As China's leadership decides to make more efforts to rejuvenate the old industrial base in the country's northeast, decision-makers and advisers have now realized that the key to success is breaking through the former planned economy framework and system barriers.

"The only way for the old industrial base in Northeast China to get out of the woods is to rapidly switch from its dependency on the planned economy to a market-oriented system," said Wang Yunkun, a National People's Congress (NPC) deputy from Jilin Province.

Heilongjiang, Jilin and Liaoning, the three provinces in the country's northeast are regarded as the last stronghold of the former planned economy in China. They now suffer from aging equipment and technology, weakening competitiveness, high unemployment rate and slow economic growth.

Statistics show that the Chinese Government established the industrial base in the three provinces in the 1950s and 1960s by pooling fixed assets worth 30 billion yuan (US$3.64 billion) with energy, raw material and equipment manufacturing as the leading industries. However, in the last 2 decades, industrial output in the three provinces has plummeted 9.7 percentage points.

Renowned economist Xiao Zhuoji said State domination within the sector had to end to allow for a mixed economy.

"The private sector should play a bigger role in the rejuvenation," he said.

About 10 percent of the country's large and medium-sized State-owned enterprises (SOEs) are in Liaoning alone and most of them are facing challenges from restructuring the SOEs, unloading their historical burden, and establishing a mechanism for efficient national asset management.

At the ongoing session of the 10th National Committee of the Chinese People's Political Consultative Conference (CPPCC), the nation's top advisory body, Xiao said it is necessary to create a fair and orderly market and change the roles of local governments in order to achieve higher growth rates in the area.

Xiao, who is an economic professor at Peking University, also placed particular emphasis on the role of professional personnel in changing the face of the old heavy industrial base.

"The rejuvenation of Northeast China mainly depends on local human resources," Xiao said.

Thankfully, Liaoning has 77 schools of higher learning, with 550,000 students now on campus and 1.5 million working professionals. Heilongjiang has 48 universities and colleges, with 335,000 on-campus students, and Jilin has 41 schools of higher learning, with 220,000 students on the campus and 750,000 professionals.

However, some deputies warned of a "brain drain" from the region.

Yue Qingyou, an NPC deputy from Jilin, called on the local government to provide better working conditions and benefits so professionals are not lost to other regions.

Many college students in the region also hope to see a better environment so they can put their talents to full use.

Yang Xingshuo, 25, a holder of two bachelor degrees in chemistry and communication engineering from Dalian University of Technology, says he is happy to see that a lot of foreign investment is being poured into his home province and that domestic investment is also playing a substantial role in the development of China's northeast.

"It will bring us more opportunities," Yang said.

Wang Guofa, a CPPCC member, yesterday also listed some of the top tasks on his government's agenda.

The first is to further reform State-owned enterprises and the second is to seek better economic transition in areas where resources are being used.

(China Daily March 8, 2004)