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

The State Council passed the still unveiled plan last Thursday.

Planners see the region as an internationally competitive base for equipment manufacturing and the area will also produce raw material and energy, commercial grain and agricultural, and additionally raise livestock, according to a posting on the official website of the central government, www.gov.cn.

The plan also foresees the northeast as 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, as well as part of north China's Inner Mongolia Autonomous Region.

These bases were once powerhouses that made significant industrial contributions after the founding of People's Republic of China. Today, due to the country's move toward a market economy, they are known as a rust belt.
 
With outmoded systems adopted by State-owned enterprises and backward industrial technology the region has lagged far behind China's coastal areas.

In contrast, China's coastal areas in recent years have witnessed a mushrooming of private companies and a huge influx of international capital.

The dilemma of the northeastern has caught the attention of the central government. Revitalization plans began in 2003, with a special office overseeing the region's industry set up under the State Council.

The government introduced a series of preferential policies to encourage the transformation of State-owned enterprises, such as tax exemptions and pension reforms.

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 correct". It has achieved double-digit economic growth since 2003.

But their growth is still less than the national average and the region's GDP is declining.

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

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

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

According to Mei, an "import substitution", policy that limited imported products and attracted foreign joint ventures to produce such goods would be beneficial to the region.

(China Daily August 9, 2007)