Xi and Li point way for old industrial base

Zhang Sheng, a deputy to the National People's Congress who runs a State-owned mining company in Heilongjiang province, has come to Beijing for the NPC's annual session this year with many questions.

Chinese President Xi Jinping (back, 4th R), also general secretary of the Communist Party of China (CPC) Central Committee and chairman of the Central Military Commission, joins a panel discussion with deputies to the 12th National People's Congress (NPC) from northeast China's Jilin province during the third session of the 12th NPC, in Beijing, capital of China, March 9, 2015. [Photo/Xinhua]

How can his company shake off its financial difficulties－the worst since 2011－when coal, its main product, is being sold at the lowest price for many years?

Will there be a turning point in the continued decline in national coal demand, or have coal's glory days in China been ended by the nation's economic transition?

Zhang shares his deep concerns with many NPC deputies from the resource-rich and heavy industrial provinces of Heilongjiang, Liaoning and Jilin.

The three provinces, which make up the country's northeast, are facing a painful struggle to shed outdated and wasteful old industries to build new growth engines for the local economy.

As a gesture symbolizing the central government's commitment to rebuilding the northeast, President Xi Jinping and Premier Li Keqiang attended panel discussions of deputies from the provinces on Monday.

Xi joined the Jilin deputies, while Li met with those from Heilongjiang.

Jilin's GDP growth was 6.5 percent year-on-year in 2014, below the national average of 7.4 percent, while Heilongjiang's growth was only 5.6 percent, 2.9 percentage points below the province's target.

Xi said officials in the northeast should have realized sooner that the local economy's simple and old-fashioned industrial structure was unsustainable.

He said the rejuvenation of China's traditional industrial base requires abandoning old industrial capacity as soon as possible to make way for new industries and services. "Sticking to the old path can only go further astray," the president added.

Li, speaking to the Heilongjiang delegation, urged the deputies to act more quickly in business restructuring.

He also said the central government may offer financial incentives for the provinces' industrial transition.

Zhang's company, which is barely afloat with State subsidies after registering a 5 billion yuan ($800 million) loss last year, is planning to reduce its full-employment payroll by as much as 28 percent this year.

Qi Yingfei, a professor of economics at Dongbei University of Finance and Economics, said the difficulties faced by the northeastern economy reflect changing times. The local governments will have to learn to help enterprises grow by producing products and services of a higher quality.

"This year is therefore a critical point. By requiring lower growth targets, the local governments may leave more room for reform and hopefully give more help to businesses seeking a transformation," Qi said.