SOE dependency hindering region's revival

A RECENT SURVEY on the employment of college graduates this year suggests that the employment rate for graduates in Northeast China continues to drop following the annual exodus of local talents. Beijing News commented on Wednesday:

The continuing departure of college graduates from Northeast China, which comprises Heilongjiang, Jilin, and Liaoning provinces, is a foreseeable result of the area's sluggish growth in recent years.

An industrial powerhouse before the 1980s, Northeast China seems stuck in a wretched economic plight accompanied by plummeting GDP growth. In the early 1980s its economy accounted for about 13 percent of the country's GDP, it then dropped to an all-time low of 8.77 percent in 2007 before climbing to 9.45 percent in 2012, thanks to a national strategy implemented in 2003 to revitalize the region.

The hoped-for economic recovery, however, did not arrive, as the figure plummeted to just 5.9 percent in 2014. It is therefore no surprise that more college graduates are choosing to start their career elsewhere, although that in turn hurts the already unpromising growth.

The economic structure backed by State-owned enterprises is responsible for the dilemma in Northeast China, where the growth of the secondary sector has been higher than that in many other areas. Even in 2010, the year marking Northeast China's best economic performance in recent decades, the growth of the three northeastern provinces' service sectors still lagged behind the growth of the service sector in East and South China.

Experience suggests that private enterprises have not only revitalized the economy in the Pearl River and Yangtze River delta regions, but also created scores of jobs. The longevity of the SOE-driven growth in Northeast China and the obsolete recruitment inclinations of many SOEs, mean there are not enough jobs in the region for local graduates.

Unlike private employers that offer decent pay to competent job seekers regardless of their "background", SOEs normally do not have competitive incentives for graduates. Revitalizing Northeast China requires local governments to remove the institutional barriers to the market-oriented forces.