Province Introduction of China: Liaoning

Published: 01 Apr 2009 18:38:50 PST

Key Information 





























  
 





















  
Introduction
Liaoning is located in the southern part of China’s Northeast, bordering the Yellow Sea and the Bohai Sea to the south, the Korean Peninsula to the east and facing Japan to its southeast. Its land area and population account for 1.5% and 3.2% of the nation’s total land area and population.   
   
Liaoning features a temperate continental monsoon climate with a long winter, a warm summer and short springs and falls. The average temperature is 7-11oC with 600-1100 mm of precipitation every year. It has about only 130-200 days that are frost-free   

 
Economic Overview
In 2006, Liaoning’s GDP grew by 18.0%. The growth of the agricultural, industry and service sectors stood at 10.7%, 19.6% and 11.7% respectively year-on-year. Figure 10.3.1 shows the breakdown of the GDP by sectors. As illustrated, the industry sector is the leading sector in Liaoning’s economy, comprising 51.1% of the province’s GDP. The service sector is also rather significant, making up 38.3% of the overall GDP. Agriculture lags behind these two sectors, with a contribution of only 10.6% of the GDP. 
 
Fixed asset investments in Liaoning grew by 34.4% from the year before, with investments mainly in the manufacturing and real estate sectors. Figure 10.3.2 shows the proportion of fixed asset investments in the key industries.   









In 2006, Liaoning’s retail sales of consumer goods reached RMB343.5 billion (+14.5%), ranking the province fifth in China and first in Northeast China in terms of retail sales of consumer goods. The major consumer centers in the Liaoning province are located in Shenyang and Dalian. 
   

   






 
 
Industry
The province has three pillar industries - equipment manufacturing, metallurgy and petrochemicals. Table 10.3.1 shows the key statistics for each of the pillar industries.   









 
Equipment manufacturing is the top industry in Liaoning. The industry focuses on the manufacture of general equipment, special use equipment and transport equipment. Famous companies include Shenyang Machine Tool Works, Dalian Machine Tool Works, Shenyang SIASUN Robot Corp, Dalian Locomotive&Roll Stock Works, Brilliance Auto (which has a joint venture with BMW to produce 3 and 5 series BMW sedans in Shenyang), Daxian Group Corp, Northeast Electric Transmission and Transformation Equipment Group Corp.  
 
The metallurgy industry is Liaoning’s traditional pillar industry. It has the advantage of having rich mineral resources, a central location and talents. The industry mainly focuses on the development of ferrous metallurgy as the province has the biggest iron ore reserve in China. In 2006, the value-added industrial output of ferrous metallurgy accounted for 86.2% of the metallurgy industry. Anshan&Benxi Iron and Steel Group is the leading steel maker in Liaoning.
 
The petrochemical industry is the third pillar industry of Liaoning, focusing on the development of fine chemical, rubber products and newly emerging petrochemical technologies. In 2006, the output of synthetic rubber and ethylene reached 26,826 tons and 492,700 tons, up 141.3% and 4.5% over 2005. PetroChina (Liaohe) Corp and Jinhua Chemical Group are the leading companies in the petrochemical industry. 

Services
In 2006, fixed investments in the service sector grew by 41.4% to RMB 285.2 billion. Major industries within the sector are finance and real estate. The development of new service industries, such as logistics, IT and commercial services, are currently being encouraged by the government.
 
By the end of 2006, the deposit balance of the financial institutions in Liaoning reached RMB 1.4 trillion, while the loan balance reached RMB 0.9 trillion. The annual cash income is RMB 3.5 trillion, representing an increase of 16.6% from the previous year. The accumulated net cash investment was RMB 3.4 billion. The gross premium of the insurance industry was RMB 25.3 billion in 2006, up 13.3% over 2005, of which life insurance accounted for 73.4% and property insurance accounted for 26.6%. In 2006, gross investment in the real estate industry was RMB 114.2 billion, 30.6% higher than the previous year. There were 2,995 enterprises in this industry and overall revenue came up to RMB 92.4 billion.   

 
Foreign Trade and Foreign Investment
In 2006, total imports and exports grew by 18.0%. The major export products were steel, refined oil, water products, olefin and tires, while the major import products were machine tools, automobiles, steel, rubber and copper. Liaoning’s major import sources are Japan, South Korea, Germany, U.S., and Australia. Its major export destinations are Japan, U.S., South Korea, Singapore, and Hong Kong. The total value of imports from and exports to these countries are indicated in Table 10.3.2. 
 











 
Liaoning attracted the largest amount of FDI in northeastern China. Dalian and Shenyang are the most popular destinations for FDI in Liaoning, accounting for 88% of Liaoning’s total FDI in 2006 altogether.  
 
Hong Kong is the largest source of FDI in Liaoning (see Figure 10.3.3). In 2006, Hong Kong launched 458 projects, with a utilized FDI of US$1.68 billion.
   


Apart from Dalian and Shenyang, Hong Kong companies also started to expand into Anshan, Dandong and Yingkou. Leading Hong Kong enterprises such as Cheung Kong, Hang Lung and New World, and multinational companies such as General Electric, Siemens, Mitsubishi, Toshiba and Sanyo have invested in the province.   
  






 
The manufacturing industry has attracted the largest share of FDI, both in terms of contracted amount and utilized amount. The government has placed emphasis on equipment manufacturing, raw materials, new technology and high-tech endeavors, food processing and service industries. In order to re-vitalize the old industrial base, the government has begun selling off stakes in state-owned enterprises to foreign acquirers. Figure 10.3.3 shows the FDI by sectors. 
  





 
Major Development Zones 











 
Shenyang Economic&Technological Development Zone is located in the southwest of Shenyang. By the end of 2006, there were enterprises from 41 countries investing in 1,837 projects, with an accumulated utilized FDI of US$2.2 billion. Eighty-three multinational companies have invested in the zone, including 25 Fortune 500 companies.  
 
Dalian Economic&Technological Development Zone (DLETDZ) is located at the southeastern edge of the Liaodong Peninsula which is comprised of both an economic development zone and an export processing zone. By the end of 2006, the accumulated gross industrial output reached RMB 597.6 billion and the accumulated FDI reached RMB 6.8 billion. The zone is ranked 4th and 6th respectively in terms of GDP and utilized FDI among all the national economic and technological development zones in China. There are a total of 2,185 foreign invested projects in the area, including 43 from Fortune 500 companies. Dalian High-tech Industrial Zone has 86 scientific research institutes, 39 training centers and over 2,300 enterprises, including 43 companies from the Fortune 500, such as IBM, GE, Dell, SAP, and HP.   

 
Education
Liaoning has 80 universities and colleges with 720,500 students. In 2006, the cost of R&D reached RMB 15 billion, accounting for 1.6% of the province’s GDP. Key universities include Northeastern University and Dalian University of Technology.   
 
 
Major Cities in Liaoning
There are a total of 14 cities in Liaoning. Table 10.3.4 shows the cities’ GDP, land area, population and FDI. Dalian and Shenyang are the two economic hubs in Liaoning, with GDPs of RMB 257.0 billion and RMB 252.0 billion , and FDIs of US$2244.8 million and US$3034.4 million respectively. The FDIs far surpass those received by the other cities in Liaoning.

 




















Shenyang 
 




















Introduction
Shenyang, the capital of Liaoning Province, is the largest city in Northeast China. It is in the centre of Liaoning and has the largest airport in the northeast, and the largest railway marshalling yard in the country.  
 
Investment Climate
Shenyang is one of the heavy industry bases of the country focusing on equipment manufacturing. The value-add of industrial output in 2006 was RMB 91.4 billion. Equipment manufacturing, automobiles, chemicals, pharmaceuticals, IT products, food processing, metallurgy, aviation and aerospace manufacturing are among its key industries. Their industrial value-added accounted for 82.9% of the total value-added industrial output in 2006.

 
Foreign Investment
Shenyang is one of the major destinations of FDI in Liaoning. In 2006, the utilized FDI rose by 42.9% and investment volume hit US$8.5 billion. The number of newly approved foreign invested projects also reached a high of 863. By the end of 2006, the city had ties with 13 cities overseas.  
 
Important Travel Information
Time taken to travel from Shanyang Taoxian International Airport to:  
- Beijing
- Shanghai
- Guangzhou
- Hong Kong
- Seoul
- Tokyo  1 hour 15 mins
2 hours
3 hours 40 mins
3 hours 50 mins
2 hours 35 mins
3 hours 55 mins 

Dalian




















 
Introduction
Dalian sits on the east coast of Eurasia and the southern tip of the Liaodong Peninsula. It is one of the key port cities for industry, trade and travel in North China. The Dalian Port is the nation’s largest port for grain and oil transportation, and the Zhoushuizi International Airport is the largest airfreight airport in Northeast China.

 
Investment Climate
Dalian has a strong industrial base. The equipment manufacturing, petrochemical, electronics and shipbuilding industries are the four pillar industries of the sub-provincial city. Table 10.3.5 shows the industrial value-add and growth of these industries. Famous companies include Dalian Shipbuilding Industry Corp, Dalian Locomotive&Roll Stock Works and DHI.DCW Group Corp.   
 








 
Dalian is an important city for business process outsourcing, especially for customers from China, Japan and South Korea. This is due to its advantage of good cooperative ties with Japan. In 2006, sales of the software industry in Dalian reached RMB 14.5 billion, 30% of which was from BPO. Companies like Genpact, IBM, Accenture and HP have all recognized this and set up their service centers in Dalian. The top three domestic software export enterprises are also all in Dalian. In addition, Fidelity International is planning to launch the nation’s first foreign fund management operation.  
 
Foreign Investment

Dalian is one of the major port cities of China. Each year more than 80% of Northeast China’s exports are transported from Dalian Port. In 2006, the total imports and exports reached US$31.8 billion, 24.2% higher than 2005. Foreign direct investments in 2006 were mainly within the sectors of advanced manufacturing (174.4%) and modern service industry (209.5%), accounting for 50.1% and 29.0% of the total FDI. Ever since Dalian opened up, 853 foreign-funded enterprises have been set up. Large foreign investors in Dalian include Volkswagen and Intel. In March 2007, Intel announced their intention to set up a 300mm silicon wafer plant in Dalian costing US$2.5 billion, making it Intel’s first chip manufacturing plant in Asia.
 
Important Travel Information
Time taken to travel from Dalian Zhoushuizi International Airport to:  
- Beijing
- Shanghai
- Guangzhou
- Hong Kong
- Nagoya
- Tokyo  1 hour 5 mins
1 hour 40 mins
3 hours 5 mins
3 hours 30 mins
3 hours 10 mins
3 hours 25 mins