Northeast China, made up of Liaoning, Jilin and Heilongjiang provinces, is China's old industrial base and an important grain base. The region has abundant natural resources, integrated heavy industries, solid infrastructure and a strong pool of human resources.

However, it has lagged behind other coastal provinces in recent years. All three provinces now face the same difficulties: many state-owned enterprises have gone bankrupt and thousands of workers have been laid off; natural resources are exhausted in some places, and low incomes in the agricultural sector has caused farmers to cut back production.

To revitalize the old industrial base, the Chinese government has decided to put certain preferential policies in place for the region. In December, the State Development and Reform Commission announced that 61 billion yuan (US$7.4 billion) was to be invested in the first 100 projects.

Nevertheless, the three provinces have come to the conclusion that system innovation is crucial for their development.

“We need adjust the structure of state-owned enterprises and adopt joint-stock systems for them. We also need to create a good investment environment for private domestic and foreign investors,” said Zhang Zuoyi, governor of Heilongjiang Province.

He said that Heilongjiang Province is set to develop a mixed ownership economy.

Jilin Province Governor Hong Hu believes that the greatest problem of the old industrial base is its outdated industrial structure and systems. Structural adjustment, he said, is crucial for the revitalization of northeast China.

Hong said that Jilin Province will accelerate this type of necessary structural adjustment, encourage modernization in agriculture, develop the service sector and fully upgrade secondary industry.

"We will began to develop light industry and we will use high technology to rebuild the traditional industries," he said.

None of the three governors was eager to respond to questions concerning regional cooperation and division of industries. Each of the three provinces is making an individual effort to develop certain industries, including autos, steel, petrochemicals and heavy industry. They are competing for both domestic and foreign investment.

"We each need to adjust the industrial layout in the region according to our own advantages, and prevent redundant constructions," said Zhang Zuoyi. He provided no further details.

(China.org.cn by staff reporter Tang Fuchun March 13, 2004)