Re­form SOEs to re­vi­tal­ize North­east China

China Daily (Canada) - - VIEWS -

To re­vi­tal­ize the north­east of China, we should first an­a­lyze the prob­lems of its un­de­sir­able devel­op­ment nowa­days. Thanks to its fer­tile black earth, North­east China has abun­dant nat­u­ral re­sources, which en­abled the re­gion to achieve self-suf­fi­ciency in the agri­cul­tural era.

But its abun­dant nat­u­ral re­sources also caused de­pen­dence on its long-term re­source-ori­ented devel­op­ment that un­der­mined the pur­suit of other growth paths and in­no­va­tion ca­pac­ity. Mean­while, the unique me­te­o­ro­log­i­cal con­di­tions of the re­gion, es­pe­cially the cold weather in win­ter, means peo­ple have de­vel­oped a life­style that only works for half a year. Once the re­gion’s re­source ad­van­tage dis­ap­pears, devel­op­ment in lo­cal ar­eas may fall into a pas­sive po­si­tion.

More­over, the planned econ­omy had a deep and lon­glast­ing in­flu­ence onNorth­east China, and its in­dus­try is mainly heavy in­dus­try and in­dus­try re­lated to the ex­ploita­tion of its nat­u­ral re­sources, in­dus­tries that were im­per­a­tive to the coun­try’s con­struc­tion un­der the planned econ­omy.

The north­east of China there­fore has fol­lowed a devel­op­ment path that re­mained de­pen­dent on the planned econ­omy even af­ter re­form and open­ing-up. But the mar­ket changed af­ter re­form and open­ing-up, and the re­gion has grad­u­ally lost its com­pet­i­tive edge. The devel­op­ment trend of the re­gion is like that of man­u­fac­tur­ing in theUnited King­dom, which boomed at first and then stag­nated.

More­over, the free flow of tal­ent and cap­i­tal af­ter re­form and open­ing-up has meant there has been an ex­o­dus of the tal­ent and cap­i­tal nec­es­sary for the re­gion’s devel­op­ment.

The re­vi­tal­iza­tion ofNorth­east China re­quires in­dus­trial ad­just­ment and up­grad­ing, but it is hard for it to achieve that goal on its own. Con­sid­er­ing the tremen­dous con­tri­bu­tion it has made to the coun­try’s so­cial and eco­nomic devel­op­ment, it is rea­son­able that the coun­try pro­vides nec­es­sary sup­port to re­vi­tal­ize the re­gion.

The main prob­lem of the re­gion’s econ­omy that needs ad­dress­ing is that its ra­tio of Sta­te­owned com­pa­nies and heavy in­dus­try is too high, and the re­gion lacks a suf­fi­ciently large and ac­tive pri­vate econ­omy.

It makes lit­tle sense to pro­mote the re­gion’s devel­op­ment through so-called open­ing up or go­ing global on a na­tional ba­sis. The re­vi­tal­iza­tion ofNorth­east China should be “ge­netic”, chang­ing the re­gion’s State-owned genes into the genes of a mar­ket econ­omy.

To re­vi­tal­ize theNorth­east re­gion, we should im­prove both the in­trin­sic fac­tors and the ex­ter­nal en­vi­ron­ment. Peo­ple in the re­gion should grad­u­ally cul­ti­vate a mar­ket econ­omy with the sup­port of the cen­tral gov­ern­ment and other re­gions.

First, the lo­cal gov­ern­ments in the re­gion should im­prove their ef­fi­ciency and deepen their un­der­stand­ing of a mar­ket econ­omy so they can cre­ate a good en­vi­ron­ment for the devel­op­ment of the pri­vate econ­omy.

Se­cond, as­sis­tance from other de­vel­oped re­gions is nec­es­sary as well. North­east China should also learn from the suc­cess­ful mar­ket econ­omy ex­pe­ri­ences of other re­gions, rather than sim­ply bring­ing in some spe­cific projects.

Third, it is ur­gent to launch re­form of the State-owned en­ter­prises in theNorth­east China. Mixed own­er­ship should be pro­moted

The author is a US-based in­struc­tional de­signer, lit­er­ary trans­la­tor and colum­nist writ­ing on cross-cul­tural is­sues. in this re­gion.

Fourth, the foun­da­tion of a coun­try should be its real econ­omy. China has made great ef­forts to de­velop its real econ­omy and has pro­moted the devel­op­ment of its man­u­fac­tur­ing in­dus­try, which means it should pay enough at­ten­tion to the North­east China, since it was the coun­try’s heavy in­dus­try base.

The strong in­dus­trial base of North­east China is the re­gion’s devel­op­ment op­por­tu­nity at present. The cen­tral gov­ern­ment should help the re­gion to ad­just and up­grade its man­u­fac­tur­ing in­dus­try to the in­ter­na­tion­ally ad­vanced level.

In ad­di­tion, the re­gion has a broad devel­op­ment prospect in agriculture due to its unique nat­u­ral con­di­tions and re­sources. Thus the na­tional strat­egy of de­vel­op­ing real econ­omy is a good op­por­tu­nity for the re­gion’s agri­cul­tural in­dus­try, as well.

The re­vi­tal­iza­tion of North­east China should be “ge­netic”, chang­ing the re­gion’s State-owned genes into the genes of a mar­ket econ­omy.

The author is a pro­fes­sor of eco­nomics at Ren­minUniver­sity of China.

LIU XINYI / FOR CHINA DAILY

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