Vitalizing Northeastern China: Liaoning’s Business Savvy and Ambition
Liaoning’s Business Savvy and Ambition
Liaoning Province, traditionally an important industrial base, is transforming its economy through high-quality development, with growing private businesses and expanded international cooperation.
In late August, Shenyang, capital city of Liaoning Province in northeastern China, welcomed more than 1,000 Chinese private entrepreneurs and representatives from Global 500 companies to the 2018 Summit of China Top 500 Private Enterprises. The meeting marked the second time the summit was held outside Beijing since it was launched by the All-china Federation of Industry and Commerce (ACFIC) nine years ago.
During the meeting, the ACFIC released its annual ranking of the 500 largest Chinese private companies, which is a barometer for China’s private economy. Even the company ranking last on the list registered revenues of 15.7 billion yuan (US$2.3 billion) in 2017. The figure released last year was 12.1 billion yuan (US$1.8 billion). Smartphone maker Huawei topped the list with revenues of 603.6 billion yuan (US$88 billion), while e-commerce retailer Suning took second place.
“China’s private businesses maintained healthy development momentum in 2017,” said ACFIC Vice Chairman Huang Rong, adding that the companies have steadily optimized their industrial structure with greater contributions to society. In the past year, the private sector contributed more than 60 percent of China’s GDP, playing an
increasingly important role in the economy.
The three-day summit became an economic boon to the northeastern province by providing enormous business opportunities. Local governments and companies signed agreements for 76 projects with enterprises on the list during the meeting, the total value of which stands close to 300 billion yuan (US$43.9 billion). This demonstrated growing confidence in the region’s economic potential after Liaoning’s GDP surpassed 1.1 trillion yuan (US$160.8 billion) in the first half of 2018, up by 5.6 percent year-on-year.
Liaoning is traditionally a significant industrial base dating back to the 1950s. During the period of China’s First Five-year Plan (1953-1957), the province welcomed 24 of the 156 national key projects and more than 30 percent of the country’s total investment. Reputed to be “China’s industrial cradle,” Liaoning produced more than 200 “China’s firsts” in manufacturing such as the first fighter aircraft and the first 10,000-ton ship.
However, Liaoning gradually lagged behind in the past decades as it shifted away from its traditional industrial model with a large proportion of state-owned enterprises. Economic growth was sluggish after 2010. But now Liaoning is transforming its economy through high-quality development with
growing private businesses and expanded international cooperation.
“To meet the demand for a consumption upgrade, we will increase efforts to revolutionize our retail stores with cuttingedge technologies,” pledged Zhang Jindong, chairman of Suning. He highlighted the company’s plan to operate about 600 smart retail outlets by 2020 in Liaoning Province to support the government’s efforts to restructure the economy.
Zhang also remarked that private enterprises are major beneficiaries of China’s reform and opening-up policy as local governments work hard to create a pro-business environment. Liaoning officials are aware of this development. At the end of 2016, the province adopted a law to regulate and improve its business environment. In 2017, Liaoning established China’s first provincial-level supervisory bureau to improve the business environment.
Aiming to optimize services, increase efficiency and save time and money for businesses, the Liaoning government has remained dedicated to transforming policy design into practical measures. Since 2015, Liaoning has canceled or adjusted more than 1,000 administrative items. Thanks to these efforts, 32 certificates involved in the industrial and commercial registration have been integrated into one, 376 certificates are available immediately upon application, and 487 items can be completed “in a one-time visit.”
“To pave the way for private investment, the government must deepen reforms to lower the threshold barring some enterprises from key sectors, facilitate tax and fee cuts, enhance the bridge connecting the real economy to financial services, alleviate financing difficulties facing small and medium-sized companies, and reduce operating costs,” said Wang Xinzhe, chief economist of China’s Ministry of Industry and Information Technology, at the summit.
In 2017, Liaoning managed to reduce the tax burden on enterprises by 128.5 billion yuan (US$18.8 billion). According to the administration for industry and commerce of the province, from January to July this year, newly registered market entities in Liaoning numbered 381,000, up by 9.1 percent year-on-year.
“The weak links of Liaoning’s economy are found in the private sector, but so is its potential,” said Chen Qiufa, secretary of the Liaoning provincial Party committee when addressing the meeting. Chen declared that the province would fully support the private economy to stabilize economic growth, push transformation and industrial upgrade and increase employment by creating new business opportunities.
This year marks the 40th anniversary of China’s reform and opening up, and the country aims to mark the occasion by broadening market access, improving investment environment and expanding imports. “Global investors are looking to China for opportunities,” said B. V. Shreedhar, vice president of the Hong Kong branch of the State Bank of India.
Foster Arata, vice president of Boeing Capital Corporation, is a witness to the long- term cooperation of Boeing and local manufacturers in Liaoning. The Shenyang Commercial Aircraft Corporation has produced airplane components for Boeing since 1990, starting with cargo doors for the 757 and expanding to complex empennage manufacturing. Boeing also opened an AVIC- Boeing Manufacturing Innovation Center satellite office in Shenyang in 2015.
“Today, more than half of the commercial jetliners operating in China are Boeing
planes, and more than 9,000 Boeing aircraft fly throughout the world with parts and assemblies built in China,” Arata noted. “Boeing will continue to advance China’s aviation industry and partner with China for mutual benefits.”
Liaoning Province, like other regions in the country, is opening its arms to foreign investors and entrepreneurs. In the first seven months of 2018, the actual use of foreign investment in Liaoning reached US$3.48 billion, up by 15.3 percent year-on-year.
“Thanks to Liaoning’s strong manufacturing power and sound business environment, our cooperation has been successful,” declared Jochen Goller, president of BMW Group Region China. The company established a joint venture with local car maker Brilliance Auto in 2003 and plans to build its third factory in the province to expand production.
Liaoning’s latest effort towards further opening up has been highlighted by the China ( Liaoning) Pilot Free Trade Zone launched in April 2017. The free trade zone targets international trade, modern manufacturing, financial services, modern logistics and scientific services and had drawn 414 foreign- invested companies from more than 40 countries and regions by July this year. With imports and exports reaching 71.77 billion yuan ( US$10.5 billion) in the first half of 2018, the zone is expected to expand trading partnerships with foreign enterprises and become the driving force in designing a new economic landscape in the province.