Xinhua Insight: China's rust belt seeks new growth engines

China has approved plans for a city cluster in the northeast rust belt, another move to revive the traditional industrial base.

According to a post on the State Council website, the provinces of Heilongjiang and Jilin will restructure their urban distribution, scale and industries with the provincial capitals of Harbin and Changchun becoming the centers of a group of cities.

The post stressed coordinated development of the region across industry; environmental protection; opening up and reform; public services to improve the urban environment; people's living conditions; competitiveness of cities; and urbanization in surrounding areas.

The city cluster will help mitigate the competing friction among the neighboring provinces of Heilongjiang and Jilin, which have similar economic structure and the same development levels by optimizing resource allocation and industrial division, said Cheng Yao, deputy head of the institute of economy research under the Heilongjiang Provincial Academy of Social Sciences.

STRATEGIC PLANS

The city cluster design is not the first government strategic plan to focus on the northeastern region recently.

Over the past two months, two new areas, Changchun and Harbin, have been approved respectively as the 16th and 17th state-level new areas approved by the State Council. Preferential policies to attract investment will be rolled out and lead development in the traditional industrial bases.

"The government wants to revive the northeastern region," said Song Donglin, president of Jilin University of Finance and Economics.

Song said the centers of Harbin and Changchun, which hope to attract high-end industries, will help promote development of nearby small cities, including Daqing, Siping and Qiqihar.

In the industry division, Harbin will focus on food and equipment manufacturing, while Changchun on automobile, agricultural product processing and trains, he said.

The northeastern region, consisting of Liaoning, Jilin and Heilongjiang provinces and part of Inner Mongolia Autonomous Region, was among the first regions in China to become industrialized. Traditional industries include steel, automobile, shipbuilding, aircraft manufacturing, and petroleum refining.

The provinces saw double-digit economy growth until 2012 and 2013, when the region faced shrinking resources and industrial overcapacity amid global economic slowdown.

In 2015, economic growth in Heilongjiang, Jilin, and Liaoning trailed behind the national average, posting 5.7, 6.5 and 3 percent, respectively. The 3 percent growth rate in Liaoning was the lowest of all the 31 provincial regions.

EMERGING INDUSTRIES

While traditional industries have lost their shine, the rust belt is seeking new engines for growth. In addition to strategic plans by the central government, local governments have also been restructuring the economy by cultivating new industries, such as winter tourism, the space industry, and robotics.

In Heilongjiang, tourism revenue surged by 27.7 percent to 136 billion yuan (20.77 billion U.S. dollars), and it welcomed 130 million tourists last year, with winter tourism a core aspect.

"Snow used to mean disaster. But now, it means money," said Fan Zhaoyi, a logger-turned rural home-stay owner in Shuangfeng Forest Farm, dubbed "Snow Town of China." Fan made 400,000 yuan last year thanks to his 15 guest rooms and restaurant.

"It feels so much better than just watching television and playing mahjong to kill winter time," he said.

The satellite information industry is also emerging. In October, the "Jilin-1" satellites for commercial remote-sensing services were launched, including an optical remote-sensing satellite, two satellites for video imaging and another for imaging technique testing.

The operator of the satellite cluster, Chang Guang Satellite Technology Co., Ltd. based in Jilin's capital Changchun, provides remote-sensing data and relevant products, which may be used for the monitoring, development, and surveying of resources as well as mapping and disaster prevention for domestic and overseas clients.

Cao Xibin, the deputy chief designer, said the project will not only promote development of machinery, optics and photoelectric sensing industries, but also help data applications, measure and control technology, and remote-sensing data processing, estimating huge commercial profits.

Compared with its European and American competitors, the company offers the same service at a lower price. It recently signed a service agreement with an Australian firm, although Cao did not disclose the contract value.

According to a 10-year plan, Jilin will establish itself in satellite remote-sensing and integrated application of space information by 2025. It is also building a space information industrial park, which is expected to bring in billions in revenue.

In Liaoning Province, robot maker Siasun has sold more than 40 self-developed composite robots, a combination of mechanical arm and automatic guided vehicle, over the past three months. The robots are used in the semi-conductor and power grid industries.

Company engineer Song Xue is optimistic about the robot's market perspectives. "Our composite robots can effectively replace human beings, and it will take only one to two years for companies to recover their costs."

A key meeting held by the Political Bureau of the Communist Party of China Central Committee in late December said the northeast region in China will be encouraged to achieve medium-high growth to help meet the target of building a moderately prosperous society by 2020.

The leadership promised more market-oriented administration, structural reform, stimulation for innovation and entrepreneurship, and improved quality of life in the region.

Sun Zhiming, an economist with Jilin Provincial Academy of Social Sciences, said the northeastern provinces are seeking new growth points in emerging industries in space, tourism, high-end manufacturing and biochemical engineering.

"Economic restructuring is a must for the three provinces to step out of difficulty," he said. Endi