Industrial base in Northeast China to be revitalized to unleash full potential of the huge domestic market

The central government announced the launch of the China (Liaoning) Pilot Free Trade Zone on April 1 to revitalize the traditional industrial base of Northeast China and promote international economic and trade cooperation in northeastern Asia.

Three northeastern Chinese provinces and the eastern part of the Inner Mongolia autonomous region account for 110 million people, with GDP reaching 6 trillion yuan ($871 billion; 818 billion euros; 700 billion). Pillar industries include manufacturing, vehicles, coal and animal husbandry products, according to the National Bureau of Statistics.

"With the implementation of the FTZ, Liaoning has become an integral part of the national strategy to build an open and new economic system and take major reform and opening-up responsibility," says Li Xi, the Liaoning provincial Party Secretary.

"We should set up strategic thinking and global vision and push the work together with the Belt and Road Initiative."

As early as 2015, Li, who was then the governor of Liaoning province, started calling for the establishment of the Liaoning FTZ.

According to Song Yanlin, director of the zone, "The biggest challenge for Liaoning, and even the whole of northeast China, is rigid institutional mechanisms. The FTZ will be a breath of fresh air and force government to recreate the service system."

The FTZ will help accumulate a wide range of resources and prompt diversified investment, consumption and foreign trade, which be a new engine for the local economy, says Lu Zhongchang, vice-president of Dalian University of Technology.

The Liaoning FTZ consists of three parts - in Dalian, Shenyang and Yingkou. Dalian will focus on port logistics and financial business; Shenyang will focus on equipment manufacturing, automotive and spare parts; and Yingkou will focus on business logistics and cross-border e-commerce.

"The core function of the FTZ is to promote domestic and foreign trade. It can only succeed when a large number of small and medium-sized companies from various countries can profit from the platform," says Yang Baowei, general manager of Neunn Technology Co, which is assisting in the construction of a data network in the Shenyang FTZ.

His view was echoed by Tu Ming, CFO of General Electric China, who says simplified processes and flexible policies help set up links between local businesses and the global market, which will greatly benefit the development of Liaoning.

"In fact, we expect this will not only benefit our business in the northeastern region of China, but also GE's development in China."

In addition to promoting the reform of government institutions, the Liaoning FTZ also undertakes the task of integrating international economic and trade cooperation in Northeast Asia. Shenyang is the transportation, trade, cultural and political hub of northeastern China. There are six countries setting up consulates there, including the United States, Japan, France and Germany. A number of transnational companies chose the city as their regional headquarters.

In fact, 20 years ago, the United Nations Development Program launched the Tumen project to promote economic and trade cooperation between China, Japan, the Republic of Korea, the Democratic People's Republic of Korea, Russia and Mongolia.

Japan's Consul General Ishizuka Hideki says the FTZ will further accelerate the international business environment and enhance the attractiveness for foreign enterprises.

"According to data from 2015, Japan ranked as the largest export partner and second-largest import partner for Liaoning. We are very close partners in the economic and trade areas. The FTA will help deepen relations between Japan and Liaoning province and other regions in Northeast China," Hideki says. "I, myself, and other Japanese companies that have invested or will invest all have big expectations from this."

German Chancellor Angela Merkel and the then-ROK prime minister Hwang Kyo-ahn visited Shenyang last year. In November, Yingkou Port Group Co signed a cooperation agreement with Russian Railways Co to implement the Belt and Road Initiative.

Zou Yumeng contributed to this story.

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(China Daily European Weekly 04/07/2017 page25)