LIAONING PROVINCE

General Background

 

Liaoning - abbreviated as Liao - is located in Northeast China bordering Democratic People's Republic of Korea (DPRK) in the East.  Shenyang is the capital of the province, together with Dalian, both enjoy similar preferential policies as the coastal open cities do.  

Liaoning has rich mineral resources with substantial deposits of coals and iron ores.  The Liaohe Oilfield is one of the largest oilfields in China.  Its output of crude oil ranked the fourth in the country, reaching 14.3 million tons in 1999.  Besides, Liaoning's output of steel and iron also ranked the second and third in China in the year. Liaoning¡¦s reserve of boron, magnesite, diamonds and jade also ranked the top in China.

Liaoning also possesses rich salt resources along its coastline.  The province's long coastline offers a favourable condition for fishery activities.  Luda is the famous fishery production base in China -  supplying ocean fish and shellfish for the domestic markets and exports.  

 

Infrastructure

 

Water Transport ¡Ð The province has five foreign trade ports - Dalian, Yingkou, Huludao, Dandong and Jinzhou. Dalian is the fourth largest container port in terms of cargo handling tonnage in China and the port's throughput was 85.1 million tons in 1999.  Inland water transport is seasonally available along the Liaohe and Yalujiang rivers.

A new port in Panjin is put into operation recently.  The new port is located at the Bohai Rim and it aims to handle commodities and oil products from the Liaohe Oilfield.

In the Tenth Five Year Plan, the Lianning government is going to invest heavily to improve the facilities of its major ports. Two of the projects, the expansions of the Dalian port and Jinzhou port are major items in the State Council¡¦s Five Year Plan and investors of these two projects will enjoy the same preferential policies granted to infrastructure building for the western provinces.

Railways ¡Ð Liaoning has one of the densest railway networks in China.  Major trunk railways include Jingha Line¡]Beijing-Harbin¡^, Shenda Line¡]Shenyang-Dalian¡^, Shenji Line¡]Shenyang-Jilin¡^, Shendan Line¡]Shenyang-Dandong¡^and Hada line¡]Harbin-Dalian¡^.  Construction of QinShen line¡]Qinhuangdao-Shenyang¡^which links Hebei and Liaoning is now in progress. The electrification of the Harbin-Dalian line, making it the first electrified railway in Northeastern China, is almost completed.

A new railway network, which  covers 2,200 kilometres from Harbin to Changxing in Zhejiang, is under construction.  The railway network will link the HaDa line and a 170-kilometre-long ferry passage from Dalian to Yantai in Shandong.  It will further extend from Shandong to Zhejiang and running through Shanghai and Jiangsu.  It will considerably improve China's existing railway network in the provinces of Heilongjiang, Jilin, Liaoning, Shandong, Jiangsu and Zhejiang upon completion.

Highways ¡Ð Major highways in the province include Shenyang-Dalian Highway which links Shenyang, Fushun, Benxi, Tieling and Huancheng; Shen-Shan Expressway which links Shenyang with Shanhaiguan in Hebei.  Besides, the Shenha Expressway f rom Shenyang to Harbin is completed recently.

In the Tenth Five Year Plan, the Liaoning government is aiming to connect all 14 cities in the province with expressways. The last four major expressways of this project: Dandong-Benxi Expressway, Panjin-Haicheng Expressway, Jinzhou-Zhaoyang, and Jinzhou-Buxin are all under construction, and will be completed by 2002.

Air Transport ¡Ð Liaoning has two international airports - the Shenyang Taoxian International Airport and the Dalian Zhoushuizi International Airport.  There are also four provincial airports in Dandong, Jinzhou, Zhaoyang and Changhai.  Scheduled passenger services to Tokyo, Fukuoka, Seoul, Pyongyang, Moscow and Hong Kong, and chartered cargo flights to Japan, the US, Romania, Thailand, the Netherlands and Canada are available.

Telecommunications ¡Ð Telephone popularization rate is high in Liaoning.  In 2000 alone the province had 2.04 million new mobile phone users. Internet users also reached 780,000.

Electricity ¡Ð Liaoning has established one of the most developed electricity-supply networks within the country and it also takes the major part of the electricity-supply network in northeast China.

Recently, a 500 KW electric cable from Suizhong in Liaoning to Qianxi in Tianjin is constructed. This is the first cable that links the

Northeastern China Electric Network with the Beijing-Tianjin-Tangshan Electric Network. It will provide relief to the coming electricity supply shortage in the Beijing-Tianjin-Tangshan area.

 

Industries

 

Liaoning's industrial output totalled Rmb417.0 billion (+24.0%) in 2000.  Major industries included iron & steel, coals, petrochemicals, metallurgy, machinery, electronics, shipbuilding, building materials, papermaking and textiles.  Mechanical and electrical products are the province's main export products.

Liaoning is one of the most important heavy industry production bases in China.  Shenyang and Dalian are the major industrial centres in the province.  Some enterprises such as Shenyang FAW-Jinbei Co. Ltd., Dalian Iceberg Group, Dalian Shipbuilding Plant, Dalian Rolling Stock Plant, Anshan Steel Group, Fushun Petrochemicals Co. and Benxi Steel (Group) Co. Ltd. take significant roles in their own sectors including electrical power, steel, automobiles, petrochemicals, aviation, shipbuilding and machinery. 

Recently, the largest joint venture of automobiles in China has been set up in Shenyang - The Shenyang Aerospace Mitsubishi Motors Ltd.  The company, also the largest industrial joint venture in Liaoning, has a registered capital of US$88.92 million and total investment of US$263.8 million.  Other well-known corporations such as General Motor, Ford, Mitsubishi also invested in the field. 

The province's light industry mainly focuses on the development of textiles and clothing industries which include cotton and wool spinning, chemical fibre, knitting, silk, garments and textile machinery. Dalian is a major fashion center in China and The China Dalian International Garment Fair has been held annually to boost the industry.

In coming years, Liaoning will keep on the restructuring process in large and medium-sized State enterprises.  Besides, the province will concentrate in developing its four pillar industries - petrochemicals, metallurgical, machinery and electronic sectors, and further develop the Bohai Bay Economic Belt, which is one of the strategic economic development areas in China.

 

Tourism

 

As the birthplace of the Ching Dynasty, Liaoning has many historical heritages, some of which are over thousands of years old. Famous tourist sites include: Shenyang Palace, the Mausoleums of the first three Ching emperors, Jiumenkou Great Wall and so forth. The annual China Dalian International Garment Fair also attracts numerous visitors to the province.

Shenyang Forest Wild Zoological Garden, one of the major floral scenic spots in Shenyang, is under construction.  The zoo will be the only forest wild zoological garden and one of the only two wild zoological gardens in China while the other one is in Panyu, Guangdong Province.

In order to boost the province's tourism industry, the province has established the Dalian Jinshitan State Tourist Resort Development Zone in 1992 with the approval of the State Council.  It aims at developing into an international standard holiday and tourist resort.

In 2000, over 612,200 tourists (+24.6%) visited the province and generated revenue of US$382 million (+25.6%).

 

Consumer Market

 

Liaoning's retail sales of consumer goods reached Rmb184.8 billion (+9.0%) in 2000, ranked the fifth largest among all provinces, municipalities and autonomous regions in China.  Major consumer centres are located in Shenyang and Dalian.

In 1992, the State Council selected Dalian as one of the 11 designated pilot cities to establish one to two pilot Sino-overseas joint-venture (JV) retail enterprises with import-exports rights. The Dalian International Commercial Trade Shopping Arcade Co., a JV retail store between the Dalian Shopping Center and Japan's Nichii was approved by the State Council as one of the 18 pilot JV retail enterprises.  Dalian Friendship Group Corporation and Wal-Mart from US also formed a JV retail enterprise, Wal-Mart Dalian Supercentre, has been opened recently.  Covering 20,000 square metres, the new Supercentre is the seventh store that Wal-Mart invested in China.

Major department stores and shopping centers in Liaoning include Zhongxing-Shenyang Commercial Building and Zhongxin-Dalian Commercial Building.  Other major department stores include Maikaile Dalain Shopping Arcade,  Tianhe Baisheng Shopping Centre, Sincere Qiulin Building, Shenyang Department Store, Dalian  Shopping Center Shareholdings Co., Jingzhou Zhongbai Shopping Arcade Holdings Co., Anshan No.1 Department Store Co., Fushun Department Store, etc.

 

Foreign Trade

 

In 2000, Liaoning's external trade reached US$20.1 billion.  Liaoning's exports rose by 30.9% to US$10.6 billion in the year.  Exports of manufactured goods included machinery and electronics. Other major exports included textiles, garments, silk, cement, soy­beans, corn and seafood.  Major export markets were Japan, the USA, Republic of Korea, Hong Kong and Germany. 

Imports also increased by 46.2% to US$9.5 billion in 2000.  Major import commodities included machinery, electronic equipment and components, fertilizers, raw materials and chemicals.  Major import sources were Japan, Republic of Korea, Hong Kong, Indonesia and the USA.

Hong Kong is the 6th biggest trading partner with Liaoning. In 1999, Liaoning imported US$24 million from and exported US$312 million to Hong Kong.

 

Foreign Investment

 

In 2000, the number of newly approved foreign invested projects increased by 61.4% to 1,851.  Contracted and actually utilized foreign investment also increased by 51.5% and 92.6% to US$5.0 billion and US$2.0 billion respectively.   

Dalian and Shenyang are the major cities in Liaoning that attract foreign investment.  Investments mainly came from Hong Kong, Japan, Republic of Korea, the US, Taiwan, etc.  Well-known enterprises such as General Electric from US, Siemens from Germany, Mitsubishi, Toshiba and Sanyo from Japan also invested in the province.  Those projects mainly engaged in television, video recorder, air-conditioner, refrigeration equipment, automobiles, etc.

In the past two decades, more than 2,800 Taiwan-funded enterprises have been set up in Liaoning with total investment of more than US$2 billion.  Accumulated to end-1998, there were 5,834 HK-funded investment projects with contracted foreign investment of US$10.2 billion, accounting for 32.4% and 33% of the province's total respectively.  Apart from Dalian and Shenyang, HK investment started to expand in Anshan, Dandong and Yingkou.  Famous HK enterprises such as Cheung Kong Group and New World Group also invested in the province. 

In coming years, overseas investments are encouraged to invest in key industries such as machinery, metallurgy, electronics, chemical industry, textile, light industry, agriculture and infrastructure facilities, as well as the tertiary industry.

To reform the existing processing trade system and to go in line with international practice, the Chinese government has decided to set up export processing zones in 15 pilot cities.  Dalian is selected as one of the cities in this trial program.  Export processing zones are special restricted areas administered by the Customs.  Goods moving in and out of the zones are regarded as imports and exports.  Enterprises involving in export processing, storage and transportation are allowed to be set up in the zones. 

 

Major Economic & Technological Development Zones (ETDZs)

 

Liaoning has 5 state-level ETDZs, one tourist holiday resort and one bonded zone, along with 13 provincial-level ETDZs.  Overseas investments are encouraged to invest in electronics, machinery, food processing, garment processing, textile, transportation in these zones. 

Dalian Economic and Technical Development Zone, the first ETDZ in China approved by the State Council in 1984, has already developed a systematic industrial structure of electronics, machinery, textiles & light industry, building materials, petroleum, chemicals, and medical instruments. 

Shenyang Economic and Technical Development Zone¡]SETDZ¡^was approved by the State Council in June 1988.  By end-1998, more than 900 firms from 36 countries and regions had launched businesses in the SETDZ with contracted investment of US$4.57 billion, of which, US$3.5 billion was foreign capital.  In addition to its existing core industries which include chemicals, pharmaceuticals, automobiles and food processing, the SETDZ is expected to pursue development of bio-technological and environmental protection industries as well.

Yingkou Economic and Technical Development Zone?/SPAN>was established in 1992 with the approval of the State Council. Investment projects with new- and hi-tech are welcome to invest in the zone. 

Dandong Border Economic Cooperation Zone, established in 1992 with the approval of the State Council.  It aims at expanding external trade and economic cooperation between the Korean Peninsula and Japan in the fields of trade, tourism, export processing, information consultancy, bonded warehousing and port transportation.

Dalian Jinshitan State Tourist Resort Development Zone

Dalian Bonded Zone, established in May 1992, will develop as an international free trade zone. Overseas investments are encouraged to invest in foreign trade, export processing, bonded storage and warehousing, finance & insurance businesses, as well as other trade-related services. All enterprises in the zone are re-exempt from import tariffs and VAT.  Foreign investment mainly came from Hong Kong, the US, Japan and Australia.  In Jan-Jun 2000, external trade in the zone reached US$244 million, up 42.6%.  Both exports and imports grew by 31% and 55.8% to US$119 million and US$125 million respectively.

Other major development zones in Liaoning included :

Dalian New- and Hi-tech Development Zone was established in March 1991. Overseas investments are particularly encouraged in the fields of information technology, biology, automotive parts, new building materials, and environmental protection technologies.

Shenyang New- and Hi-tech Development Zone was established in 1988. Overseas investments are particularly encouraged in the fields of information technology, electronics, chemical, pharmacy, etc.  

 

Economic Indicators

 

 

	1999		2000
Economic Indicators	Value	Growth	Value	Growth
		(%, y-o-y)		(%, y-o-y)
Area (sq km)	147,500	--	147,500	--
Population (mn)	41.7	0.3	42.4^	1.6
Gross Domestic Product (RMB bn)	417.2	9.0 *	466.8	8.9 *
Per Capita GDP (RMB)	9,958	8.5
Income Per Capita
- urban (RMB)	4,898.6	6.0	5,357.8	9.4
- rural (RMB)	2,501.0	0.8	2,355.6	-5.8
Fixed-assets Investment (RMB bn)	90.5	4.0	102.8	13.6
Added Value Output
- primary industry (RMB bn)	52.0	-3.7	51.0	-1.9
- secondary industry (RMB bn)	199.6	6.9	210.7	5.6
- tertiary industry (RMB bn)	163.1	16.6	185.1	13.5
Retail Sales (RMB bn)	169.6	8.1	184.8	9.0
Inflation (Consumer Price Index, %)	-3.9		-0.1
Exports (US$ bn)	8.1	6.7	10.6	30.9
- by FIEs (US$ bn)	4.4	13.5	6.3	43.2
Imports (US$ bn)	6.5	6.0	9.5	46.2
- by FIEs (US$ bn)	3.9	28.7	6.1	56.4
Foreign Direct Investment
- number of projects	1,147	-32.6	1,851	61.4
- contracted amount (US$ bn)	3.3	-24.7	5.0	51.5
- utilized amount (US$ bn)	1.1	-51.5	2.0	92.6

Note: * In Renminbi real terms                          

^ Latest population census, 1999 figure was estimate base on previous survey.

Sources:     Statistical Yearbook of Liaoning and State Statistical Bureau

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