The Compendium of Rejuvenation Plan for the Old Industrial Base of Changchun
----The Commission of Development & Reform of Changchun
October 3, 2007
Changchun is a central city of the old industrial base in Northeast China, and it has long been playing an important role in the construction and development process of socialism of China. As the situation develops and changes, the chronic conflicts in system and structure of the old industrial base have become increasingly conspicuous, which in return holds back socioeconomic development of Changchun. The 16th CPC National Congress pointed out that supports would be given to speed up the adjustment and reconstruction of such old industrial bases as the one in Changchun. This was another strategic decision of great importance following the strategy of opening up the eastern costal cities of China and the strategy of developing the western regions of China. As for Changchun, the strategy of revitalizing the old industrial base in Northeast China is historic opportunity. Seizing the opportunity, speeding up the tempo of adjusting, reconstructing and rejuvenating the old industrial base in Changchun is of great importance to improving the people’s living standards and building a moderately prosperous society in an all-round way. According to the national and the provincial topologies and in line with the basic situation of Changchun, the Compendium of Rejuvenation Plan for the Old Industrial Base of Changchun was made to guide the actions to adjust and reconstruct the old industrial base in Changchun.
I Revitalizing Foundation and Restrictive Factors for the Rejuvenation of the Old Industrial Base of Changchun
Early in 1940s, Changchun’s industrial foundation was very weak for there were only some handicraft workshops and a few small-sized factories for cereal and oil processing, food, cigarette and mechanical fixing, etc. After the new China was founded, some large or medium-sized light industry enterprises manufacturing such products as rubbers, asbestoses, vacuum flasks and vitreous enamels and so on were relocated in Changchun. In the “First Five-year Plan” period, the central government’s efforts were put on the construction of 156 key projects, of which two projects, the FAW and Self-Supplied Power Plan of FAW, were in Changchun. After that, the nation invested on such large-sized industry enterprises and military industry enterprises as “Factory 133”, “Factory 793”, “Factory 636”, “Factory 513”, and “Factory 228” and so on, and meanwhile Changchun invested on 76 state-owned enterprises, thereby forming an industrial structure laying particular stress on heavy industry. In 1978, the proportion between the light industry and the heavy industry was 3:7. Over the past 20-plus years since the reform and opening-up policy was adopted, Changchun has witnessed a rapid development in industry, with some key industries like automobile, food, optoelectronic information, and biomedicine and so on growing at an annual rate of about 20%. An industrial system, which is relatively strong in industrial foundation, backed up by the state-owned economy and is featured by pillar industries with conspicuous features, has been preliminarily formed. By the end of 2002, the transportation equipment manufacturing industry had contributed 78.3% of Changchun’s gross value of industrial output, and state-owned and state-holding industry accounted for 84.4%.
1. Foundation of Rejuvenation
1) Comprehensive economic strengths have become increasingly competitive. In 2002, the GDP of Changchun reached RMB 115 billion, accounting for 51.3% of the total of Jilin Province, 9.9% of the total of the three provinces in Northeast China. The GDP per capita was RMB 16,300, RMB 6065 and RMB 5471 more than the average level of Jilin Province and the three provinces in Northeast China. The government revenues reached RMB 11.02 billion, making up 45.0% of the total of Jilin Province, and 6.8% of the total of the three provinces in Northeast China. The gross value generated by the industries over the designated scale was RMB 123.57 billion, accounting for 60.6% of the total of Jilin Province, and 9.6% of the total of the three provinces in Northeast China or ranking the first among the four big cities in Northeast China. The industrial added value realized RMB 45.03 billion, 45.9% of province’s total amount and 11% of the total of the three provinces in Northeast China. The industrial structure was constantly optimized, with proportion of the first, the secondary and the tertiary industry coming up to 12.8：45.4：41.8 in 2002 from 30.8：51.5：17.7 before the reform and opening-up policy was adopted.
2) Reform of the state-owned enterprises has become increasingly deepened. Starting from the reform of the ownership system and the transformation of operating mechanism, Changchun has done a lot to boost the reform of the state-owned enterprises, and establish a modern enterprise system step by step. At present, 222 state-owned enterprises have gone through reforms, of which 65 were bankrupt, 39 were merged and 108 small or medium-sized enterprises were changed with new ownership system. Consequently, this has revived RMB 7.99 billion effective assets, and thus helped 98,000 people get employed.
3) The policy of opening up to the outside world has been constantly strengthened. Changchun has so far established economic partnerships with over 160 countries and regions. Among the top 500 Enterprises of the World, 29 multinational companies including Volkswagen, IBM and Toyota have invested here in Changchun. In 2002, USD 630 million foreign direct investments were actually used, accounting for 9.5% of the total of the three provinces in Northeast China. The import and export volume came up to USD 2.89 billion, 7.3% of the total of Jilin Province and 9.9% of the total of the three provinces in Northeast China. In addition, the development zones became larger and stronger, playing a leading role in the opening up of Changchun to the outside world, and over 70% foreign direct investments of Changchun were used by them.
4) The city’s comprehensive service functions have been constantly improved. The urbanization level is getting increasingly higher, with the urbanization rate having reached 42.7%, the urban infrastructure having become increasingly endurable, the daily water supply capacity having reached 103 tons, the water supply piping having been extended to 1194 kilometers, sewage water treatment rate having reached 66.8%, natural gas coverage rate having come up to 94.5%, and the urban heating rate having reached 55%. The air quality is basically as good as the national Grade II Standard, greening rate has amounted to 39%, and the public greenbelt area per capita has increased to 7.2 square meters. The long-distance direct dialing connection with over 500 cities in China and more than 180 countries and regions has been made possible, with the tele-text and cyber transmission having been available as well. The city’s highway totals 6,644 kilometers long, railway can serve as long as over 6100 kilometers, 39 domestic air routes have been opened and the annual freight capacity has reached 35 billion Ton/km.
2. Comparative Advantages
1) The transportation equipment manufacturing industry has exceptional strengths. Changchun has formed an industrial system which is mainly backed up by transportation equipment manufacturing industry, with automobile and railway carriage industries ranking ahead in China. The FAW is the largest production base for automobiles in China, producing 6 series of products such as heavy duty trucks, medium duty trucks and light duty trucks and saloon cars and so on. In 2002, 0.58 million cars were sold, accounting for 18% of the domestic market shares and ranking the first in the nation. Changchun Railway Vehicles Co., Ltd., is the largest production base for railway vehicles, manufacturing railway carriages and urban rail transit vehicles. Of the two kinds, production of the railway carriages has long maintained a supply rate of about 48% in the domestic market, and production of the urban rail transit vehicles has come up to over 90% of the total amount of the nation.
2) The processing industry of agricultural products is expected to see a bright future. Changchun is situated in the one of golden strips for corn of the world, and it is an important grain production base, with such indicators as amount of the commodity food, rate of the commodity food, export amount and amount of the food per capita ranking the first in China for over 10 years in a row. The animal husbandry industry is developing at a rapid speed, whose output value accounts for 51.6% of the gross value of agricultural output. The top five processing series for corn, soy bean, meat chicken, meat cattle and live pig have been formed. In 2002, the output value of processing of agricultural products reached RMB 30.1 billion, accounting for 19.3% of the gross value of industrial output.
3) The optoelectronic information industry boasts of foundation for rapid development. Changchun has a batch of nation-level optoelectronic IT research institutes and institutions of higher education, making it an important base for R&D of optoelectronic information technologies, transformation of scientific findings, and cultivation of talents. In recent years, the optoelectronic information industry has maintained an annual growth rate of over 30%, with certain industrial foundation having been formed in particular in such manufacturing fields as optoelectronic display components as well as the downstream products, optoelectronic materials and components, optoelectronic apparatus, instrument and equipment, national defense optoelectronics and so on.
4) Biomedicine industry has great potential for development. Changchun is the headquarters of Changchun Biological Products Research Institute, Jilin University, and Jilin Provincial Research Institute of Traditional Chinese Medicine, making it endowed with advantages in making both the biomedicines and the modernized traditional Chinese medicines respectively. Out of the national 35 kinds of bacterin, 26 kinds are produced here. Among the 18 authorized gene medicine projects of China, 10 are headquartered in Changchun, and 17 out of the 88 Thymosin manufacturers of China are also stationed in Changchun. Changchun holds the intellectual property rights for 11 kinds of new biomedicines, ranking ahead in China in terms of the market shares.
5) Advantages in science, technology and education are exceptional. Changchun has 101 independent scientific research institutions, 0.47 million technicians serving in different fields, 26 academicians and the population of scientists and engineers engaged in scientific activities ranks ahead in the nation as well. In 2002, Changchun succeeded in applying for 1,861 patents, of which invention patents accounted for 33.6%, 14 percentage points higher than the national average level. In addition, Changchun has 27 institutions for higher learning. A number of 0.196 million students are studying in universities and colleges, and 40,000 of them with associate degrees or above will graduate every year.
3 Major Conflicts and Issues
The old industrial base in Changchun is still confronted with various difficulties and pressures, and conflicts still exist, deeply-rooted in systems and structures, though it has gone through reform and development for years.
1) The proportion of the sate-owned economy is higher and enterprises are shouldering heavy historical burdens. By the end of 2002, the number of the state-owned and the state-holding industry enterprises had accounted for 43.3% of the total amount of the enterprises over the designated scale. Their assets and employees made up 85.6% of the total. The output value generated by the state-owned industry enterprises accounted for 84.4% of the gross value of the industrial output of Changchun. There were 401 state-owned enterprises at city or below the city level that needed to be reformed, whose average asset debt rate was 127.3%, and the loss-making percentage for the enterprises over the designated scale was 37.9%, getting 0.189 million employees affected. There is such a heavy burden for the enterprise running society that they will have to face about RMB 1 billion expenditure every year. Therefore, the single ownership structures, the higher proportion of the state-owned economy and the weaker market competition have caused sluggish economic development.
2) The enterprises’ technologies, equipment and innovation abilities are left behind. There was only 18% technologies and equipment in the industry enterprises that could catch up with the level of the 1990s, while there were 65% of them were still at the level of the 1970s or 1980s, and there was 17% at the level of 1950s or 1960s. Even though 57 technological centers have been set up, but it is only 9.7% of the total number of the industry enterprises over the designated scale. In addition, no enough funds have been used to upgrade the enterprises’ technologies. In 2002, RMB 650 million were earmarked for enterprises’ research and development, accounting for 45% of the city’s research and development funds, but 16.2 percentage points lower than the national average level. The products’ upgrading and transformation were kind of slow, with a higher record seen in investment products while less in final products.
3) The issues related to the laid-off and unemployed workers are widely existed, and the social security functions are weak. By the end of 2002, 0.194 million workers had been laid off or unemployed, of which 0.169 million were laid off, and 25,000 people would have to live on unemployment pensions. In the following five years, 0.28 million people need to get reemployed, and another 0.1 million people will join the labor force as more migrant workers move to the city, which in return will put more pressures on employment and reemployment. There is imbalance between revenue and expenditure in terms of the pension and unemployment insurance. The enterprises have RMB 0.135 billion in total left to pay for the insurance. The collective enterprises have RMB 250 million pensions unpaid to the retirees, with the individual accounts left empty as well. By the end of 2002, the actual gap of the individual accounts had reached RMB 4.07 billion. The urban residents who lived on the minimum living guarantee funds was 0.161 million, accounting for 5.5% of the total non-rural population.
4) The foreign-oriented economy stands at low level and is not competitive in the international market. In 2002, the total import and export volume accounted for 20.8% of the GDP, 29 percentage points lower than the national average level. The export volume accounted for 9.2% of the GDP, 17 percentage points lower than the national average level. The GDP of the city was over 1% of that of the nation, while the proportion of the actually used FDI was 0.6% of the nation’s total amount. The export volume was only 0.4% of the total amount of the nation. Among the exported goods, the proportion of the agricultural byproducts was excessively big, with a proportion of 62% for corn and only a small proportion of 11% for mechanic and electronic products. The new and hi-tech products were less than 2%. The enterprises were not competitive in the international market, and only few enterprises engaged in contracted projects abroad, sending labors abroad or opening businesses in other countries.
5) The rural economy develops a low speed, and the issues related to the “agriculture, farmers and countryside” are conspicuous. The economic structure is highly characterized by two different structures in the urban and rural areas, and the rural industrialization and urbanization progresses at a low speed. In 2002, the proportion of the first, the secondary and the tertiary industry in the four counties (cities) was 38.8：28.0：33.2, which showed that agriculture was still in the dominant position, but with weak industrial foundation. The labors engaged in the first industry in the rural areas accounted for 73.2% of the total labor forces, 7.3 percentage points higher than the national average level. In the rural areas, the economic structure was quite simple, with economic returns. The revenues of the four counties (cities) only accounted for 3% of the city’s GDP, much lower than the city’s 9.8% level. The farmers’ incomes grew at a low speed, with most of their incomes coming form the various planting industries which were subjective to big influence of natural disasters and market. Therefore, the issues related to “agriculture, farmers and countryside” are still left unresolved because of the insufficient confidence and ineffective measures.
6) Ideas and concepts change at a low speed and the development environment is still not flexible. The traditional mindset affected by the agricultural production and the influence of the planned-economy remain as conspicuous as before, which has caused unspecific market awareness, limited development concept and weak recognition of entrepreneurship. The enterprises are not mentally ready for system innovation and ownership transformation, so they are not strong enough to get used to the new environment. . The soft environment for the economic development was not flexible enough. In addition, there are such problems as slow transformation of the government functions and low service quality and efficiency and so on. “Three kinds of turmoil” at different levels can still be found, and even more serious in some departments. The enterprise running the society are confronted with higher operating cost.
II General Concept and Goal for the Rejuvenation of the Old Industrial Base in Changchun
1. General Ideology and Perspective
Under the guideline of Deng Xiaoping’s Theory, the main ideas of the “Three Represents” and spirit of the 16th CPC National Congress, efforts will be made to fully implement the spirits of the 3rd Plenary Session of the 16th CPC National Congress, the 4th Plenary Session of the 8th People’s Congress of Jilin Province and the 4th Plenary Session of the 10th People’s Congress of Changchun City, stick to the goal of building a moderately prosperous society in an all-round way, and stick to the direction for the development of the “three centers”, development of the “four pillar industries” and the implementation of the “five strategies”.
Efforts are being made in line with taking the innovation of systems, mechanisms and technologies as the driving force and the economic restructuring as the masterstroke to deepen the reform of the state-own enterprises, expand opening up at home and abroad, do the best to strengthen the regional economy, optimize the economic development environment, and strive to make Changchun a new-type industry base featured by advanced technology, ideal structure, complete function and competitive strength in 7 years. The principle of “planning the five as a whole” will be persisted to speed up the harmonious development of material civilization, political civilization and spiritual civilization in an all-round way, and figure out a complete, harmonious and sustainable method for the rejuvenation.
2. Basic Principles
----Persist in deepening reform and expanding opening up. Efforts will be centered on accelerating the innovation of systems and mechanisms, and the strategic adjustment of the state-owned economy, deepening the reform of the state-owned enterprises, further develop the private economy, and strengthening the economic vitality as well as actively attracting strategic investors to get involved in the adjustment and reconstruction of the old industrial base, and create the development space through expanding opening up.
----Persist in relying on the market-oriented mechanism and correctly bringing into play the government functions. The industrial restructuring, means of production integrating and enterprise reshuffling will be promoted by relying on the functions of the market-oriented mechanism. And the sound development environment and the market order under the fair play principle will be created by speeding up the transformation of the government functions and bringing into full play the design-led and policy-oriented functions.
----Persist in making pragmatic decisions. Based on bringing into full play the current foundation, resources and comparative advantages, emphasis will be focused on strengthening the pillar industries, accelerating the upgrading of the traditional industries, and taking a road of a new type for industrialization characterized by high content of science and technology, good economic returns, low cost of resources and less environment pollution and full demonstration of advantages of the human resources.
----Persist in self dependence and encourage the people to start business. Active efforts will be made to get the national supports in policy and finance and at the same time to dig out the inner potential, stimulate the inner vitality and intrigue the people’s enthusiasm and innovative abilities to get the entire people involved in tide of starting businesses and being part of the rejuvenation for the old industrial base of Changchun.
----Persist in taking the people as the foremost and doing the best to improve their living standards. The people’s interest will be put in the first place, with more efforts to be made to address the basic life issues for the people living in both the urban and the rural areas and make sure the relations of reform, development and stability can be handled properly. High priority will be given to expanding employment and constructing the social security systems, optimizing allocation system and improving the people’s living standards.
----Persisting in making overall plans while taking all factors into consideration, and paying attention to harmonious development. Efforts will be made to accelerate the harmonious development for material civilization, political civilization and spiritual civilization and promote the society’s progress and the people’s development in an all-round way so that the harmonious development between industry, agriculture and service industry, the urban areas and rural areas as well as the economy and the society can be achieved. All kinds of natural resources should be exploited properly and used economically, and the ecological environment should be protected to make sure that the people and the nature can co-exist in harmony, with the complete, harmonious and sustainable development realized at the same time.
3. Development Blueprint
Basically, the task of revitalizing the old industrial base in Changchun will be fulfilled from 2003 to 2010, with the economic returns of the first industry to be improved dramatically and its competitiveness strengthened at the same time, the second industry to continue to play its predominant role in economic development, and the scale of the tertiary industry to be increasingly expanded in the industrial restructuring, and its inner structure to be more appropriate. The goal of achieving the complete, harmonious and sustainable development will be fulfilled, thereby making the old industrial base in Changchun an important place to completely rejuvenate Jilin Province and even the entire northeastern region of China. By 2010, the city’s GDP will come up to RMB 300 billion, the GDP per capita to RMB 38,500, the urban residents’ disposal income per capita to about RMB 15,000 and farmers’ net incomes per capita to about RMB 6,000. The registered unemployment rate will be controlled lower than 5%.
The strategy for rejuvenation of the old industrial base in Changchun is to be implemented in three phases:
The first phase: From 2003 to 2005, preliminary achievements will be made in adjustment and reconstruction. The conflicts of most significance will be relieved, and basically the reform of the state-owned enterprises will be completed, with the processing base for automobiles and agricultural products to be further enlarged, the bases for optoelectronic information industry, biomedicine and logistics industries to be formed preliminarily, and the social security system to be basically established. By 2005, the city’s GDP will come up to RMB 170 billion, with an annual growth rate of over 13%, the industrial added value will increase at an annual rate of about 15% to RMB 71 billion and a total of 0.18 million job opportunities will be created.
The second phase: From 2003 to 2007, remarkable achievements will be made in adjustment and reconstruction of the old industrial base. The bases for the five big industries will show their preliminary look. The large or the medium-sized state-owned enterprises will be of dynamism and vitality while the private economy will prevail, with the social security system to be further improved at the same time. In 2007, the city’s GDP will come up to over RMB 210 billion, with an annual increase rate of about 3%, and the industrial added value will increase at a rate of over 14% to RMB 90 billion. And RMB 240 billion will be invested accumulatively on the fixed assets, and at the same time a total of 0.36 million jobs will be created.
The third phase: From 2003 to 2010, the historic mission of adjustment and reconstruction of the old industrial base will be completed basically. The bases for the five big industries will generate preliminary influence, with Changchun International Automobile Center, and some industrial clusters of remarkable size and with high market shares will be formed. The social security system will be running smoothly, and the employment issues will be basically addressed and the people will be living a moderately rich life. By 2010, the city’s GDP will come up to over RMB 300 billion, with an annual growth rate of about 12.5%, the industrial added value will increase at a yearly rate of 13% to RMB 126 billion. A total RMB 440 billion will be invested on the fixed assets of the entire society and 0.56 million jobs will be created.