Capital Magnetism
Positive development trends make Liaoning Province ever more appealing to investors
Broadly speaking, the wave of economic transformation produced by reform and opening up in China over the past four decades has swept across the country from south to north. The development of certain regions, from Shenzhen in Guangdong Province to the Pudong New Area in Shanghai, has served as a powerful centrifugal force, exerting influence on surrounding areas and beyond, and grabbing headlines around the world via rapid economic progress in the process.
Now, it seems to be time for northeast China’s Liaoning Province to assume the spotlight.
At the end of August, the China Top 500 Private Enterprises Summit 2018 was held in Shenyang, the province’s capital. Representatives from Fortune Global 500 companies, as well as some of the most prestigious business figures in China, joined the discussion and debate.
Organized by the All-china Federation of Industry and Commerce, the event has been held nine times. In China, conven- tions of such significance usually take place in the country’s capital, Beijing, but Shenyang’s selection as the host city sent a signal that Liaoning is increasingly preferred by entrepreneurs and investors alike, becoming a magnet for capital.
Once a waning force
An important province in the country’s northeast, Liaoning enjoys rich natural resources and distinct geographical advantages. It was one of the cradles of China’s modern industry, earning a reputation as the country’s industrial base and “the eldest son of the People’s Republic” in the early years following the founding of the People’s Republic of China in 1949.
However, after the inception of reform and opening up in 1978, the old industrial centers in the three northeastern provinces of Liaoning, Jilin and Heilongjiang began to lag behind the rest of the country. One of the reasons behind this shift was that state- owned enterprises held an excessively large share of the local economy with the planned economy playing a predominant role. Rigid management systems greatly constrained economic development, and Liaoning was left unable to fully participate in domestic and international competition.
Since the beginning of the 21st century, the government has introduced a strategy to revitalize the northeast. Yet despite these measures, the economy of the region has remained sluggish as remnants of the planned economy continue to obstruct economic transition. Liaoning, once a major industrial powerhouse, fell out of the top 10 provinces in terms of GDP, and the weak economy in northeast China contributed to unbalanced national economic development.
In order to cure a chronic disease, treatment must be targeted and appropriate. That’s why President Xi Jinping has paid particular attention to the development of the northeast. During an inspection tour of Jilin Province, another former industrial powerhouse, in July 2015, Xi said that the laggard region should work to improve its systems and mechanisms, accelerate economic restructuring, boost innovation and business startups, and enhance people’s well-being. And while attending a discussion with deputies to the National People’s Congress (NPC), China’s top legislature, from Liaoning at an annual session of the NPC in Beijing in March 2017, Xi stressed the importance of supply-side structural reform, the leading role of state-owned enterprises and improved conduct by officials.
Return to strength
Liaoning set about tackling one of its most daunting challenges by improving its business climate through reform. It was the