Ownership transfer to spur economic development in northeast

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Last updated at: (Beijing Time) Saturday, October 11, 2003

Ownership transfer to spur economic development in northeast

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The rust-belt of northeast China is undergoing a series of profound reforms on the ownership of the outdated industrial enterprises as the central and local governments have called for painstaking efforts to revitalize the former prominent industrial hub.

Including welfare reform, a range of prompt measures have been applied to spur the state-owned enterprises. In September, the Political Bureau of the Communist Party of China (CPC) Central Committee required accelerated efforts to reinvigorate the area, describing it as a long-term and arduous task.

According to the Political Bureau, a draft decision on some issues related to the improvement of the socialist market economic system will be submitted for deliberation to the Third Plenary Session of the 16th CPC Central Committee, scheduled for Oct. 11-14.

As some government officials indicated, the Party summit meeting is likely to further push forward the reforms on ownership transfer allowing more non-government investors to get involved in management of state-owned enterprises.

"It is time to get rid of the effects of the planned economy completely and establish a market-oriented economy, which might be the only solution for these enterprises," said Xu Chuanchen, a professor who researches state-owned sectors at Jilin University.

According to Xu, ownership transfer would probably become one of the most important parts of the revitalization campaign because it is likely to stir up staff motivation and attract more investment. Observers speculate that sole or partial ownership of some state-owned enterprises would be later sold to private or even overseas investors.

Xu noted that governments now are aware they should avoid interfering in business circles and their real responsibilities are to work out the game rules and guarantee a nice environment for the businesses. But the current situation is far from enough, he said.

In spite of that, officials and economic experts say the revitalization program is expected to make the northeastern region a new economic growth area following the flourishing Pearl River Delta in the south and the Yangtze River Delta in the east.

Covering the provinces of Heilongjiang, Jilin and Liaoning, the northeast China region played a vital role in the country's industrial development in the 1950s to early 1970s.

The northeast contributed China's first batch of steel, machine tools, locomotives and planes after the founding of New China in 1949, and still has potential in these fields.

However, many of the traditional industrial enterprises that were established in the 1950s when China adopted a planned economic system, became less competitive, and some have been losing money over the past 20 years, when China implemented the policies of reform and opening up to the outside world and moved from a planned economy toward a market economy.

The proportion of the region's industrial output value to the national total dropped to 9 percent from a record 17 percent. Some unprofitable state-owned industrial enterprises were closed, resulting in mass unemployment.

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