Key to solving Liaoning's problems lies in reforms

Should the northeastern province of Liaoning immediately deprive State-owned enterprises of their social functions?

Every deputy to the National People's Congress I asked from the Liaoning delegation gave an absolute "yes".

It is not difficult to understand the reason for their unanimous answers.

Liaoning was once a titan of China's heavy industry, reaching a peak in the 1970s when it was among the top three industrial centers, along with Shanghai and Tianjin. But its status declined rapidly over the next decade, as it struggled to adapt to the structural reforms of the new market economy.

As a result, many cities in Liaoning have been hit by factory closures and suffered unemployment as heavy as its main industries: steel and machinery.

I'm a native of Liaoning, and I once asked my hometown friends why they have fought so hard to stay in big cities such as Suzhou, Hangzhou and Xiamen since graduating from university.

The answers were all similar - the salary offered by SOEs in our hometown are not attractive, and the administrative style of management there is too bureaucratic.

One of the major issues that wrecked the economic growth in Liaoning, and the whole northeastern region, is the powerful function of their giant SOEs.

These enormous companies, such as Shenyang Aircraft Corp, which is part of the Aviation Industry Corp of China, and Ansteel Group, have the power to manage their own hospitals, schools, commercial properties and even police stations.

Huang Taiyan, an NPC deputy and a professor from Liaoning, told me such self-management and benefit systems have made locals believe that getting a job at one of these SOEs means having a "iron rice bowl" - a job for life.

They never expected that one day these companies would struggle with cash flow.

"Locals just want to secure a job at these SOEs. Many of them lack the nerve to establish their own business," he said.

"The majority of supporting businesses, including after-sales and transportation services, and supplies of parts and materials, have been taken over by private companies from Zhejiang and Jiangsu provinces as well as from Germany and the Netherlands."

To my relief, many NPC deputies raised their voices to speak out about their concerns on this matter during the annual sessions this year. They argued that the SOE reform should stress "quality and efficiency".

Eager to enhance the province's earning ability, the central government has said pushing supply-side structural reform and making more efforts to upgrade the industrial structure and establish competitive industries are key to revitalizing Liaoning's economy.