THE struggling rustbelt province of Liaoning in northeastern China will sell stakes in nine large government-run enterprises to strategic investors to help promote mixed ownership and stimulate its stagnant, State-dominated economy.

    China has long struggled to find ways to rejuvenate its northeastern provinces, which are suffering from resource depletion as well as a downturn in traditional industrial sectors like steel and mining. Liaoning’s economy shrank 1 percent in the first half of 2016.

    The province is offering the stakes in the nine firms in order to create “bigger and stronger” enterprises, increase the value of State assets and promote the mixed ownership model, according to a notice issued by the Liaoning Shenyang United Assets and Equity Exchange, a government-backed investment platform.

    Among the nine firms is the Benxi Steel Group, a struggling State steel enterprise that has total liabilities of 105.6 billion yuan (US$15.9 billion), amounting to 75 percent of its total assets. The firm was involved in a protracted merger with its local rival, the Anshan Iron and Steel Group.

    China is embarking on an ambitious plan to revamp its lumbering and debt-ridden State sector with the aim of creating globally competitive multinationals through mergers, asset swaps, management reforms and experiments with mixed ownership.

    But experts have raised concerns that provinces like Liaoning will not be helped by a focus on reviving the struggling State sector.

    According to Liang Qidong of the Liaoning Academy of Social Sciences, the province’s 1,751 State-owned firms account for 47 percent of the province’s total corporate assets, and have drawn resources away from the private sector.

    Their struggles with rising debt and declining demand have had a disproportionate effect on the local economy, depressing government revenues and making it harder to diversify, Liang said.

    (SD-Agencies)