Revitalizing Old Industrial Base of Northeast China: Process,Policy and Challenge Revitalizing Old Industrial Base of Northeast China: Process,Policy and Challenge

Revitalizing Old Industrial Base of Northeast China: Process,Policy and Challenge

  • 期刊名字:中国地理科学(英文版)
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  • 论文作者:ZHANG Pingyu
  • 作者单位:Northeast Institute of Geography and Agroecology
  • 更新时间:2020-11-11
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Chin. Geogra. Sci. 2008 18(2) 109-118DOI: 10.1007/s11769-008-0109-2www.springerlink.comRevitalizing Old Industrial Base of Northeast China:Process, Policy and ChallengeZHANG Pingyu(Northeast Institute of Geography and Agroecology, Chinese Academy of Sciences, Changchun 130012, China)Abstract: Northeast China is the largest old industrial base of China that endured persistent infuence of the past plannedeconomy system. This region has lost its leading place since the reform and opening up, and became a backward region bycontrast with the coastal areas. This paper elaborates the evolutionary process of the old industrial base of Northeast China,analyses the main reasons for the decline, gives a preliminary evaluation on the revtalizing polices in recent years, andpoints out major long term challenges for future revitalization. It concludes that for Northeast China, a relative decliningarea: 1) it is indispensable to get the long-term policy support from the central govenment; 2) system reform and structureadjustment are the crucial strategies, particulaly the reform of the large and medium state-owned enterprises; and devel-oping new industries is as important as upgrading traditional advantaged industries; 3) the local goverments should playan indirect role, avoiding from any unncessary intervention on economic actity; and 4) social security and investmentclimate must be improved simultaneously. In addition, the author sresses that the lack of knowledge on the nature of oldindustrial base had led to filures of the past ititives, and revializing the old industial base should be treated as a holistic regional project incuding economy growth, society progress and eavironment improvement.Keywords: old industrial base; regional revialization; regional policy; Northeast China1 Introductionthe 1980s. In the mid-1990s, some scholars noted thedeclining in the old industrial base of Northeast ChinaUrban and regional decline is a worldwide phenomenon, (Li and Li, 1996), and began to concerm revitalzing is-and revitalizing the declined old industrial base remains sues (Li, 1996; Lin et al, 2000; Liu, 2001). Until 2003,as a tough issue in regional and urban development revitalizing old industrial bases became a national policy,studies. With rapid technology advancing and global people treated old industrial base issues more seriously,economic and political restructuring after World War I,,and realized the very lack of knowledge on the nature ofmost developed countries acomplished industry trans-this issue. Hence, more and more domestic literaturesformation in the period of the 1970s -1980s, and stepped aimed at making some sense of foreign theory and em-on the post industialization stage, yet there were some pirical story about revitalizing old industrial base (Lideclining cities or regions left to be revitalized. It is easy and Zhang, 2004; Li and Wu, 2005; Li and Shi, 2006).to find some Westerm ltratures elaborating regional Major research projects focused on policy and measurerevitalization and urban regeneration, and some stories for the revitalization, particularly on the system reformlike Emscher Park in Ruhr, and Dockland in London etc. of the state-owned enterprises (SOEs) and industrialseem familiar to current Chinese scholars and oficials adjustment (Jin et al, 2006; Wang and Wei, 205). The(Roberts and Sykes, 2000; Couch et al, 2003; Hamnette, international research even more concerned finance and2003). However, it is hard to find any holistic study on market issues (Bourguignon, 2003). But, a broadly ac-China's old industrial base, though the story of eco- knowledged theoretical framework for revitalizing oldnomic achievement in the coastal area has long domi- industrial base does not appear.nated main stream of China's social and economy since中国煤化工may experience aYHCNMHGReceived date: 2007-03-12; accepted date: 2007-12-03Foundation item: Under the auspices of National Natural Science Foundation of China (No. 40635030, 40471038), Knowledge Innova-tion Program of Chinese Academy of Sciences No. kzcxz-YW-321-04)Corresponding author: ZHANG Pingyu. E-mail: zhangpy@neigae.ac.cn110ZHANG Pingyucycle of birth, growth and decline. There is some com-golia Autonomous Regions, with an area of 1.25x 10'km';parability between different social contexts, and Chinawhereas NOIB in general is referred to Northeast Chinacertainly could learn both experiences and lessons fromthat includes Liaoning, Jilin and Heilongjiang provincesthe abroad cases. But, a fundamental difference between only. In 2005, gross regional production in NortheastChinese and Westem old industrial bases is that China's China was 1.80x 10'2 yuan (RMB), and total populationold industrial bases have all grown up under the blockedwas about 120x 10°. Owing to the very abundant naturalplanned economy for a long time, and system reformresources, unique development history and geopoliticalshould maintain the core part of revitalizing policy.relations with the pre-Soviet Union, Northeast China wasTherefore, we should treat the old industrial base as a built to be the first indutialized region in the 1950s-regional phenomenon based on its special history back- 1960s, with the result that it won its historic position asground, unique social and economic context and localthe largest industrial base of China at that time. Earliercondition. This paper attempts to comprehensively dis-regional industrialization had produced advanced socialcuss the old industrial base of Northeast China, usuallydevelopment. The urbanization level in Northeast China,called Northeast Old Industrial Base NOIB), in order to involving 90 cities,s is 50%, which is about 10% highergive a good understanding of China's old industrial basethan national average level. This region also takes frontissues, which by all means adds new materials on therank in education and technology level; there are hun-old industrial base studies.dreds of colleges and university and key institutes.Moreover, Northeast China is very famous for its vast2 Evolutionary Process of Northeast Old In-black soil plain, which contributes 1/3 more commoditydustrial Basecrop for the whole China annually. Bordered with DP RKorea, Russia and Mongolia, Northeast China could playNortheasterm China consists of Liaoning, Jilin and Hei-an important role in regional coperation in Northeastlongiang provinces and the eastem part of the Inner Mon-Asia (Fig.1).RUSSIA●Genhe{ Heihe BlagoveshcbeaskzabaykalsyYichu ,●Hcgang/弋( Qiqihar| MONGOLIA、,)Daqing SuitUangoisyr●Harbin Jjiojitcheng 0 Modanjiang●- isuifenhe" Changchun 小、. 以WadiyostokJapan SeaoLidoyuanhifenLegend .ChapysngT Paojin ShenyangRailway. jJiozhou MnsharBeaxiy DPRK- Provincial boundary中国煤化工MYHCNMHGBohai Sea DalianFig 1 Distribution sketch of cities in Northeast China11Revitalizing Old Industral Base of Northeast China: Process, Policy and Challenge2.1 Industrial legacy and building of Northeast Oldthe other areas, so it is quite understandable for the cen-Industrial Basetral goverment to reuse the industrial legacy includingIn the early 20th century, Northeast China generally rep- workshops, machines and ifrstnctures as well asresented an agricultural landscape with hundreds of technicians and sill workers. 2) Northeast China hadthousands immigrants from inner China because of theboth quantity and quality advantages in natural re-deregulation of land cultivation by the govermment of sources. These industril materials had a very good spa-late Qing Dynasty. The agricultural booming in a shorttial combination particularly in Central Liaoning Prov-time provided favorable conditions for the agro proce- ince which was acknowledged as“Oriental Ruhr" andssing industries, and a large amount of flour, soybean oil, had long been a very important mining, smelting, petro-alcoholic drink, and sugar products were sold to domes-leum processing, chemical, manufacturing industriestic and overseas markets. Especially the annual soybeanbase. And 3) Northeast China was bordered with formertrade amount of Northeast China, where is the main soy-Soviet Union. It was convenient to copy the former So-bean production area in the world, rose from 640x10't viet Union idutialization model, to introduce the for-in 1922 to 2.83x10t in 1931 (Deng et al, 2004). Mostmer Soviet Union's experts and industrial equipments toof the soybean was sold to Europe, Japan and Russia.this region. Also, it was a safe area for developingMeanwhile some industry sectors were at the beginning economy with respet to the intimate Sino-Soviet Unionstage.relationship and uncertain world security situation in theIn 1931, the Japanese invaded and conquered North- 1950s.east China, and sooner established a puppet ManchurianSome 54 projects were virtually implemented ingovermment. Some 20 big cities including Dalian, Anshan, 1953-1961. Except for some new establishments suchBenxi, Fushun, Dandong, Shenyang, Changchun, Jlin,as First Automotive Works Corp (FAW) in ChangchunHarbin, Qiqihar, Jiamusi were buit to be various types of City, most investments were put on reconstution andindustrial cities with main sectors of mining and quarry- enlargement of the old sectors such as coal mining,ing, smelting, machinery, petroleum processing and cok-smelting, electric power, machinery and manufacturinging, raw chemical matrials and chemical products, tex- indutries in the big cities. Those projects had funda-tile industry, etc. (Fig. 1). Obviously, there were many mntally changed regional economic landscape, somecongenital malformations for this resources-based heavy20 big mining cities rose across the region, and largeindustrial layou, which was subjet to war requirement manufacturing city like Shenyang, Dalian, Harbin andand the nature of colonized economy, but it commenced aChangchun as well as the specialized cities such as Jinregional scale of industialization. When Japan suren- (chemical industry), Anshan (steel indutry) won theirdered, there left a primary foundation for further devel- very outstanding places in Chinese economy in thoseopment. But the Civil War and Korea War held up this time. It seems to be a historic coincidence that a giantindustrialization process around 1950.oil field was found in Daqing City in 1959, and it hadAfter the People's Republic of China was found in made a marvelous record of over 50x10t of annual1949, Chinese people were eager to change this semi- output for 26 years. Not only had it met the need of thecolonized and semi-feuda agricultural nation to bea state economy for at least three decades to the earlypowerful ndustriaized country. Therefore, in the na- 1990s, but also it has contributed Northeast China to betional First Five-Year Plan period (1953- 1957), the the largest petroleum proessing and chemical materialsChinese central govenment initiated 156 state key pro-products base until now. By the mid-1980s, Northeastjects asisted by the former Soviet Union, of which 57 China became a pioneer stamping on a heavy industri-projects were dstribued in the Northeast China (Dong, alization road, it had made great succsses in upgrading1999) with total investment of 30x10° yuan which was technology. optimizing, industral structure, expanding37.3% of the whole country (Bao et al, 2006). Main produ中国煤化工new sectors duringreasons for this layout are as follows. 1) After succes-the plfYHC N M H Gose investment hadsive years of wars, most regions were damaged seri- received very ich and generous rewards. In 1985, theously and lack of basic conditions to start industrial outputs of coal, cnde oil, wood, seel, pig iron, automo-production. Northeast China had better conditions than bile, machine tool, tractor and cement amounted t112ZHANG Pingyu15.1%, 53.4%, 37.65%, 24.3%, 25%, 32.2%, 13.7%, cline tendency and increased investment on reconstuc-11%, and 12% of Chinese total production, respectively.tion of NOIB, insufficient investment could not keep theFrom the 1950s to the beginning of reform and openingdeclining trend within limits. From 1980 to 2004, re-up in the late 1970s, Northeast China had contributedgional percentages of gross regional production and in-half billion ton of rolled steel, one million of machinerydustrial production value decreased from 13.7%, 17.8%equipments and two million technicians and skilledto 9.3%, 9.6% respectively (Wang and Wei, 2005) (Fig.workers to other regions at the cost of regional natural2). Things turned to be more serious in mid-1990s, andresources and ecological environment as well as the lossthe whole region was suffered with the syndrome calledof local beneft under the planned economy system (Baoand“Northeast Phenomenon” by scholars (Li and Li,et al, 2006). Northeast China won many historic glories,1996; Li, 1996; Ding, 2003).and was worthy of the name of the largest industrialbase in China.g 20[■Gross regional production口Industrial production value2.2 Decline of Northeast Old Industrial BaseBy the end of the 1970s, Chinese economy has beenalmost at the edge of collapse due to the political reason,while stricken symptom appeared in the Northeast OldIndustrial Base for long-term absence of investment on198(19851990 1995 2000 2004upgrading technology and adjusting structure of hun-dreds of thousands of overburdened state -owned enter-Soures: National Bureau of Stitics ofChina,prises. In 1978, China implemented the reform and1986, 1991, 1996, 2001, 2005Fig 2 Regional percentage of gross regional production andopening up policy to begin with the southeast coastalindustrial production value of Northeast Chinaarea, which indicated the shift of regional policy focusfrom the inner lands to coastal areas. Northeast China,The Northeast Phenomenon had several evident fea-far away fom the economic frontier areas, was no tures. First, the industral ouput and proft showed alonger at the core of preferable policies, but it must con-state of ceasing or decreasing in all sectors; second,tinue the state instuctions and afford reform costthousands of SOEs were bankrupt or closed; third, somethrough some unequal policy such as the "dual track of mining cties were faced with the dpletion of mineralprice system” in the late 1980s (Chuai, 1990; Yang,resources; fourth, laid-off and unemployment were very1992). The unaccountable amount of raw and processedpervasive across the whole region, inducing urban pov-materials kept being allocated and transferred to south-erty and public security issues and environmental issues;east coastal arcas by the same low price as before.and the fth, the dilapidated factories and distepair in-Moreover, growh rale of regional investment in the fastructre pesented small and mediumsied indus-fixed assets was lower than that of the national averagetrial cities with a decadent image across this region.in the period of 1982- 2003, and regional percentage ofThe cause of Northeast Phenomenon is still a stimu-the investment kept declining (Table 1).lant topic by now, and remains some contentious points.Generally, there are three leading explanations. The firstTable I Investment in fixed assets of Northeast Chinaapproach is based on“industry life cycle theory", whichGrowth rate (%)Regionalpercentagethinks the decline of traditional industry, particularlyNortheast China Whole Chinain China (%)mining industry, is inevitable when resources are ex-1982 198526.127.7123hausted and markets are lost. The second is intitutional1986- 199010.113.011.9approach Northeast China had heen thoroughly built to1991-20000.05.6beap中国煤化工must manifest some2001-2003).7.0unftnYHCN M H G symptoms duringSources: National Bureau of Satistics ofChina, 1996, 200, 2004transition to market system, and the existing system re-strained the SOEs from implementing quick and com-Though the central government was aware of the de- plete rstrucuring. This approach maintains the domi-13Revitalizing Old Industrial Base of Northeast China: Process, Policy and Challengenance (Lu, 2004; Qiao, 2004; Wang and Li, 2004; Chen(Zhang, 2001). In 2002, the 16th Party Congress Reportand Liu, 2005). The third is from local culture aspects.of China emphasized“to support the northeastem regionThis viewpoint seemed not be argued oficially with and other old industrial bases in acelerating theirrespect to local people's feeling, but lots of literaturesstructure adjustment and transformation and to supportattack the absence of commercialism and entrepre-cities and areas mainly engaged in natural resourcesneurism in Northeast China, and the backward thinkingexploitation in their efforts to develop altemative indus-of“waiting, relying, and asking” that have grown uptries", which indicated that the Chinese central govem-during long-term planned system (Lan, 2003; Liu andment deliberately put forward a holistic policy dealingChang, 2005). Each of the above viewpoints has partialwith the old industrial bases. Soon afterwards, the topstringency, but it is hardly a thorough explanation with-leaders investigated Northeast China for three times, andout quantity of practical studies. A more comprehensivePremier Wen Jjiabao addressed revitalizing NOIB bygeographical approach becomes much helpful to under-“new idea, new system, new mechanism and new way".stand Northeast Phenomenon, because geographers ar-In October 5, 2003, CPC Central Committee and thegue this issue as a special regional phenomenon, andState Council of China issued “On implementing thethink that Northeast Phenomenon in nature is an issue ofstrategy of revitalizing the Northeast old industrial baseregional development (Li and Li, 1996; Li, 1996; Ding,and other areas" (SCORNOIBOA, 2005), which sym-2003; Chen et al, 2004; Deng et al, 2004; Jin et al,bolized a special regional policy for the old industrial2006).base first time in China. Swiftly, National DevelopmentExcept for Northeast Phenomenon, New Northeastand Reform Commission of China put forward the firstPhenomenon came upon in the late 1990s, which waslist of revitalizing items funded by treasury bond dis-referred to unmarketable grain and declining income forcount loans, tally 100 projects, 64x 10' yuan. The StateNortheast farmers. New Northeast Phenomenon was notCouncil of China set up a leading group and standingnecessarily related to Northeast Phenomenon, and was aoffice (State Council Office for Revitalizing Northeasttempory issue, but it had aggravated the existing s0~Old Industrial Base and Other Areas, SCORNOIBOAcial and economic problems during that time.for short) steering and coordinating the implementingMost scholars consider that system bondage andpolicies. Liaoning, Jilin and Heilongjiang provincialstructural contradiction are the two key intrinsic factorsgovermments sponsored their concrete plans. Generally,for the decline of Northeast China, and backward reform the central and provincial governments have playedand opening up is one key extrinsic factor. It needs to .main roles in the revitalizing activities.understand those factors in its unique historic context atThe revitalizing strategy constuted a series of fa-a justice and objective standpoint. For instance, this re-vorable policies from Chinese central govermmentgion had less right to manage its own affairs in the past,(SCORNOIBOA, 2005; 2006) and gave more benefitsbecause it has kept playing much more indispensablefor Northeast China. 1) By puting tax-free policy onroles in both state economy and national defense thanagriculture in Jilin and Heilongjiang provinces first, andthe other regions.by expanding compensatory coverage and scale of grainproduction, the three provinces of Jilin, Heilongjiang3 Revitalizing Policies and Their Primary Ef-and Liaoning had got 24x109 yuan in 2004 and 2005from the central finance through the transfer payment offectrural tax-for-fees reform, direct subsidies on grain and3.1 Revitalizing policesseed purchasing price difference. 2) Following Liaoning,In 1997, the Chinese central government initiated aJilin and Heilongjiang provinces have carried out pilotthree-year reform and reconstruction progamme onprojects of urban social security system including pen-SOEs, targeting establishment of modem corporate sys-中国煤化Iisurance and mini-tem in most large and medium- sized SOEs. This pro-mum.1H.CNMH(hose two provincesgramme bsically reached the goal in structure reform ofgot an annual yuua U1 1.0c^1U yuan from centralSOEs across China (Liu, 2001; Chen, 2003), but it leftfinance for personal pension insurance, and totalconsiderable tasks particularly in the old industrial bases5.5x10° yuan for compensating the previous laid-off114ZHANG Pingyuworkers who completely dismissed from their SOEs in system reform has made remarkable achievements. Over2004 2005. 3) From July 1, 2004, the Northeast China 90% SOEs have been reformed to be shareholding sys-frst implemented value-added tax reform. Only in the tem. Some key enterprises such as Angang Steel Com-first half year of 2006, did this region get a tax draw-pany Limited of Liaoning Province have accomplishedback of 9.45x109 yuan. Aitiall, by cuting down inter and intra regional rstructuring. Hopetully, privatedepreciable life for fixed assets and invested immaterialeconomy kept increasing at an annual rate over 20%,assets (<40% depreciation rate), and by cuting down and more and more investors from southeast coastalresources tax (<30% tax rate) in the depleting mines and areas began to develop small and medium enterprises inoil fields, the relevant sectors and enterpises receved this region. Third, regional opening up has gone forwardconsiderable profit. 4) By enbancing SOE's pol- rapidly. There have been nine subdivisions and nineicy-related bankruptcy, the three provinces closed 122agencies of foreign banks in Dalian and Shenyang bybankrupt SOEs in 2004 2005; as a result, governmental 2006. Total regional FDI reached to US$5.7x10 for thecapital of 2.4x10 yuan was canceled after veification, first time, and growing FDI was going on merging inwhich was 24.5% of that of whole natin. 5) The large SOEs. Meanwhile, some large SOEs began to mergeand medium state-owned enterprises had made substan- overseas manufacturing enterprises. Fourth, structuraltial actions on separating their social function. Someadjustment was focused on upgrading manufacturing420 primary and middle schools, public security organs, technology, and developing high-tech industry and ag ,procuratorial organs and people's courts were taserred ricultural processing industry. Fifh, social tensions haveto local govemments, accompanying with 33x10 staf, been retieved due to projets on remploymnent, social14x10’ retired teachers, while the national finance of- security system, slum clearance and comfortable hous-fered 1.9x109 yuan. 6) The state-owned commercial ing priclarly in mining cties. Liaoning Province tookbanks had sriped bad asets off twice by 2005 with total the leading role in building the social security systemvalue of 331x109 yuan.刀) Pilot projects dealing with and minimum-standard living insurance covering wholecllecive enterprises' ises were cried out exten- province. In respect to Liaoning's experiences, this worksively. And 8) In the end of 2006, the State Council of went on smohly in Jilin and Heilongiang provincesChina isued the policy to cancel the enterprise owing under support of central finance. Newly added employ-taxes of 10x10" yuan before 1997. As a regional policy, ment amount was 2.4x10 in 2005, and this figure keptit is rely found in China's tax history. Except for above increasing in 2006. The Chine central govenmment haspolicies from Chinese central govemment, some minis- put 6.5x109 yuan on managing 15 subsidence miningtries and the provincial governments also ised prefer- areas, and rsttling 152 thousand households. In re-able policies to support this region, which has promotedsponse to the Minstry of Construction of China's policy,work in slum clearance, land and mineral resources de- a regional scale slum clearance is undergoing at present.velopment and regional opening up.Liaoning Province resettled 345x 10 households,1.20x 10° slum dwllers moved into new apartments in3.2 Initial achievements of revitalizing policies2005- 2006. Sixth, a large number of urban and regionalThe revitalizing policies have brought with primary ef-infrastrucure projects are under construction, whichfects over the past three years of 200- -2006 (Zhang, will largely improve capacities in trafi, communica-2006), though those procedings renain some uncer- tion, letricity power and water spply.tainty in future. First of all, regional economy developedEven if the encouraging achievements, it seems too .faster than before. Owing t polic efets, investments ealy to ass the efectet in an al-around way. It is juston fixed asset increased much faster than that in othergoing on the first stage to tackle issues in-depth, andareas. Growth rate of investment on fixed asset was many system and strncture. contradictions nee lon6.9% less than that of national average in 2003, but it time t中国煤化工obably is atributedwas 5.9% and 12.1% more than that of Chinese average to poli:0HC N M H Garket demanding onin 2004 and 2005 rspetively, which presented an un- heavy and petochemical industy products. Althoughprecedented climate. The incomes of citizen and farmergross regional production (GRP) increased much fasterincreased faster than that of Chinese average. Second,than before, its proportion in the national GDP kept de-115Revitalizing 0ld Industrial Base of Northeast China: Process, Policy and Challengecreasing in recent years, which indicates that in. years (Table 2). It is very bewildered why not promotingtra-regional gap keeps enlarging, and Northeast China is some new labor-intensive industry, and it is also doubtedstill a relative backward region.if those projects could improve regional employmentsituation, except for some short-term GRP increase.4 Long-term ChallengesTable 2 Industrial structure of Northeast China in2003 and 2006 (%)Over a three-year revitalizing practice to now, someessential issues become much clear, it is recognized thatPrimary industrySecondary industry Tertiary industrythe revitalizing process would last two or three decades20012.450.736.9200612.7.1at least, as we could not cure the recession syndromebefore resolving the time _costing problems as follows.Sources: National Bureau of Stisics of China, 2004,0 20074.1 System obstacle4.3 Fund shortage and financial creditOver two decades refrm and opening up, most system Generally speaking, Northeast China has been lack ofand mechanism established during the planned economy investment for decades, and there is an al-around fundperiod have been changed to fit current market sytem. shortage in social, economic and environmental devel-However, large central SOEs sil play major roles inre- opment. Owing to historic reasons, SOEs andgional economy, most superiority resources and opportu- sta-cnotrtolig companies had a total of 140x10 yuannites are under control of them, and they keep very intri- of non-performing loan in 2006 (Zhang, 2006), whichcate beneficial and conflicting interest relations with local has deteriorated local credit climate. Policy-related loanenterprises and govemments. In 2006, value added of and FDI increase has not prlleled with an expectedindustry for central SOEs still took a very high percentage, large- scale commercial loan increase, and potential in-53% in Liaoning, 63% in Jilin, 86% in Heilongjiang, all vestors lack a strong confdence in harvesting the an-of which were 20 30 percentage points higher than the ticipated profit from the revitalizing projects. More se-national average. Therefore, acelerating reform of the riously, there is 810x109 yuan imbalance between de-central SOEs, with a full consideration to their responsi- posit and loan in local banks and credit agencies, be-bility on local social-economic development, is the core cause a large number of local funds were transferred toof the system reformn. Meanwhile, it needs some years for the developed areas. New projects are very difcult tothe newly reformned SOEs to build a standard and efec get loans from local financial institutes.tive moderm corporate system and discharge historic bur-dens. Individual-run economy is stil weak. Aditinall, 4.4 Employment isuesit is very pessing to deepen reform of local govermments, After one decade decline, there emerged a large propor-aiming at improving working eficiency and preventing tion of disadvantageous groups, about 5x10° deprivedcormuption.people in forest, miltary and coal sectors in 2006 (Zhang,2006). In spite of some success in improving employment4.2 Rigid industrial structurein recent years, long-term pressure has been not relievedThe NOIB has long been in a heavy industry-leading so far. Except for new added-employment from urban andeconomy, This kind of industrial structure usually brings rural population, further reform of SOEs continues towith consequences that high investment on the fixed as- release large number of new unemployee. Neveteless,sets does not necessarily increase employment rate, andthe current industrial policy is still capital and technologyeconomic connection between city and countryside is intensive, and small and medium-sized enterprises are notvery weak. However, most of newly approved projects able to provide large number of jobs, consequently a fa-funded by treasury bond discount loans are concentrated vorab中国煤化工not ready for futureon reconstructing and enlarging the old sectors and enter- emploMYHCNMHGprises (SCORNOIBOA, 2005; 2006), so that the heavyindiutry-leading structure will be further consolidated, 4.5 Transformation of mining citiesand the industrial structure hardly changed in the past3 Mining city is the epitome of the NOIB. At present,116ZHANG Pingyusome 20 mining cities are struggling to survive. Trans- side construction have improved social developmentforming mining cities is one of the most thorny anlevel. The regional ecological environment and naturalcomplex problems. Such problems as industry declining,resources are better generally. But, Northeast China hasunemployment, urban poverty and deteriorated ecologi-not atained high growth rate as the coastal areas, andcal environment there, are more serious than those in the the decline of some traditional industries has aggravatedother areas. Stable employment rate is around 60% only.the syndrome of the old industrial base, namely theThe substitute industries have not made breakthrough inNortheast Phenomenon somewhere. The evident chang-most mining cities, and fund shortage keeps increasees only happened in recent years, which proves that thewith reform deepening. The mining cities are very vul-central revitalizing strategy is necessary and effectivenerable to any disturbance, so transformation of miningfor the old industrial base.city becomes both a pressing and long-term issue.In spite of the above achievements, crucial issues re-main to be sttled. The state- owned economy still keeps4.6 Inter-regional cooperationthe leading role, backward situation does not change,Due to similar industrial structure, imperfect distributionand it seems far away to cure the old industrial basesystem and the lack of investment, there is more compe-syndrome. Out of various reasons for the decline oftition and less cooperation among cities and differentNOIB, outmoded system and mechanism is the firstlevel of local govenments presently. New projects con-constrain factor, also it remains the most difficult issuescentrated on central and southern urban agglomeratesto deal with. The pressing problem is to accelerate re-and coastal areas of Northeast China, while no inform of central SOEs in parallel with developing newtra-provincial industry cluster come into being. The pe-economic engines from private economy, so that theripheral areas tend toward marginalizing and furtheroverwhelming preponderance of SOEs could be broken,recessing. It is expected to create some kinds of col-and a new balance between central and local economylaboration and coordination mechanisms among prov-may emerge.inces as well as cities, in order to prevent malignantUnlike old industrial bases in the West, it is a type ofcompetition and fulfll whole region prosperity.relative decline in Northeast China in comparison toChina's high growth rate in recent decades. But this4.7 Resources and environment carrying capacitycharacter could not conceal the substantial contradictionOver decades of high intensive resources exploitation,and problem in NOIB, nor does mean any easiness toresources and environment carrying capacity has de-revitalize regional economy. Long-term challenges arecreased sharply. Except that some minerals are near toexpected to be overcome in two or three decades, hencebe exhausted in somewhere, regional water and landit needs stronger support from Chinese central goverm-capacity hardly meets economic and social requirements,ment, by endowing more free and open policies relatedparticularly in the central and coastal areas of Northeastto tax revenue, finance, custom in cancelling historicChina. Resources and environment constraint warns thatdebts and SOE's bankrupt, merging, restructuring, etc.current economy model is not sustainable, and industryIn retrospect of the reconstruction process of NOIB,transformation has to parallel with eco-envronment some past lessons could be identifed. 1) Both centralimprovement in a long term.and local governments lacked exact cognition on thnature of old industrial base issues. No comprehensive5 Conclusionsstrategy was put forward before 2003, instead of somepiecemeal tactics on some concrete issues. InsufficientOver two decades of adjustment and reconstruction, the fund was comminuted to a variety of reconstructionpast initiatives have made tangible achievements iitems, so that there were rarely good results. 2) Thereeconomy and society development. Economic structure was中国煤化工on revializing oldand quality have been improved, economy quantity and indusEd it to be industrialgrowth rate increased largely in recent years, and sub- issue;MYHc N M H Gswere cocentratedtstantial change is towards market-oriented economyon industrial technology problems, while some substan-system. Regional infastucture and urban and country- tial aspects such as system reform and institutional in-117Revitalizing Old Industrial Base of Northeast China: Process, Policy and Challengenovation were belittled. And 3) More emphases weretrialization Road of Norheast Old Industrial Base: How toput on govemment intervention and less on market andUnderstand Northeast China, How to Revitalize the NortheastChina. Changchun: Northeast Normal University Press. (iprivate strength which have been smothered innovationChinese)appetency, so that most resources were put on the agedChen Qingtai, Liu Shijin, 2005. New Ildeas for RevitalizingSOEs, less resources were distributed to new economicNortheast China. Dalian: Dongbei University of Finance §ors. Consequently, private and foreign-orientedEconomics Press. (in Chinese)economy lagged largely behind the coastal areas.Chen Yongjie, 2003. Reform measures for state-owned enter-Therefore, reconstruction of old industrial base is aprises and achievements in recent five years. Review of Eco-nomic Research, (32): 2-6, 25. (in Chinese)holistic regional project including economic growth,Couch Chris, Fraser Charles, Percy Susan, 2003. Urban Regen-society progress and eco-environment improvement.eration in Europe. Oxford, Malden, Ames, Carlton South andThe emphases for revitalizing NOIB include systemBerlin: Blackwell Science Ltd.reform, structure adjustment, employment growth and Chuai Shiqi, 1990. Rethinking the dual track of price system ofindustrial competitiveness upgrading. In concert withproduction materials. Academic Forum, (1): 81- 83. (in Chi-revitalizing industry, agriculture, regional infrastructure,nese)social security, investment climate, etc., must be im-Deng Wei, Zhang Pingyu, Zhang Bai, 2004. Report on RegionalDevelopment of Norheast China. Beiing: Science Press. (inproved simultaneously. The all levels of governmentsshould assume an indirect role, shifting from actor and Ding Sibao, 2003. The problem of the Northeast of China: Whydecision maker to facilitator, signaler, and prodder, andand the way out. Modern Urban Research, 18(6): 6-9. (in Chi-any unnecessary intervention will hurt local economy. Inaddition to enhancing traditional predominance indus-Dong, Zhikai, 1999. On“156" key projects in the First Five-YearPlan. Journal of Chinese Economic History Research, (4)trial sector such as huge equipment manufacturing, pet-93-107. (in Chinese)rol-chemical processing and steel industries, more em-Hamnette Chris, 2003. Unequal City: London in the Global Arena.phases should be put on new sectors including agricul-London and New York: Routledge, Taylor & Francis Group.tural procesing, pharmacy industry and a variety of Jin Fengjun, Zhang Pingyu, Fan Jie et al, 2006. Research onhi- tech sectors by full use of local intellectual resources.Revitalization of Northeast China and Sustainable Develop-It is expected that new industrial sectors under marketment SIrategy. Beijing: The commercial Press. (in Chinese)economy system could play more important role in re-Lan Yi, 2003. Revitalizing Northeast China by beginning withwakening the local people. Phoenix Weekly, (26): 58 -61. (invitalizing NOIB, and Northeast China would recover thepast brlliance through radical reform and opening up.Li Chenggu, 1996. A study on the mechanism of ressions andstructure transfrmation of Northeast old industrial base. Scien-This paper is for the 50th anniversary ceremony oftia Geographica Sinica, 16(2): 106 114. (in Chinese)Northeast Instiute of Geography and Agroecology,Li Chenggu, Li Zhenquan, 1996. Feature of "Northeast Phe-nomenon" and causing factor. Economic Geography, 16(1):Chinese Academy of Sciences.34 38. (in Chinese)Li Jiaoqi, Zhang Xiaoli, 2004. Declining type of old industrialReferencesbase and its reconstruction. Social Science Front, (I): 186-188.(in Chinese)Bao Zhendong, Cao Xiaofeng, Chang Qiao et al, 2006. Blue Li Jujiang, Shi Benye, 2006. Foreign old industrial base recon-book of the Northeast China: The report on development ofstruction measures and implication. Economic Review, (5):Northeast China. Bejing: Social Sciences Academic Press. (in38- 40. (in Chinese)Li Yonghui, Wu Zhaoxia, 2005. Reconstruction model of worldBourguignon Francois, 2003. Transition of China's Northeast:old industrial base and its implication. Research on Develop-The need for combining regional and national policies. htp:/ment, (3): 119-121. (in Chinese)www-wds.worldbank. org/exterma/default/WDSContentServer/Lin Ling, Rong Jianying, Shen Hongsheng et al, 2000. Way ofWDSPI1B004030/000265513_ 200409170321/Rendered中国煤化3T ina. Reform,(5):5-19/PDF/28105.pdfLiu H上f tee-yer reform ofChen Cai, 2003. Strategic thinking on revitalizing Northeast oldstatYHC N M H G. East China Economicindustrial base. Northeast Asia Forum, 12(6): 60 64. (in Chi-Management, 4(I): 22- -24. (in Chinese)Liu Xiaoli, Chang Huarong, 2005.“The Northeast Phenomenon”:Chen Cai, Li Guangquan, Yang Xiaohui et al, 2004. New Indus-Its perspective and its enlightment. Public Administration &ZHANG PingyuLaw, (9): 51-52. 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