Northeast China’s Liaoning province is to enhance its ties with countries throughout Northeast Asia as part of efforts to further its opening-up during the 14th Five-Year Plan (2021-25).
In response to the call from the central government, the province is taking a more proactive approach to optimizing its industrial structure, promoting diverse business development, and advancing the reform of State-owned enterprises, in a bid to build itself into an emerging frontier for the country’s opening-up.
Liaoning is located at the intersection of the Bohai Sea economic rim and Northeast China. It’s the only province in Northeast China that has both coastal and land borders, which gives it an edge in economic opening-up.
In the first half of 2021, Liaoning’s foreign trade grew 13.6 percent year-on-year to 371.53 billion yuan ($57.37 billion). The province received paid-in investment worth 336.89 billion yuan during the period, an increase of 28 percent year-on-year.
Liaoning is also a logistics hub in Northeast Asia. The province has launched three major international freight routes. So far, it has connected itself with Mongolia and a host of countries in Europe such as Russia and Norway. Its China-Europe freight train services have reached about 40 cities in more than 20 countries.
At the end of January, China’s first East Asia-Central Asia multimodal transport channel for motor vehicles was put into operation.
In the past, it took more than 80 days to ship cars made in Japan to Kazakhstan. But now, the vehicles are sent to Dalian Port in Liaoning by sea and then transported to Kazakhstan on China-Europe (Dalian) freight trains. As a result, the travel time has been reduced to about 30 days.
These routes, which slash logistics’ time and costs, are bringing huge benefits to manufacturers. They are also playing a vital role in promoting regional connectivity and trade in Northeast Asia, local officials said.
In late June, the Shenyang area of the China (Liaoning) Pilot Free Trade Zone launched a new air cargo route between Shenyang, the capital of Liaoning, and Seoul, ROK. It is the fourth international air freight route launched by the Shenyang area, following those linking to London, Los Angeles and San Francisco.
The route is expected to see 100 flights made by the end of this year, with 2 million orders delivered that are worth about 200 million yuan in total, according to the Liaoning FTZ.
The Liaoning FTZ — which includes three areas in Shenyang, Dalian and Yingkou — had attracted 69,000 businesses by July. One-third of all foreign-funded enterprises in the zone are from Northeast Asia.
The Dalian area has established a distribution base for products from Japan and the ROK. Meanwhile, an international supply chain center of fresh food was set up in the Yingkou area.
From January to June, 5.45 million cross-border e-commerce orders worth 700 million yuan were fulfilled through the Shenyang area. The number was 2.6 times that of last year.
In the next step, the Shenyang area will continue to assist in the opening-up of Liaoning. It is set to help construct a national hub for China-European freight train services, attract leading cross-border e-commerce companies and accelerate the development of airborne logistics and medical care, said the management committee of the Liaoning FTZ.
Besides the Liaoning FTZ, the province is home to an array of channels that bolster its opening-up and international cooperation.
Shenfu New Area, standing between the cities of Shenyang and Fushun, is one of China’s first demonstration areas for reform and innovation.
Thanks to a better business climate and favorable policies offered by local authorities, some key digital economy projects were launched in the zone. In the first half of 2021, businesses involved in the digital economy contributed nearly 60 percent of the zone’s tax revenue.
Liaoning has also built five comprehensive bonded zones and five national cross-border e-commerce pilot zones.
Song said that the province needs to step up its support to these opening-up platforms, improving their capabilities and injecting impetus to the overall revitalization of Liaoning.
According to the government’s plan, Shenfu New Area is poised to build six industrial clusters — focusing on the digital economy; information technology applications and equipment; intelligent manufacturing; health industries; modern services; and new materials and hydrogen energy — to cultivate new growth drivers for Liaoning’s economy.
In recent years, Liaoning has made considerable achievements in economic and trade cooperation with the ROK, Japan and Russia as it strove to attract investment and build transnational platforms and industrial parks.
Japan is Liaoning’s biggest trading partner. In 2019, the province racked up 98.2 billion yuan in its trade with the country.
The National Development and Reform Commission approved the establishment of the China-Japan (Dalian) Regional Development Cooperation Demonstration Zone last year.
With a focus on high-end manufacturing equipment and new materials, the zone plans to launch a great number of China-Japan sci-tech institutions and bring in a group of Japanese-funded enterprises over the next five years, local officials said.
The ROK has established a close partnership with Liaoning in tourism, port logistics and new energy vehicles. In June, the ROK Industry Park in Shenfu New Area began operating.
Liaoning will continue to strengthen its cooperation with Northeast Asian countries, especially in the wake of the Regional Comprehensive Economic Partnership. The free trade agreement was signed by China and 14 other economies last year, Song said.
The agreement will give Liaoning more weight in the regional economic landscape and bring a higher standard of trade and investment to spur common growth, said Li Jirui, deputy director of the Liaoning Department of Transportation.
Liaoning province has established a long-term, extensive and in-depth relationship with France. Companies from the two sides have maintained economic and trade cooperation in many fields. For example, Brilliance Auto and French carmaker Renault signed a strategic cooperation agreement in 2018 to promote the development of light commercial vehicles, including e-vehicles, in China. The Liaoning provincial government said it is an important achievement in international cooperation in the automobile industry in the province and even China. Also, as early as in 1995, French tire maker Michelin established its first Chinese joint venture in Shenyang, capital of Liaoning. Now, Michelin Shenyang Tire serves as one of its most important production plants across the world. Another major French investor is Schneider Electric. The company’s advanced energy efficiency management technology is of great significance in promoting the transformation, innovation and green development of Liaoning.
Liaoning province has attached great importance to economic and trade cooperation with Central and Eastern European countries in recent years. Officials from the province’s department of commerce said Liaoning has a good foundation and unique advantages for economic cooperation with those countries. The province has made substantive progress in the construction of communication platforms and working mechanisms, laying a solid foundation for further promoting Liaoning’s integration into the cooperation between China and Central and Eastern European countries. Since 2018, Liaoning has held a series of large-scale promotion activities such as a Liaoning tour of CEEC delegations and a Liaoning-CEEC economic and trade cooperation promotion conference. The province has also organized local companies to visit Romania, Bulgaria and Bosnia and Herzegovina to conduct business negotiations.
Germany is an important European economic and trading partner of Liaoning province. As of December 2020, the country had invested more than $2.9 billion in Liaoning. The establishment of platforms for opening-up such as the Liaoning Pilot Free Trade Zone and the China-Germany (Shenyang) High-end Equipment Manufacturing Industrial Park has further provided investment and cooperation opportunities for German companies. Currently, high-end projects have attracted companies engaged in intelligent manufacturing, high-end equipment, automobile manufacturing, industrial services and strategic emerging sectors. Liaoning’s favorable investment conditions have attracted a number of well-known German enterprises including BMW, Siemens, Draexlmaier, Volkswagen and ThyssenKrupp. The Liaoning and Jilin regional manager of AHK Greater China praised the business environment of Liaoning.
Liaoning province and Russia are highly complementary in energy, minerals, forestry, fishery and other fields, which means the two sides have broad prospects and huge potential for further cooperation. In recent years, Liaoning has focused on its deep integration into the China-Mongolia-Russia Economic Corridor, promoted the construction of the Belt and Road Initiative, and paid more attention to its cooperation with a leapfrog development zone in Russia. The province has also made more efforts to improve the operation of China-Europe freight trains. A direct container shipping route was added on Aug 9, linking Jinzhou Port in Liaoning and Vostochny Port in Russia. The move will further facilitate the flow of goods between the two regions.
Japan has always been an important growth partner for Liaoning province to attract foreign capital. The country’s actual investment in Liaoning exceeded $24.3 billion as of December 2020. Many well-known Japanese enterprises such as Nidec, Orix and Panasonic have invested and set up operations in the province. Japan is also Liaoning’s largest trading partner among the countries that have invested in the province. In recent years, Liaoning has continuously deepened practical cooperation with Japanese enterprises. This cooperation not only involves traditional industries like equipment manufacturing and the deep processing of agricultural products, but also relates to new businesses including trade logistics and financial insurance. Liaoning and Japan have been committed to promoting cooperation in high-end equipment and artificial intelligence, and together develop new markets. In May last year, the China National Development and Reform Commission approved the establishment of a China-Japan development and cooperation demonstration zone in Dalian. The port city in Liaoning will be one of the areas receiving more resources poured by Japanese companies in the future, according to officials from Japan.
Liaoning province and Brazil’s Paraiba state have similar geographical advantages, economic development structure and cultural tradition. They are also strongly complementary and have great cooperation potential in the fields of economy, trade, education, culture, sports, healthcare and tourism. The Liaoning trade promotion association and its counterpart in Paraiba have established close contact and an information sharing mechanism. The initiative allows the two sides to have timely and effective exchanges, give play to their own advantages, build trade and investment promotional channels and introduce their investment environment, key areas and projects. Liaoning will use its Invest in Liaoning platform built by the provincial trade promotion association to carry out practical cooperation. It also plans to boost trade cooperation with the exhibition economy and make full use of cross-border e-commerce platforms. Also, China-Latin America bilateral cooperation mechanisms, such as the annual China-LAC (Latin American & Caribbean) Business Summit, will be further used to realize the continuous development of economic and trade relations between Liaoning and Paraiba, according to the Liaoning provincial government.
Liaoning province is one of the first places to have economic exchanges and business communications with South Korea. As of December 2020, the actual investment South Korea had made in Liaoning exceeded $16.8 billion. The province has attracted many South Korean companies to trade and invest by using its unique geographical and ethnic cultural advantages. The establishment of a China-South Korea free trade zone has further facilitated trade and cooperation between Liaoning and South Korea. In recent years, Liaoning has deepened its cooperation with South Korea in such sectors as new energy vehicles, port and air logistics, transportation, finance and tourism. South Korean companies with investments in Liaoning have witnessed remarkable returns and enjoyed sound development. Shenyang, the capital city of Liaoning, will host a China-South Korea investment and trade exposition in the near future.
The United States
In recent years, Liaoning province has conducted exchanges and cooperation with the United States in many fields. As of December 2020, the actual investment the US had made in Liaoning exceeded $11.3 billion. The two sides have jointly built a multifield platform to promote communication and cooperation. They have also boosted practical exchanges and cooperation in trade, economy, environmental protection and culture. Intel Semiconductor (Dalian) was established in June 2006, with a total investment of $8.88 billion and a registered capital of $2.22 billion. It is mainly engaged in the production of discrete semiconductor devices. As the world’s largest semiconductor chipmaker, the Silicon Valley giant Intel has been expanding its cooperation with Liaoning in information industries.