Transcript Thanks for your listening

The Revitalization of The Old
Northeast Industrial Bases
Du Yuantao
Qiao Shuhui
contents
• The formation of the Northeastern China
industrial base.
• The reasons of falling behind
• The policies of revitalization
• The prospects of Northeastern China.
The formation of the
Northeastern China industrial
base
The advantages of Northeastern
China---rich mineral resources
• Hei Longjiang: 134 different kinds of
mineral resources, accounts for 57.2%
within China.
• Ji Lin: more variety mineral resources in Ji
Lin, many of resources is in the first place
in China
• Liao Ning: already found a variety of 110
mineral, more than 2000 oilfiled.
The advantages of Northeastern
China---plenty of labor resource
• Hei Longjiang: total 36,890,000 people,
15-64years old people have total
27,930,000 accounts for 75.68%
• Ji Lin: total 27,279,900people,15-64 years
old people have 21,163,000,accounts for
77.58%
• Liao Ning: total 42,380,000 people, 15-64
years old people have
31,570,000,accounts for 74.49%
The history background
Stage 1.The heavy industry boom in the Manchukuo(满
洲国) period.
To meet the huge demand of the war, Japan built the northeast
China to the heavy industry base.
the ratio of northeast china’s production to the entire china in
1943
Coal production 49.4%,Iron production 87.7%,
Steel 93%,Electricity generation93.3%,
Cement production 66%,Mechanical production95%
Stage 2.
The rapid growth
in the first 5 year
plan in China
The important
strength
to form a complete
industrial system
Promoting the
national fast
economic growth,
and provides
generous tax
revenue to
national finance
Providing valuable
experience to
establish and
improve Chinese
industrial enterprise
management system
The important strength to form a
complete industrial system
Promoting the national fast
economic growth
• Y= A
K
a
L1-a
• In the first 5 year plan，China meet with
success at different fields.
The cradle of China's automobile
industry--Changchun automobile
factory
China's first large chemical industrial
base--Jilin chemical industry company
Daqing oilfield—change the
appearance of China’s oil industry.
•
•
•
•
Neo-Confucianism in the first 5 in plan.
1.devote and sacrifice themselves to country
2.thrift
3.hardworking
Wang Jinxi
The fact of the falling behind
the reasons of the falling behind of
The Northeast China
We begin to look for the reasons by
looking at the number of K
Y=(L K, T, Institution) Harrod-Domar Model
Why does it like this???
What can we draw from these
• 1 As the change of the Chinese government
policy. The government investment went
to the coastal area, The Northeast China
can’t get as much as they got in the past.
• 2 The Northeast China didn’t have enough
attraction for both domestic and foreign
funds.
why can’t they attract founds?
• External reasons----policy-----Chinese
government wanted to stimulate costal
area, the lower taxes and other
preferential policies make coastal area
more attractive.
• Internal reasons—lack of competitiveness ,
which could reflect on the lack of the
efficiency of K
MPK
• To prove this, we first do quantitive
analysis
• We calculate the MPK which is the
• dy/dk=dy/investment
• All the data are in the table are from
• Statistic yearbook of Liaoning, Jilin,
Heilongjiang, Zhejiang, Guangdong, Fujian
• We all know the Marginal Diminishing Effect
• It holds separately among northeast china
provinces or coastal area provinces
Average GDP and investment from 1980-2001
Liaoning > Heilongjiang>Jilin
So the MPK is Jilin>Heilongjiang>Liaoning
Average GDP and investment from 1980-2001
Guangdong>Zhejiang>Fujian
So the MPK is Fujian>Zhejiang>Guangdong
• But Marginal Diminishing Effect doesn't
hold between these two areas, the
investment in northeast china provinces
are lower, they had the lower MPK than
the coastal area.
How to explain it?
• In the Harrod-Domar Model, besides
Marginal Diminishing Effect there are two
more factors are really do matters to the
efficiency of the investment (the MPK).
• Y=(L.K;T Institution)
The problems
• Lagging behind of technology
• Y=(L.K;T Institution)
• The improper environment for investment.
Y=(L,K;T institution)
• So they make the MPK lower in The North
East China, even it has lower Investment
amount.
T
• 1 the plants backwardness---the plants in many factories
are backward and old. More than 1/3 machine should
have been eliminated.
• 2 the technology backwardness---the tradition industry
sector like steel and mechanical industry lack intensive
technology progress; the emerging industry sector like
electric and computer industry develop very slowly.
• For example, In Jilin province, only 15% enterprises
have technical skills are equivalent to 1990s’ level, 60%
belongs to 1970s or 1980s, 15% even belongs to 1950s
or 1960s’ level.
•
•
•
《东北现象的特征及形成原因》Li Chenggu and LI zhengquan March 1996
http://wenku.baidu.com/view/02f308c48bd63186bcebbc32.html
《老东北”图再次振兴 拉开新“辽沈战役”之幕》 Gao guangzhi And Xing Luxu
http://www.people.com.cn/GB/jingji/8215/29839/29848/2096270.html
Institution
Basic industry
Administration system
Planned economy
1 The lag behind of Basic
industry and infrastructure
• the speed of development of the basic industry
like transportation, post and communication are
much slower than the heavy industry. And the
heavy industry really need the support of the
good basic industry and infrastructure. During
1978-1994, the speed of the basic industry and
infrastructure’s development is only 24.6% of the
heavy industry.
• 《东北现象的特征及形成原因”》Li Chenggu and LI zhengquan March 1996
http://wenku.baidu.com/view/02f308c48bd63186bcebbc32.html
2 the lag behind
of administration
system
In the government
In the enterprises
Between the
enterprises
In the enterprise
• Government-owned enterprises account for huge part in
northeast china’s economy.
• As we all know, the administrative system in Chinese
government-owned enterprises has many drawbacks.
• 1 the bloated administration system (too many
department and officials)
• 2 overconcentralization of power
• 3 inadequate laws and rules in administration.
• 4 backwardness of H R management.
•
•
(深化国有企业行政管理体制改革问题研究)
http://wenku.baidu.com/view/c4bf8718a8114431b90dd8b3.html?from=rec&pos=3&weight=3&lastweight=3&count=
4
• Between the enterprise
• Different factories belongs to different
administrative department.
• (no cooperation, lack conducive
connections)
The example of Jinxi oil refinery
and Jinxi petrochemical plant
•
“东北现象的特征及形成原因” Li Chenggu and LI zhengquan March 1996
http://wenku.baidu.com/view/02f308c48bd63186bcebbc32.html
• They were close, but the oil refinery did
not supply raw materials to the
petrochemical plant.
3 the aftermath of the planned
economy
• Northeast China is the area which is called the
fortress of the planned economy.
• The planned economy enhanced The Northeast
China to accomplish glorious achievement, but
now, it also constrains this area in the new era.
• The most obvious aftermath from it is the
improper industry structure and lack of market
mechanism in this area.
•
《东北现象的特征及形成原因》 Li Chenggu and LI zhengquan March 1996
http://wenku.baidu.com/view/02f308c48bd63186bcebbc32.html
improper industry structure
• As The Northeast China was looked as the
material supply and heavy industry centre
in the planned economy. The other
industry sectors in Northeast China was
constrained for long time. Long time
development under the centre’s planned
make the northeast china industry
structure extremely abnormal.
lack of market mechanism
• (1)the monopoly economy caused by
state-owned economy.
• NE China has the highest proportion of
state-owned economy in china. In 2001,Jilin
Province, the properties held by the state-owned business account
for 86.2% which it is 65% in the rest of China.
The high
ratio of state-owned economy constrains
the development private-owned business
which lead the lack of market competition.
•
Data from http://www.people.com.cn/GB/jingji/8215/29839/29848/2096270.html
• (2)administrative restriction
• The administrative restriction constrains
the state –owned enterprises to make the
rational decision under the market.
• As the center of heavy industry and raw
material, NE China have the responsibility
to provide various products and material to
the rest of china under the administrative
order without only charge.
•
http://sq.k12.com.cn/discuz/thread-376124-1-1.html
The fact we see
Inadequate of K Y=(L,K;T)
Government investment
Domestic loan and foreign funds
The change of policy
No attraction for K
No efficiency for K
Lagging behind of T
The improper institution
The policies of the revitalization
• The plan of the revitalization of the
Northeast China was put forward in 2003.
• 100 projects all together, with 61 billion
RMB are distributed in this area.
• As we discussed before, the infusion of
capital is just the beginning and the
easiest step.
•
Data from http://doc.mbalib.com/view/3f9a9feae75cf4fce60ae579e64d4976.html
1 Capital infusion led by government
2 Improve Institutions and introduce new
technology can make a difference in
effectiveness and efficiency of capital
3 Make this attractive for capital
4 Generate innovative technology and wealth
continuously.
5 Revitalize the northeast china
Improve
the institution
and technology
To strengthen
the construction
of infrastructure
Optimize the
economic structure,
establish modern
industrial system
To speed up
the enterprise
technological
progress,
Improve the
ability of
Independent
innovation
Deepening reform
and opening in
Various aspects.
Suggestion of further implementation the northeast china reform from the state
council (number 33)
To strengthen the construction
of infrastructure
Building the comprehensive transportation
system, linked to large and medium-sized
cities
Speed up the construction of railway
networks and airports, improve the
transport abilities of land, water and pipes.
Framework of freeway
network
Framework of water
transport network
Optimize the economic structure,
establish modern industrial system
• Speed up the enterprise merger and
reorganization, optimize allocation of resources.
• Strengthen the pillar industry
• Developing the service industry.
• Supporting key industry cluster areas to
accelerate development
The achievements
• In 2011, in the service industry, Hei
Longjiang’s growth rate is 12.6%,both Liao
Ning and Ji Lin’s growth rate is 10.3%
• In 2011, in the pillar industry, Hei
Longjiang, Liao Ning, Ji Lin’s growth is
13.6%, 15.1% and 20%.
•
Data from：provincedata.mofcom.gov.cn/people/disp.asp?pid=77
To speed up the enterprise
technological progress, Improve the
ability of independent innovation
• Enhance
Independent
Innovation Ability
• Promoting
industrialized
achievement of
independent
innovation
Deepening reform and opening
• opening the market to the outside world
• Strengthen the market mechanism in this area.
Stimulate the development of private enterprises,
and deepening reform the state-owned
enterprises( which is the hardest work in the
revitalization) the reform of state-owned
enterprises involves centre and local
government, employees, debtors and may
cause a big shake in local economy.
The assessment of the reform cost
• (1) the cost of splitting the social function from
the enterprises(8billion)---Liaoning
• (2) the cost of splitting the big collective
enterprises(10-15billion)----Liaoning
(3) the cost of shift of the employee’s identity that
means buy off the contract years.( 1.5 billion for
approximate 150 thousands workers)---Liaoning
(4) the cost of employment insurance and lowest
welfare subsidy.(3.3 billion)---Liaoning
《东北老工业基地振兴前景展望》 written by Pro Li Kai
http://doc.mbalib.com/view/3f9a9feae75cf4fce60ae579e64d4976.html
achievements
Until 2010, 90% State owned
enterprises(nearly90000)
finished the reform.
Data from：provincedata.mofcom.gov.cn/people/disp.asp?pid=77
prospects of Northeastern
China
Hoping to be the fourth pole of
China’s economic growth
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Four rapidly developing regions in China
Chang Jiang delta (including Shanghai city,
Jiang Su and Zhe Jiang province)-takes
up 1/4 GDP
Zhu Jiang delta (including Guang Dong
province )-1/10 GDP
Jing-Jin-Tang region (Peking, Tientsin, and
north of Hei Bei)
The north east of China(Hei, Ji,Liao)
Formed the regional
cooperation pattern which is led
by industrial chain
•
•
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Automotive industry chain
Equipment manufacturing industry chain
Industry chain of steel materials
Shipbuilding industry chain
Petrochemical industrial chain
Logistics supply chain
……..
The formation sub-economic
regions with the central cities as
the core
• Shenyang Economic Zone :Shenyang,
Anshan, Benxi, Fushun, Liaoyang,
the features are the equipment
manufacturing and materials industries,
expected to become important
industrial base in northeast China
• …..
Increase cooperation with South
Korea
• The industry which South Korea invest:
Toys, shoes, textiles, cement, furniture,
household appliances,
semiconductors, steel
products, biotechnology,
telecommunications transmission…….
Increase cooperation with South
Korea
• Korean industry is transforming into a
knowledge and technologyintensive industries, focus on
developing next-generation growth
industries, industrial restructuring has
intensified, forcing a large number of
enterprises ready to move
overseas. Which gave the northeast old
industrial base revitalization that provides
a good opportunity for development.
South Korea bring numerous K
• South Korea now is investing a lot of K in
china. 480billion in 2010. Northeast China
has the geography advantages to attract
the K from South Korea, so NE China has
big potential power to gain K from South
Korea.
• South Korea's oil industry in oil
development, storage, refining facilities,
and other aspects have advanced
technology, become the northeast oil
industry important direction of foreign
investment to upgrade and technological
innovation
questions
• 1 what makes the diminishing marginal
effect do not hold between NE China and
coastal areas in china.
• 2 what are the important reasons to make
NE China lack market mechanism.
• 3 how can China and South Korea help
each other in the NE china market.
Thanks for your listening
Reference
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http://tjsj.baidu.com/pages/jxyd/14/99/f1ec76d898bcb121517127334df6bf20
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http://www.china.com.cn/zhuanti/115/node_5409023.htm
http://www.iccs.cn/contents/401/9968.html
http://wenku.baidu.com/view/02f308c48bd63186bcebbc32.html
http://www.people.com.cn/GB/jingji/8215/29839/29848/2096270.html
http://wenku.baidu.com/view/02f308c48bd63186bcebbc32.html
http://wenku.baidu.com/view/c4bf8718a8114431b90dd8b3.html?from=rec&p
os=3&weight=3&lastweight=3&count=4
http://doc.mbalib.com/view/3f9a9feae75cf4fce60ae579e64d4976.html
http://www.people.com.cn/GB/jingji/8215/29839/29848/2096270.html
http://sq.k12.com.cn/discuz/thread-376124-1-1.html
http://doc.mbalib.com/view/3f9a9feae75cf4fce60ae579e64d4976.html