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State-owned firms can expect more opportunities for development and changes in the major but lagging industrial bases in northeast China, as the central government launches a strategy to modernize the rusty industrial centers in the next few years.

The Chinese government made the decision in early September to turn the outdated industrial bases of China into new and essential growth areas of the national economy. The Political Bureau of the Communist Party of China Central Committee on Monday called for accelerated efforts to revitalize the old northeast industrial base, calling it a long-term and arduous task.

Comprising the provinces of Heilongjiang, Jilin and Liaoning, the northeast China region played a vital role in the country's industrial development from the 1950s to the early 1970s.

In line with the strategy, the provincial government of Heilongjiang has set up a promotion team guiding reforms in over 400 state-owned enterprises in the province. Meanwhile, the provincial government also began gradually reducing the shares of the state-owned enterprises it owned.

The same is happening in Liaoning province, which was once a famed industrial center around China in the 1950s and 60s but became gradually sluggish in marching toward the market economy in the mid-1990s due to its single economic structure, intensive with heavy industry. Its provincial capital city of Shenyang has sped up the privatization of state-owned shares as well. The city's nine listed companies have transferred state-owned shares to other forms of assets so far.

The another province in the rust-belt, Jilin, has also been retooling state-owned firms by withdrawing state-owned shares from the medium and small-sized ones.

The northeast, which contributed the country's first batch of steel, machine tools, locomotives and planes after the founding of New China in 1949, still has potential in these fields.

However, many of the traditional industrial firms established in the 1950s when China adopted a planned economic system, became less competitive since the country implemented the policies of reform and opening itself to the outside world, and moved from a planned economy toward a market economy about two decades ago.

Relevant figures show that by the end of 2002, the total gross assets of Chinese state-owned enterprises valued 17.4 trillion yuan (about US$2.1 trillion). The government was expected to bankrupt those non-competitive state-owned enterprises in five years, but a comparably huge amount of assets have a potential developing future, not only with the workshops and equipment, but also with the technical and management talents and official business allowance, which were appealing to the private sector as well as individuals, according to industrial insiders.

Some state-owned enterprises, including those dealing with resources and public utilities, are attractive to investors, said Luo Fei, a general manager from a finances consultancy firm.

With the promotion from the central government, the retooling of state-owned enterprises in the three northeastern provinces is stepping into a new stage, noted experts.

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