Changes taking place in China's northeastern province of Liaoning in the past 70 years can be seen as a microcosm of rejuvenation in the country's northeastern rust belt - a traditional industrial base that has long relied on heavy and chemical industries, energy resources, raw materials and, most prominently, a large proportion of state-owned enterprises (SOEs).
In the past decades, the region has experienced many difficulties in economic growth but has been determined to regain industrial success amid the nationwide efforts to revitalize the real economy, by pushing forward supply-side structural reform while promoting mixed ownership for inefficient state-owned enterprises to establish competitive industries. After President Xi Jinping pointed out in 2017 that regenerating and reforming these SOEs should take the lead of regional reinvigoration, many SOEs have tried hard to reach the goal and have seen fruitful outcomes.
Production line of Northeast Pharmaceutical Group plant./CGTN Photo
The Northeast Pharmaceutical Group in Shenyang, capital city of Liaoning Province used to suffer from almost all the difficulties of typical state-owned companies, including financial loss, lack of innovation and incentives, and poor execution. Wei Haijun, chairman of company said they have noted a big gap with their competitors in globalization. "We must adjust our administration, regulation and competitive strategies to meet market requirements," Wei emphasized.
With over seven decades of productive operations, the company launched a pilot mixed ownership reform in 2018 to change the situation. It managed to increase its annual income by over 30 percent last year. That happened after it introduced private capitals and efficient operation mechanisms from its shareholders. Workers earned a lot more and enjoyed better welfare after the reform. "There is more pressure and responsibility now - but the harder you work, the more you get," said Tong Xin, a worker at the company.
Huludao zinc factory. /CGTN Photo
Changing the authorized management system of state-owned capital has also been very effective in optimizing regional economic structure, by phasing out excess and outdated capacity. Chimneys of old iron and coal factories were torn down and instead, more efforts were made in research and development. Through SOE reform, the zinc factory in Huludao City, once the largest of its kind in Asia, has eliminated pollutant discharge while making breakthroughs in recycling, low-energy production and technical advance.
Fang Yong, deputy director of Liaoning Development and Reform Commission, said the province has already fulfilled its obligation of eliminating overcapacity in various sectors in accordance with the nation's 13th Five-Year Plan. "The structural reforms are starting to see the return as competitiveness and profitability of the traditional heavy industries have been boosted," Fang said.
And state-owned firms in this former heavy industrial hub have also become a new magnet for foreign investors, as Liaoning opens up to the world. Brilliance Auto Group, which has had a partnership with BMW for over 15 years, has been provided a state-of-the-art assembly line and absorbed foreign technology and business orientation. Vice-president Liu Pengcheng said the company now has a joint venture with French auto firm Renault in addition to BMW. "For the next step, we will conduct international cooperation regarding core engine components, new energy and intelligent network," Liu added.
Brilliance Auto's assembly line. /CGTN Photo
As one of the earliest open coastal provinces in China, Liaoning has continued to open up by establishing the B&R comprehensive pilot area, as well as the China-Central and Eastern European Countries "17+1" Demonstration Zone, for economic cooperation and trade. Progress has also been made thanks to the efforts to revitalize the relatively under performing business environment to attract more investment and, via clean governance and optimization of state's functions in the market, now hundreds of international cooperation projects in infrastructure and energy fields have gained substantial progress.
Several overseas economic and trade cooperation zones in Iran, India, Indonesia, Romania and Uganda have begun to take shape. Provincial officials say the Liaoning government will strengthen its support for overseas economic and trade cooperation zones and guide leading enterprises in the province to set up a batch of such cooperation zones in node cites and ports of the countries along the B&R routes.
Liaoning accelerates building of sea-rail transportation network./CGTN Photo
The future is promising according to the rising foreign trade proportion and Liaoning's GDP growth rate getting back to over six percent. Last year, the total profit made by major SOEs in the province saw an over 40 percent year-on-year rise. Such powerful strength for the nation to count on, as many in northeast China believe, will bring economic growth back onto the right track with the right reform tools and supports.
