China ploughs cash into struggling north-east

China will plough Rmb1.6tn into projects in its north-eastern rust belt in an effort to revive growth in one of the country’s worst-performing regions, one of the clearest signs to date that Beijing is attempting to stimulate its way out of slowing economic growth.

In the first quarter of this year the north-east, home to the state-backed heavy industrial companies and state-owned farms that form the Communist party’s traditional support base, reported some of the slowest growth rates in China. One province, Liaoning, reported negative growth — the first provincial contraction in seven years.

The cash, equivalent to $250bn and earmarked for about 130 separate projects, could be dispensed over the next three years, according to Zhou Jianping, director of the office in charge of transforming the north-east’s economy at the National Development and Reform Commission. He did not identify the projects or clarify whether any had already been incorporated under other initiatives.

Mr Zhou said the spending was not a “subsidy” for the region but that the central government had recognised that “the people’s livelihood needs more support”. The spending total Mr Zhou referred to was not included in the heavily abridged official transcript of the press conference.

Companies that require support include coal mines, Mr Zhou said. “Some of them date from before the Communist liberation [in 1949] and after liberation a lot of them were low-tech. The north-east has contributed a lot to China in terms of coal, oil and human resources, so Beijing needs to help with pensions and a sustainable environment” among other areas, he said.

Last year at least three cities in the north-east reported negative growth — Daqing, the ageing oil production base operated by China National Petroleum Corp, and two cities, Jixi and Qitaihe, whose economies are dependent on coal mines operated by debt-laden state-owned Longmay Group.

Policies would focus on relieving state-owned companies’ “social burden” as well as problems including resource depletion after decades of mining and oil extraction. “The north-east was the earliest area to introduce the planned economy and now it’s the region that feels its impact most heavily,” Wang Jianguo, vice-director of the Heilongjiang province planning commission, told reporters.

The NDRC also planned to improve policies for private enterprise, which is relatively under-represented in the north-east, officials said.

This article has been amended since initial publication to reflect the fact Rmb1.6tn has been earmarked for spending in the north-east