The rejuvenation of northeast China's rust-belt industrial bases remains a prominent subject at the Second Cooperation and Exchange Convention of Overseas Chinese Enterprises in Science and Technology Innovation, which was officially opened in Shenyang on Sunday.

The following is an introduction to the Chinese government's crucial strategy to rejuvenate the traditional industrial bases in the northeast.

Northeast China used to be the nation's industrial base. The region, including Heilongjiang, Jilin and Liaoning provinces, was the national center of heavy industry and served as the engine for national reconstruction in the 1950s.

At that time, as a national strategy, China put enormous resources from all over the country into the northeast to develop heavy industry, such as equipment manufacturing. In return, products from the region were distributed to other regions under the planned economy. Boasting fertile farmland, the region's agricultural sector also held a key position in the national economy.

The planned economy of the region gradually lost its luster, however, as the country began to launch its market-oriented reforms in the late 1970s and the government gradually retreated from economic activities.

The market is now playing an ever-greater role in allocating resources. This is a historical transition.

But for a region that has been used to the planned economy, the process is proving to be rather painful as it failed to adapt itself in a timely way to new market conditions.

Factories registered huge losses and went bust, workers lost the protection of corporate welfare, and social problems ensued. These issues are common in many places in northeast China.

In Jilin Province, for example, only 15 percent of industrial enterprises have a technological level of the 1990s in 2002. That means the production of more than four-fifths of its firms depend on outdated technology. Enterprises with such a low overall technological level can hardly fare well in a market-driven economy.

In the early stage of China's reform and opening, Liaoning Province's GDP was twice that of south China's Guangdong Province. Now Guangdong's is double that of Liaoning.

Against the backdrop of glaring growth in the eastern and southern regions, the struggling northeast becomes more noticeable. The central government is well aware of the region's problems. After the western development campaign was launched, the issue of northeast China's development topped the agenda. The Communist Party of China's 16th National Congress in November 2002 pledged to support the transformation of the northeastern industrial bases.     

In August last year, Premier Wen Jiabao hosted a symposium in Changchun, capital of Jilin Province, on the rejuvenation of traditional industrial bases in northeast China after the premier's inspection tour there. The premier said that the northeast China rejuvenation program would play a major role in China's modernization process, reiterating to officials of the three provinces that the central government would help the region surmount its current economic difficulties.

Economists said this symposium indicates the Chinese government has officially launched the strategy to rejuvenate the northeast old industrial bases.

At the first plenary session of the State Council's Leading Group of Revitalizing the Northeast Region and Other Old Industrial Bases in March this year, Premier Wen unveiled four major tasks for reinvigorating rust-belt industrial bases, which include restructuring state-owned enterprises, technical upgradingand the introduction of more domestic and overseas investment. Wen, also head of the leading group, said those old industrial bases should speed up institutional innovation and reform, which is the fundamental way to their revitalization.

Economists say the northeast region will become China's fourth economic growth area after the Zhujiang River Delta, the Yangtze River Delta and the Beijing-Tianjin area.

To date, the National Development and Reform Commission has approved two batches of investments, which is aimed at boosting development of northeast China.

The first batch of 100 projects will take a combined investment of 61 billion yuan (7.38 billion US dollars), and the second batch of 60 projects will cost 5.6 billion yuan (677 million dollars).