Rust-belt blues hit industrial heart of China

AP , BEIJING

Sun, Mar 14, 2004 - Page 5

After 55 years in power, the Communist Party has made "putting people first" the motto of the People's Republic of China. Now the question is, which people?

China's long-neglected farmers got promises of more money and lower taxes during the current annual legislative session. But in the northeastern rust belt, tens of millions of factory workers laid off from defunct state-run factories are hoping for the same, if not better.

Beijing's ability to stretch scarce resources far enough to deliver on its promises could dictate its success in capping unrest among laid-off workers and pensioners angered at the loss of their livelihoods, as well as tens of millions of farmers.

"The government is a service organization. Of course it has power, but that power comes from the people. We must satisfy the public," Zhang Wenyue, governor of Liaoning Province, said during a meeting of Liaoning delegates to this week's National People's Congress.

In the 1950s and 1960s, during the years of communist planned economies, the far northeastern provinces of Liaoning, Jilin and Heilongjiang were the proud vanguards of Chinese industry. Now they're known as "old industrial bases" struggling to revamp decrepit state-owned factories.

"In the past, the northeast was the model area of the planned economy. Now it has become a new backward area under the new market system," said Xiao Zhuoji, a government economic adviser. "We are facing a very huge and difficult task."

The northeast, home to 107 million people, has a wealth of natural resources -- coal, forests, hydroelectric power, farmland. But in many areas those riches have been used up. Entire cities are imperiled by sinkholes over depleted coal mines. Jilin's farmers struggle to sell unwanted corn.

The central government has promised support. At the same time, it is pouring billions of dollars into developing western inland regions and promising to meet rising demands for better public welfare and services in both the cities and countryside.

The northeast may get a strong advocate in the country's newly appointed commerce minister. Bo Xilai (薄熙來), son of a communist revolutionary, spent 20 years in Liaoning as mayor of the city of Dalian and later as governor.

But it's a daunting challenge -- trying to please all the people all the time. When Mao Fengmi got the floor at the Liaoning delegates' meeting, he launched into a 10-minute recital of frustrations over corrupt officials, stingy bankers and limited business prospects.

"Officials are too obsessed with making money," complained Mao, a farmer and businessman who drew chuckles with his wry outrage. "I went to the local government to borrow a measly 30 fen (US$0.30) but they wouldn't see me."

State-owned enterprises still account for more than 80 percent of economic activity in the northeast, and the government still owns most industrial assets. Leaders want to nurture private businesses that, along with foreign-invested ventures, are now the biggest engines of China's economic growth, especially in the booming southeast.

But in many cases, workers accustomed to cradle-to-grave employment, welfare benefits and housing find it difficult to start businesses of their own, especially since state-run banks accustomed to government-backed public companies often turn them away.

"The banks don't treat us fairly at all," said Li Jindian, chairman of Liaoning Shuguang Auto Group, a small-sized independent automaker.