Revive real economy in Northeast China

A Chinese worker processes steel at a factory in Qingdao city, East China's Shandong province, July 1, 2016. [Photo/IC]

President Xi Jinping has always given importance to the revival of Northeast China. He has delivered a series of speeches on how to revitalize the region, and at this year's annual sessions of China's top legislature and top political advisory body, he emphasized the importance of boosting the real economy in the traditional industrial base.

Recent years have seen the central government paying greater attention to the revival of the old industrial base and implementing a new strategy in 2003 to revitalize Northeast China. The central government issued the 13th Five-Year Plan of Northeast China Revitalization, too, in 2016, and vowed to revive the real economy and cultivate new economic engines in the region.

The authorities must also ensure the manufacturing sector is at the core of the strategy to revitalize the real economy in Northeast China. Although manufacturing in the region has made some progress during the past more than one decade, it still lags behind the manufacturing sectors of the eastern and southeastern coastal areas. And accelerating the economy's upgrading and transformation is key to the further development of Northeast China's manufacturing sector.

The implementation of Made in China 2025 and Internet Plus offers a golden opportunity for Northeast China to revive its manufacturing sector. How to effectively use the region's industrial base and mature industrial human resources to expedite the development of intelligent manufacturing and emerging industries, as well as elevate the region's manufacturing sector to the medium and high end of the industrial and value chains, is a big challenge for the region's enterprises.

For the transformation and upgrading of the region's manufacturing sector, we have to improve the internal development base. First, Northeast China's enterprises should improve their technological innovation capacity. Since innovation is key to upgrading, enterprises have to constantly develop new products through innovation to meet consumers' demands. The competitive edge of enterprises should be based on technology and quality rather than low cost, for which they have to earmark more funds for research and development, improve their innovation-incentive mechanisms, create new innovative platforms and integrate their innovative resources.

Second, the internal structural adjustment of Northeast China's manufacturing enterprises should be intensified. Compared with enterprises in the eastern coastal region, those in Northeast China face a bigger overcapacity problem. So the region's enterprises should expedite the process of reducing overcapacity, improve the capacity utilization rate, help develop strategic emerging industries, and promote the transformation and upgrading of the manufacturing sector.

Third, managers of enterprises in the northeastern region should encourage the craftsmanship spirit for their long-term development. In addition, employees should also be allowed to give full play to their creativity and grow together with their enterprises.

Moreover, the government should create a good systematic environment for Northeast China's manufacturing transformation and upgrading.

Revitalizing Northeast China's manufacturing sector requires the central government to provide funds, support large-scale projects, and build an investment-friendly environment for all parties.

The government has to further streamline the administration and delegate more powers to lower-level governments and promote mixed-ownership reform for the revival of Northeast China, because that will reduce government intervention in enterprises' normal production and operation activities, and allow the market to play a greater role in the economy. Besides, mixed ownership reform can revitalize State-owned enterprises in Northeast China, promote private investment and private businesses.

The government also should further cut taxation and fees (and there is enough room for it to do so) in order to reduce the burden on enterprises. Also, it should either withdraw or regulate the arbitrary charges imposed on enterprises in Northeast China. All these will help reduce the burden on enterprises, create more room for their self-development and attract investment for the manufacturing sector.

The author is a researcher at Chinese Enterprise Confederation.