The north east of China, encompasses the three provinces of Liaoning, Heilongjiang and Jilin. Geographically it also includes a large swath of the eastern most part of Inner Mongolia. It is an area which has had a turbulent and colourful history. Home to the Manchus, who ruled China from 1644 to 1911, it fell under Japanese occupation in the first half of the 20th century, and even after 1949 lay in sensitive territory, between the Soviet Union in the north and the Democratic People's Republic of China in the south east border.

　　Cities like Harbin in Heilongjiang and Dalian in Liaoning testify in bricks and stones to this diverse history. Russian style buildings stand in the old centre of the former, and in the latter German style colonial buildings are a reminder that it was once part territory subsumed under European expansionism. They speak of a past where the culture and mentality of this area was open This might offer a clue to the sort of attitudes the region needs to regain in order to become dynamic and competitive again.

　　The simple fact is that in recent history the north east has fared less than some other regions as reform and opening up have continued. This is partly due to legacy issues. In the early Maoist era, and then on into the 1980s, the North East was dominated by heavy state industry. Aircraft factories were moved in the 1950s to Shenyang and Harbin. The Daqing oilfields dominated the western part of Heilongjiang, and produced most of the country's domestic oil up till recent years, when their productivity dropped. Steel making, coal and other heavy industry employed most people. When, therefore, the Jiang Zemin and Zhu Rongji leadership in the late 1990s targeted the inefficiency of these entities with a major restructuring of state enterprises, it resulted in as many as sixty million redundancies. The impact on this region was huge, with large numbers having to seek employment elsewhere, or in other sectors, and with growth falling.

　　Campaigns by the central government to re-energise the economies of the northeast as a way to remedy this trend have been ongoing since the mid 2000s, when there were plans to exploit the connectivity of the region through its major ports in Dalian, and through nearby Tianjin. Even so, growth has never been close to that of coastal provinces further south. Zhejiang, Guangdong and Fujian have motored ahead. Heilongjiang, Liaoning and Jilin have lagged behind.

　　Collectively, this region makes up a population of over 100 million. Heilongjiang has 38 million, Jilin 27 million, and Liaoning 43 million. The GDP levels of the provinces per capita are mid-ranking. But there are a number of attributes that might make their renaissance a little easier than at first appears to be the case. Firstly, the region is relatively highly urbanized, a legacy of its industrialized past. Secondly, they occupy an area with relatively good logistic links both by sea, and also inland. They are close to the major urban cluster of Beijing and Tianjin, and to the coastal region of China southwards. They have to compete with these areas in order to attract more business and attention, however.

　　One key issue is raising awareness of what the region has to offer, and why businesses might want to invest or manufacture there. Using the infrastructure of railways and roads installed in the past alongside newer airports and high speed links is one possibility. But in addition to this, there is the good quality universities that the region has. Harbin Engineering University, for instance, or Liaoning University, each with good histories and a strong national standing. Producing, and retaining, good quality human capital is as crucial for the north east as it is for other areas in China.

　　In recent years, too, there have been concerted attempts to clean up the environment. Shenyang saw a major tree planting campaign in the 2000s. Making more pleasant and desirable cities, especially where there is more space than in the crowded southern urban centres, is one means of competing to get the best people. The other is to nurture and strengthen enterprises. The northeast has had its fair share of entrepreneurs. Heilongjiang, for instance, has pharmaceutical, agricultural, construction and aviation industries. Private conglomerates like the Orient Group based in the province and chaired by Zhang Hongwei is listed on the Shanghai stock exchange and had profits of 230 billion in 2010. Liaoning has a similar diversity, with Chengda, an import and export company, and Liaoning Fangda Group, dealing with iron ore and coking. It has also succeeded in attracting inward investment from over 500 foreign enterprises, amongst them BMW and Mitsubishi. Jilin also has pharmaceutical and agribusiness companies.

　　China's northeast has the infrastructure, and the logistics and human capital, along with good universities, to be able to remerge as one of the economic powerhouses of China and start to address its suboptimal performance in recent years. It has made sporadic attempts over the last two decades to do this, however now the need is more urgent. Labour costs in southern China are rising. Provinces like Guangdong and Fujian are looking at a more service sector orientated future model. That gives Liaoning, Jilin and Heilongjiang an opportunity to find a new niche and use their competitive advantages. But in order to do this, they have to work together as provinces to ensure that they re-emerge as competitive in terms of producing new technology for heavy industry, new automotive methods and a new generation of entrepreneurialism. They also have to optimize their links to Russia, and the North East Asia region, as well as compete more within China in order to specialize more.

　　In some ways the challenges of the northeast illustrate just how much provinces within China are competing alongside international ones in order to get a good share for the domestic market. The north east's main relevance therefore will not so much be to service manufactured goods for the international markets, but to gain market share for its aircraft, pharmaceuticals, agricultural products and engineering within China. For this to happen, it will have to use its historic legacy in order to restart, rather than trying to create everything from scratch.

　　Professor Kerry Brown

　　Kerry Brown is Professor of Chinese Politics and Director of the China Studies Centre, University of Sydney and Team Leader of the Europe China Research and Advice Network (ECRAN) funded by the European Union. He is an Associate Fellow of Chatham House, London and author of `Struggling Giant: China in the 21st Century' (2007), `The Rise of the Dragon: Chinese Inward and Outward Investment in the Reform Era' (2008), `Friends and Enemies: The Past, Present and Future of the Communist Party of China' (2009), `Ballot Box China' (2011), `China 2020' (2011), `Hu Jintao: China's Silent Leader'(forthcoming).