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Business / Economy

Problems the Northeast must solve

By Zhang Zhouxiang (China Daily) Updated: 2016-03-28 10:10

The lack of proper understanding of the market makes things worse. The China Economic Times journalists agreed on one thing, that entrepreneurs in the above provinces and regions care more about leading officials' opinions than market changes, because they make profits by getting allowances from the provincial governments rather than by increasing productivity.

Also, State-owned enterprises, which still play a major role in the provinces and regions, still carry the heavy baggage of bureaucracy with them.

"We produce good grains, but our mooncakes are all imported from Guangdong province in the south," says Li Junjiang, chief of the School of Economics, Jilin University.

Local enterprises tend to solve problems through their close relationships with officials instead of market means, Li added.

What should the resource-intensive provinces do? How do they reverse the falling trend?

"Investment is still the most effective policy," says Ren Kai, a planning official with the Shanxi provincial development and reform commission.

Ren's remarks reflect the mentality of officials in the provinces. As demand dips, heavy investment in big projects becomes their main tool to stabilize economic growth.

To attract investment, the Liaoning provincial government has set up a 10-billion-yuan ($1.53 billion) "guiding fund" to facilitate cooperation between State and private capital. In neighboring Jilin, officials have expedited infrastructure construction. And Heilongjiang had started at least five programs by September 2015, each with an investment of over 10 billion yuan.

Another major move is to develop new industries and extend the industrial chain. In Inner Mongolia, one coal mine after another has been trying to extract gas and oil from coal, in order to produce cleaner energy.

And Shanxi is putting more emphasis on sectors such as cultural tourism, agriculture and gas exploitation.

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