More to do

Over recent years, the Central Government has issued a number of plans to revive the northeast. The region’s development lost steam in the 1990s because of China’s economic transition and reform of stateowned enterprises (SOES), and its lackluster economic performance has since continued.

The latest data from the National Bureau of Statistics show the three provinces differ in terms of economic growth. In 2016, the GDP of Heilongjiang and Jilin respectively increased by 6.1 percent and 6.9 percent, similar to the national average of 6.7 percent, whereas that of Liaoning shrank by 2.5 percent.

In the first two months of 2017, the industrial value added of the northeast increased by a meager 0.8 percent, much lower than the national average of 6.3 percent, while fixed assets investment in the region declined by 17.8 percent year on year, compared to the national average of 8.9-percent growth.

A lack of dynamic private businesses is also a major concern for the northeast. A recent ranking of the top 500 private businesses in China released by the All-china Federation of Industry and Commerce contained only 10 enterprises from the northeast, whereas Zhejiang, Jiangsu and Guangdong each have nearly 100 firms on the list.

The region’s economy, however, is far from satisfactory. What are the reasons?

One possible explanation is the shortage of outstanding entrepreneurs and other people clued up about how the market economy works. After several decades during which the economy was centrally planned, the older generations in the northeast tend to be overcautious in private businesses and reform. Such behind-the-times thinking obstructs the development of private businesses, one of the major driving forces of China’s economy.

“To reverse the outdated notions about the market economy of the local governments and people is at the heart of efforts to revive this region,” said Xiang Tao, a professor at the Northeastern University in Shenyang.

Furthermore, while the region has a strong need for skilled laborers, the population of the three northeastern provinces has been shrinking in recent years due to net outward migration and comparatively low fertility rates. High-caliber workers have drained from the three provinces due to the slowing regional economy, and this has in turn undercut local growth. According to NDRC data, from 2010 to 2015, approximately 240,000 people moved away from the three provinces to other regions in pursuit of better job opportunities and a more comfortable climate.

According to Fu, SOES account for a large proportion of the northeastern economy. Most locally administered SOES have encountered difficulties in recent years, such as in dealing with social security funding shortages and resettlement of laid-off workers. In addition, as the region’s population is quickly aging, the provincial pension deficits are expanding, and it’s unrealistic to expect the region to fix this problem by itself. If the Central Government could give more support in these areas, it would help the development of the northeast in a big way.

“The Central Government should be patient with this new revitalization attempt to allow a time window for the northeastern economy to gradually adjust itself, make changes and let market forces kick in,” Fu said.