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Northeast China used to be the nation's industrial showpiece.

The region, including Heilongjiang, Jilin and Liaoning provinces, was the national centre of heavy industry and served as the engine for national construction in the 1950s.

At that time, as a national strategy, China ploughed enormous resources from all over the country into the Northeast to develop heavy industry, such as mechanical equipment.

In return, products from the region were distributed to other regions under the planned economy.

Boasting fertile farming land, the region's agricultural sector also held a key position in the national economy.

In 1978, the per capita gross domestic product (GDP) of the three provinces was only behind that of Beijing, Shanghai and Tianjin.

The plan-based economy of the region gradually lost its lustre, however, as the country began to launch its market-oriented reforms since 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 fails 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 the Northeast China.

In Jilin Province, for example, only 15 per cent 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 That means the production of more than four-fifths of its firms depend on outdated technology.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.

For the region, the past 20 years have become the  "lost years.''

The national position of Liaoning, Heilongjiang and Jilin has dropped to the eighth, 10th and 14th respectively in terms of per capita GDP.

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 was put right to the top of the agenda.

The Communist Party of China's 16th National Congress in November last year pledged to support the transformation of the Northeastern industrial base. Premier Wen Jiabao reiterated to officials of the three provinces in his August visit to the region that the central government will help the region surmount its current economic woes.

The latest indication of the importance attached by the central government to helping the Northeast was made at a State Council meeting last Wednesday, when Premier Wen and other top officials discussed measures to fulfil their pledges.

The high profile given to the issue shows that the country is not willing -- and cannot afford -- to see the region's problems remain, as this will undermine the national blueprint to build a comprehensively well-off "Xiaokang" society.

Moreover, the rejuvenation of the region will lend more dynamism to overall national development, becoming a new propeller to the growth of the national economy.

The question is, after going downhill for two decades, can the region step out of difficulties? And how does it achieve this?

Experts cite as the advantages of the region its abundant natural resources, relatively complete heavy industrial system, comprehensive transportation network and concentrated pool of skilled and professional people.

The region also has petroleum reserves and many rare metals and acres of forest.

The region's oil, petrochemical, iron and steel, electrical equipment manufacturing, and machine tool industries, among others, have a firm economic base.

In the region, the number of people with a junior middle school education or higher accounts for 48 per cent of the population, nearly 10 percentage points higher than the national level. The proportion of people with a college diploma or higher to the whole population is also 40 per cent higher than the national level.

Abundant resources, both natural and human, however, may not automatically translate into real economic growth.

That is an obvious lesson drawn from the fall of the region in the past two decades.

More investment, as many locals have expected after they received the message of  "rejuvenating the Northeast'' from the central government, would not play a decisive role, either. The Northeast is different from the country's poor western region.

The real problem for the Northeast is the systematic bottleneck, a legacy of the old planned economy.

A predominant proportion of enterprises in the region remain State-owned. The single ownership structure must be steadily optimized to add dynamism to the local economy.

The eastern regions have benefited much from the private economy since China adopted the reform and opening up policy.

Seen from experience of the eastern regions, what the Northeast needs badly is policy manoeuvre room to introduce more market elements in order to boost the economy.

For example, experts said more personnel power can be given to local governments. And more flexible policies concerning foreign investment approval and land use could be granted to the region.

In terms of material input, the central government can do little in the market-economy era, apart from the areas of the social security network and environmental protection.

Anyway, support from the top is far from a cure-all. The region must depend on itself to reform its economy.

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