By Li Fangchao (China Daily)
Updated: 2007-08-09 07:05

Northeast China, home to the country's old industrial bases, is set to get a makeover with the endorsement of a long-awaited plan.

The plan, yet to be officially unveiled, was passed by the State Council last Thursday.

It envisages the region as an equipment manufacturing base, with international competitiveness, a base for new raw material and energy, for commercial grain and agricultural products, and stockbreeding production, according to a posting on the official website of the central government, www.gov.cn.

The plan also sees the region playing a major role in technical research, development, and innovation, as well as ecological safety.

The old industrial bases encompass three provinces in Northeast China - Heilongjiang, Jilin and Liaoning, and also part of North China's Inner Mongolia Autonomous Region.

These bases were once powerhouses, contributing significantly after the founding of New China. Today, they have turned into a rust belt following the country's move to a market economy.

An outmoded system adopted by State-owned enterprises and backward industrial technology caused the region to lag far behind the coastal areas.

The coastal areas in recent years have witnessed a mushrooming of private companies and a huge influx of international capital.

The struggle of the Northeast caught the attention of the central government. It began to deliberate its revitalization in 2003, and a special office overseeing the region's industry was set up under the State Council.

A series of preferential policies to encourage the transformation of State-owned enterprises, such as tax exemptions and pension reform, were introduced.

Zhang Guobao, director of the Office of the Leading Group for Revitalizing Northeast China and Old Industrial Bases, said in a review report last December that the country's strategy to rejuvenate these bases had proved to be "perfectly right". It had achieved double-digit economic growth since 2003.

However, the growth is still outpaced by the national average and the region's GDP is declining.

Zhang said company management concepts, lack of innovation, the amount of non-performing assets, and environmental pressures all need to be addressed urgently.

Mei Xinyu, a researcher with the Chinese Academy of International Trade and Economic Cooperation, said an overall revitalization plan was necessary to lay the foundation for a new industrial and development strategy.

He said the region should not "blindly" introduce export-oriented light industries and neglect the equipment manufacturing industries.

He said that an "import substitution", policy to limit the import of products and attract foreign companies to set up joint ventures to produce such imports would be beneficial to the region.

(China Daily 08/09/2007 page3)