The Communist Party of China (CPC) at the 16th National Congress last November called for the country to support the rejuvenation of the nation's old industrial base in the northeast.

The latest message of policy support comes from the Third Plenum of the CPC Central Committee, held in early October, which proposed to promote multiple forms of public ownership to improve the socialist market economy. Making the shareholding system a main form of public ownership will help ensure the reform and rejuvenation of the once glorious region.

A key part of the northeast region with its rich endowment of physical and human resources, Liaoning Province will seize upon this historic opportunity to revitalize its economy.

Since the late 1990s, the region has undergone active structural adjustment of its industries to re-energize its economy. It had lagged behind the prosperous eastern coastal regions, which benefited greatly from the country's reform and opening up drive.

Yet, Liaoning has been held back by such problems as slow institution of market reforms; a waning of economic vitality; an overstress on a single ownership structure with an excessive concentration on state-owned enterprises; outdated equipment and technologies; and a heavy social security burden.

But the province instituted a string of countermeasures to solve these problems in the late 1990s.

The reform of the ailing state sector has been going soundly; a complete new social security network is taking shape; and economic restructuring has been progressing healthily.

Most of the large-scale state-owned enterprises have been transformed into modernized companies with sound governance structures. The annual sales volume of industrial companies in the province hit more than 440 billion yuan (US$53.2 billion) by the end of 1999, with total profits of more than 13 billion yuan (US$1.6 billion).

Industrial restructuring saw non-state economic element take over more than 50 percent of the economy by the beginning of 2000, and the high-tech industry is booming.

By that time, the social security and medical care reforms covered more than 6 million people. In the past two years, the average gross domestic product growth rate has exceeded 9 percent.

All this has laid a solid foundation for the rejuvenation of the region with the help of the central government's supportive policies.

The province's own economic advantages are also helping in its development.

Located in the southern area of northeast China, Liaoning is ideally located for the development of trade and economic cooperation with other countries and regions in northeastern Asia.

The prospects for its trade and economic and technological cooperation with the Republic of Korea, Japan and Russia and the Democratic People's Republic of Korea are exceedingly rosy. Its location guarantees that these adjoining areas will help boost its economic development.

Liaoning's rich natural resources will greatly assist the province in its drive to rejuvenate its industry. Moreover, its enormous assets accumulated through time, its solid industrial foundation, and the high educational level of its population, its rich pool of technicians and advanced infrastructure will enable it to catch up quickly.

Liaoning's industrial base is solid. It boasts a complete set of industrial departments served by experienced technical workers and technicians.

In terms of industrial completeness, Liaoning is one of the best among all the provinces and regions of the country.

Many of its products are in dominant positions in the country's domestic markets.

It has the best of those key industries vital in keeping the country's industrial lifeline healthy, such as the petrochemical, metallurgy, equipment manufacturing and military industries.

Its crude oil processing, iron and steel, light passenger car, ship building, and digitally controlled machine tool industries are renowned throughout the country.

It ranks high in many industrial categories. Its petrochemical capacity, for example, is the third strongest in the country; its crude oil processing ranks first in the country; and its comprehensive metallurgical capacity ranks second in the country.

Based on these advantages, the provincial government has hammered out its policy orientation. It has decided to focus on the establishment of two major bases -- a modern equipment manufacturing base and a key raw material base and three pillar industries, namely, the high-tech, agricultural byproduct processing and modern service industries.

Local policy-makers should be aware that the rejuvenation drive should be open and oriented towards both the domestic and international markets.

The province should make good use of China's World Trade Organization membership to create a set of open mechanisms that conform with international practices. This will attract more outside capital to invest in local projects.

The authors are researchers with the Party School of the Communist Party of China's Liaoning Committee.

(China Daily November 17, 2003)