December 1, 2005｜China
Research Fellow, Consulate-General of Japan in Shenyang
What do you think of when you hear the name “Shenyang”?
Mukden in the old Manchuria, the Manchurian Incident (Mukden Incident), state-owned companies, the smoke of the Tiexi District, mass unemployment…. Until a few years ago, the city tended to be associated with many dark, sooty images. However, in recent years, in order to try to cast off the traditional “Shenyang image”and attract investment, the city of Shenyang is deploying its “Great Image Enhancement Strategy”. Furthermore, with the backing of the state’s Northeast Development Strategy, the “Shenyang image” is changing significantly.
Firstly, if one were to walk around the Tiexi District (the district to the west of Shenyang South Station), the old industrial base that typifies the “Shenyang image”, where many state-owned companies were concentrated, one would be amazed by the transformation in the area.
The Tiexi District began to be developed at the end of 1918, when the Manshu Railway embarked upon the purchase of land from farmers based in the western area of the railway, to use for future industrial development. After the Manchurian Incident, a plan to expand this area was formulated, with large and medium-sized companies from Japan and “Manchuria” subsequently continuing to move into this area, forming the biggest industrial zone in Northeastern China.
<Photograph> The Tiexi District as it once was. The soot and smoke emitted by state-owned companies were terrible.
After the Second World War, heavy industry was revived through priority investment under China’s 1st Five-Year Plan. During the initial period of building a new China, the district played an important role in promoting a shift in the Chinese economy as a whole towards heavy and chemical industry. 350 “Chinese firsts” were manufactured along Beier Road, which was home to 37 large state-owned companies, and it was the star performer of the planned economy era. However, after the policy of reform and opening up began to be implemented, the area was completely left behind by the tide of development that introduced the market economy to the country; in 2001, the debt ratio of corporate assets rose to in excess of 90% and it suffered the stigma of being dubbed “Deficit Road” and “The Road of Laid-off Workers”. The problems suffered by many state-owned companies in the Tiexi District intensified, including such issues as decrepit equipment, delays in implementing economic reforms and deterioration in management, and the situation in which businesses suffered financial difficulties, with surplus workers, as well as retiring and displaced workers, was called the “Northeastern Phenomenon”. In 2002, the value of debt defaults by 232 large and medium-sized state-owned companies in the Tiexi District, due to such problems as delays in wage payments, apparently rose to RMB 2.7 billion.
Over the 16 years between 1986 and 2002, the central government injected a total of RMB 35 billion of funds in its quest to resuscitate the Tiexi District, but it did not wield the scalpel in the direction of grassroots structural reforms of state-owned companies and no major results were achieved. Amidst this situation, a state plan was formulated in 2003, entitled the Northeast Development Strategy. In order for China to maintain sustainable economic development in the future, it will be necessary to resolve issues relating to the elimination of regional disparities and transition in economic systems. In particular, no time should be lost in dealing with the crucial issue of socioeconomic reforms in the northeastern region, which has been unable to cast off the effects of the planned economy era and where the share of state-owned companies is high.
In the Tiexi District, over the two years from the summer of 2002, a strategy was implemented under which state-owned companies were moved to a suburban development zone (Shenyang Technological and Economic Development Zone). The Tiexi District is located in the center of Shenyang, where the price of land for industrial use is cheap. If this industrial land were resold as commercial or residential land, the price would rise and it would be possible to use this money to build new plants in the suburban development zone, replace equipment and raise the funding required in order to provide compensation money to restructured staff. Furthermore, it would be helpful as a means of countering air pollution in Shenyang. Thus, 130 large and medium-sized state-owned companies moved to the suburban development zone by the end of 2004. At present, this suburban development zone and the original Tiexi District are together known as the New Tiexi District. The original Tiexi District is now home to rows of car dealerships, apartment blocks and tenant buildings constructed with capital from such southern areas as Hong Kong, Wenzhou and Zhejiang, and the image of the Tiexi District as it once was is no longer perceptible.
<Photograph> A decrepit state-owned company (left) and the New Tiexi District after redevelopment (right)
Over the 18 months, I have observed the changes in Shenyang on the ground; reforms have been progressing in many fields all at once due to the ripple effect of the Northeast Development Strategy and the enthusiasm behind efforts to transform the quot;Shenyang imagequot; is palpable. Due to the constraints of space, I will refrain from reporting on these changes in detail, but I can say that urban redevelopment within Shenyang and the upgrading of transport infrastructure, such as the construction of a high-speed road network and a Shenyang subway system, are progressing rapidly.
In addition, in May next year, the 2006 Shenyang China International Horticultural Exposition will take place, something that would have been unimaginable with the old quot;Shenyang imagequot;. Ahead of this, Shenyang has successively been awarded such honors as the title of quot;State Environmental Protection Cityquot; in 2004 and quot;State Forest Cityquot; in 2005. At the Shenyang International Horticultural Exposition, which will mark the climax of Shenyang’s efforts to shake off its old image as quot;smoke cityquot;, Shenyang is seriously aiming to publicize the new quot;Shenyang imagequot; to the rest of the world.
Recently, I visited the site where the Shenyang International Horticultural Exposition is due to be held (Qipan Mountain International Scenery, Tourism and Leisure Development Zone, in the northeastern part of Shenyang). The Rose Garden, an immense greenhouse covering an area of 7,000 square meters, in which 3,500 varieties of rose will bloom exuberantly during the six months of the exposition, was designed around the theme of the rose, which is the city flower of Shenyang, and is symbolic in publicizing the new quot;Shenyang imagequot;. Moreover, construction of gardens on the theme of various countries around the world and regions within China is progressing at a rapid pitch. There will also be a Japanese garden, funded by Sapporo, Shenyang’s sister city.
<Photograph> A poster for the International Horticultural Exposition (left) and the theme park that will be the venue for the exposition, where construction is progressing (right)
The PR officer at the Shenyang International Horticultural Exposition Preparation Office emphasized that, “It is highly appropriate that the Shenyang International Horticultural Exposition will take place in 2006, the year in which the 11th Five-Year Plan begins, and it will be a beautiful new addition to the Northeast Development Strategy. This is the perfect opportunity to publicize to the rest of the world the growing Shenyang economy and Shenyang’s endeavors to achieve ecological and environmental improvements.”
This strategy seems to involve using the enhanced image of the city as a powerful weapon in efforts to promote investment attraction activities, which are a crucial issue.