North­east De­vel­op­ment :

Changchun, China’s Detroit in the coun­try’s north­east rust belt, is re­gain­ing its eco­nomic mo­men­tum. What can it teach other cities in the re­gion?

NewsChina - - CONTENTS - By Xu Tian

Rust to Riches

Changchun, the cap­i­tal of China's north­east­ern Jilin Province and the cra­dle of the na­tion's au­to­mo­bile in­dus­try, might have re­mained at the back of the pub­lic mind if not for the vac­cine scan­dal re­vealed in July that trig­gered na­tion­wide anger. But now there is bet­ter news.

Ac­cord­ing to Changchun's mu­nic­i­pal sta­tis­tics bureau, in the first half of 2018, the city's GDP reached year-on-year growth of 7.4 per­cent, main­tain­ing its record of higher than na­tional av­er­age growth since the first half of 2016. Three other ma­jor cities in the area, Shenyang, Dalian and Harbin, all still lag be­hind the av­er­age.

The old north­east in­dus­trial base thrived dur­ing the pe­riod of the coun­try's planned econ­omy, but be­gan to fal­ter af­ter mar­ket-ori­ented re­forms ac­cel­er­ated through the 1990s. There has been wide­spread con­cern and con­tro­versy in re­cent years as to how the re­gion can catch up by im­prov­ing its busi­ness en­vi­ron­ment. This is why Changchun's re­vival is re­garded as a pos­si­ble so­lu­tion that its peers in the re­gion may fol­low to find their way out of the woods.

In­dus­trial Re­struc­ture

In 2015, Changchun faced im­mense chal­lenges, with all its flag­ship en­ter­prises, in­clud­ing the State-run First Au­to­mo­tive Works Group (FAW) and the Hong Kong-listed bio­chem­i­cal gi­ant Dacheng In­dus­trial Group both fail­ing. The city's in­dus­trial out­put went back­wards for sev­eral months.

Che Renyi, vice di­rec­tor of Changchun's In­dus­try and In­for­ma­tion In­dus­try Bureau, told Newschina that the city de­cided to re­ju­ve­nate it­self with tech­nol­ogy-ori­ented in­no­va­tion and in­dus­trial re­struc­tur­ing and up­grad­ing on the ba­sis of its ex­ist­ing strength.

For ex­am­ple, tra­di­tional oil-fu­eled cars might be at the end of the road, but the prospects for new en­ergy and smart ve­hi­cles are promis­ing. To achieve the up­grade, the city has been try­ing to move up the value chain to­ward a world-class base for its ex­ist­ing ma­jor pil­lar in­dus­tries, in­clud­ing au­tomak­ing, agri­cul­tural pro­cess­ing and equip­ment man­u­fac­tur­ing.

Mean­while, emerg­ing in­dus­tries, such as pho­to­elec­tric in­for­ma­tion tech­nol­ogy, bi­ol­ogy, medicine, new en­ergy, new ma­te­ri­als and big data, are ex­pected to be built on the city's ex­ist­ing re­sources and boost the up­grade of the tra­di­tional pil­lar in­dus­tries.

New en­ergy will power au­tos while big data will make the man­u­fac­tur­ing sec­tor smart. Changchun is also home to China's first op­ti­cal re­search in­sti­tute. All this makes it pos­si­ble for the city to de­velop a fully-fledged, in­no­va­tive sup­ply chain.

To at­tract pri­vate tech-savvy en­ter­prises to re­al­ize the po­ten­tial, in 2017, Changchun set a goal of hav­ing 200 Lit­tle Gi­ant En­ter­prises and 140 Na­tional High-tech En­ter­prises, two head­line cam­paigns launched by the Chi­nese gov­ern­ment in re­cent years to en­cour­age the growth of high-tech com­pa­nies. The Lit­tle Gi­ant pro­gram rec­og­nizes small and medium sized com­pa­nies that gain core com­petive­ness through in­no­va­tion in tech­nol­ogy, man­age­ment and ser­vices, while the Na­tional High-tech pro­gram, which has higher stan­dards, in­volves com­pa­nies that pos­sess in­tel­lec­tual prop­erty for tech­nolo­gies that play a core role in their prod­ucts or ser­vices.

It was thought a mis­sion im­pos­si­ble at first. In 2014, there were only about 60 Lit­tle Gi­ants in the city, as Zhang Yongchao, an of­fi­cial at Changchun's Bureau of Science and Tech­nol­ogy, told Newschina. “At that time, we didn't even know where to find th­ese en­ter­prises,” Zhang said.

Gov­ern­ment of­fi­cials were re­quired to seek en­ter­prises with the po­ten­tial to be­come a na­tional high-tech en­ter­prise or a “Lit­tle Gi­ant.” Short­listed can­di­dates were pro­vided with tech­ni­cal help in cal­i­brat­ing with the na­tional stan­dards, and suc­cess­ful ones were awarded with more op­por­tu­ni­ties in win­ning bids in the city.

In 2017, 197 com­pa­nies be­came Na­tional High-tech En­ter­prises, 2.7 times the growth in 2016. And 261 com­pa­nies have be­come new Lit­tle Gi­ant En­ter­prises, 3.9 times the num­ber in 2016. In 2018, there are al­ready 329 com­pa­nies ap­ply­ing to be Na­tional High-tech En­ter­prises, 103 more than in 2017.

Mean­while, part­ner­ships be­tween en­ter­prises and re­search

in­sti­tu­tions and uni­ver­si­ties have been en­cour­aged to build more in­no­va­tion-ori­ented busi­ness star­tups. Fur­ther­more, an on­line plat­form is avail­able where fi­nan­cial in­sti­tu­tions pro­vide cap­i­tal for tech com­pa­nies with good busi­ness prospects. Thanks to this ser­vice, Yongli, which pro­duces laser tubes, has grown to take 20 per­cent of the do­mes­tic mar­ket and now ex­ports over­seas.

Im­prov­ing the Soft En­vi­ron­ment

Ac­cord­ing to Changchun's bureau of sta­tis­tics, from 2015 to 2017, Changchun's turnover of tech­nol­ogy con­tracts, which in­volve ser­vices in de­vel­op­ing, trad­ing and con­sult­ing on tech­nol­ogy, grew from 2.4 bil­lion yuan (US$352.5M) to 20.8 bil­lion yuan (US$3B).

Be­tween Jan­uary and May 2018, the in­dus­trial out­put value of en­ter­prises with an an­nual sales rev­enue of more than 20 mil­lion yuan (US$2.9M) recorded an in­crease of eight per­cent over the same pe­riod for last year, with the au­to­mo­bile and parts and agri­cul­tural pro­cess­ing sec­tors con­tribut­ing over three-quarters of the to­tal rev­enue. Emerg­ing in­dus­tries did their part too.

The out­put value of bi­o­log­i­cal phar­ma­ceu­ti­cal en­ter­prises re­ported a year-on-year in­crease of 12.6 per­cent while opto-eletronic and in­for­ma­tion com­pa­nies achieved a year-on-year growth of 10 per­cent.

Part of the re­sults are thanks to Changchun's progress on im­prov­ing its “soft en­vi­ron­ment” for in­vest­ment. This refers to gov­ern­ment pol­icy and reg­u­la­tions, ad­min­is­tra­tive ef­fi­ciency, cul­tural at­mos­phere, ser­vices and the qual­ity of the per­son­nel in­vestors have to deal with.

Changchun started by chang­ing the of­fi­cials' mind­set in 2016. “When you feel you are slow and back­ward, you will be more mo­ti­vated to catch up and ex­plore more pos­si­bil­i­ties,” Song Zhangzhe, vice di­rec­tor of the Changchun De­vel­op­ment and Re­form Mis­sion, told Newschina.

As a stim­u­lus, the ap­point­ment and pro­mo­tion of of­fi­cials is per­for­mance-ori­ented. For ex­am­ple, in the past, of­fi­cials were not tasked with at­tract­ing in­vest­ment. Now the as­sess­ment of rel­e­vant de­part­ments and the pro­mo­tion of of­fi­cials is linked to their achieve­ments in this field.

Changchun re­newed its soft en­vi­ron­ment of­fice in 2016. How the soft en­vi­ron­ment goes, as su­per­vised and as­sessed by the of­fice, is part of the per­for­mance as­sess­ment for lo­cal of­fi­cials.

A mech­a­nism has also been es­tab­lished to pro­mote the smooth land­ing of projects. For big projects, re­lated of­fi­cials are as­signed to help go through the for­mal­i­ties, fi­nanc­ing, and other ser­vices. If the projects fail to land smoothly, it will af­fect the pro­mo­tion of the of­fi­cials in charge.

Ad­min­is­tra­tive pro­ce­dures for en­ter­prises have been uni­fied and largely stream­lined in the city. Now the ac­tual time for open­ing a com­pany has de­creased from 15 pre­vi­ously to three work­ing days.

Ac­cord­ing to He Jun, di­rec­tor of Changchun's soft en­vi­ron­ment of­fice, now all the civil ser­vants in Changchun feel pres­sure to im­prove their be­hav­ior and pro­vide a bet­ter soft en­vi­ron­ment for busi­nesses, the top pri­or­ity on the gov­ern­ment agenda.

Changchun's take-off in the mar­ket-ori­ented econ­omy may pro­vide good lessons for the whole re­gion.

A key sci­en­tific equip­ment project passed its eval­u­a­tion at the Changchun In­sti­tute of Op­tics, Fine Me­chan­ics and Physics, Chi­nese Academy of Sciences, Au­gust 21, 2018

Pro­duc­tion line of Volk­swagon ve­hi­cles at Changchun Volk­swagon Au­to­mo­tive Com­pany

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