1. The Northeast
General Overview
China’s northeast, an area historically known as Manchuria, encompasses Heilongjiang, Jilin, and
Liaoning Provinces as well as the eastern half of the Inner Mongolia Autonomous Region. The region
is home to more than 110m people—nearly a 10th of China’s overall population—as well as the bulk
of the country’s heavy industry.
Market reforms came more slowly to the northeast than to other parts of China owing to the
region’s preponderance of State-owned industries. By 2002, more than 40 percent of these
industries were estimated to be losing money, prompting subsequent calls for reform that began the
following year.
The Chinese government envisages the northeast as a lean, productive centre for industry without
the vast inefficiencies that once plagued the region. In addition, the region’s proximity to several
foreign countries suggests enormous potential for extensive links to key markets, not least of which
is energy-rich Russia. The growth of the port of Dalian, located in Liaoning Province, will also factor
into the long-term growth strategy of northeast China.
Logistical Overview
Recent years have seen extensive investment into northeast China’s logistics network, mostly
centred on the region’s most prosperous city, Dalian. The city’s ice-free sea port plays a tremendous
role in the regional economy, as transport links to other cities in the northeast emanate from Dalian.
The Dalian Port Group, in association with ProLogis, jointly own a new logistics centre in Shenyang,
capital of Liaoning Province. The two companies are also planning logistics facilities in Changchun,
Harbin, and Manzhouli, bringing further economic development to the region’s hinterland.
North-eastern China has also deepened its ties to countries on its perimeter, most notably Russia.
The land port of Manzhouli facilitates trade between the region and Russia’s Far East, a region rich in
natural resource wealth. Chinese shipments of machinery, electrical appliances, and high-tech goods
also pass through the port. A USD 25bn energy cooperation deal signed in February 2009 between
the two countries will only cement economic ties further.
Key Dynamics
 The economic relationship between China and Russia, countries that share a coastline of over
2,000 km, will be centred in the northeast region. Continued improvements in logistical
capabilities in Manzhouli and along the Tumen River are vital to the region’s strategy.
 Much of the fat from the State-owned enterprises dotting the northeast has been cut, but more
remains. Privatising and downsizing major industries while avoiding mass levels of
unemployment will challenge the region’s leaders.

2.  The rate of economic development in Dalian, the region’s most prosperous and only major
coastal city, still contrasts sharply with that in the hinterland. Improved transport links—such as
a train between Dalian and Mudanjiang in Heilongjiang Province—could revitalise the
traditionally moribund inland parts of the region.