth in Heilongjiang, Jilin, and Liaoning trailed behind the national average, posting 5.7, 6.5 and 3 percent, respectively. The 3 percent growth rate in Liaoning was the lowest of all the 31 provincial regions.