Enterprises in northeastern Liaoning province, one of China's old industrial bases, are focusing on industrial upgrading and innovation, hoping it will treat its economic woes.

Liaoning's economic growth largely driven by heavy industries, like equipment manufacturing and building construction, have been hit hard by the global financial crisis.

"Liaoning has seen a steady drop in the growth rate of exports since November last year," said Jiang Jianli, vice director of Liaoning provincial information center, which monitors the world economic crisis.

Foreign direct investment, reflecting the impact of the global credit crunch, has also plunged dramatically, according to Jiang.

Qianshan Cement Co, a subsidiary of China Shanshui Cement Group, has also seen a decline of orders since last year, its deputy party secretary, Chen Yunxiang said.

The demand for cement from the nearby cities of Liaoyang, Panjin and Anshan has declined and "the company had to stop a production line, which had a daily capacity of 1,000 ton," Chen said.

As part of reducing costs, the company has begun "recycling industrial wastes, such as coal slag, blast furnace ashes and mining refuses," said Chen.

The company also launched a new production line with a daily capacity of 4,000 ton last year and pulled down another line constructed in 1937, for its poor efficiency and serous pollution. The new line will use the dry-method, a technique more energy efficient and clean than the traditional shaft kilns.

However, Chen is optimistic about a recovery after the country's 4-trillion-yuan stimulus package, unveiled last year. The package included infrastructure construction as a major investment target.

"We are expecting that construction projects, including airports and railways, will spur the demand for cement," said Chen, adding that the company has set a target of producing 1.6 million tons of cement this year.

Angang Steel Co Ltd, China's second-largest listed steelmaker, is also suffering severely from the financial meltdown. Declining steel prices, a wane in demand and the high price of iron ores, saw the company's net profit drop by 60 percent, in 2008.

As demand from container, household appliance manufacturing has decreased sharply, demand for steel planks are most hit, said Duo Fuli, director of the company.

However, the group did not resort to shutting down operations at any of its blast furnaces, according to Duo. He said the steelmaker provides winter heating for citizens with its coke-oven gases.

Despite its economic woes, Anshan Iron and Steel Group, the parent company of Angang Steel Co Ltd, is proceeding with its Bayuquan project in Yingkou, a port city in Liaoning province.

The project, which claims it will use advanced and environmental protection technologies, is the first large-scale iron and steel production base located in costal China.

The company plans to produce 18.96 million tons of crude steel this year, after output fell a slight 0.52 percent to 15.99 million ton last year. This will include 5 million tons from the Bayuquan project.

In an inspection tour in Liaoning province last month, Chinese Premier Wen Jiabao visited Anshan Iron and Steel Group, and told company officials to speed up the phasing out of obsolete technology and strictly control capacity, to curb excess supply in the steel industry.

Hu stressed that companies should focus on refining product structure, improving quality and upgrading technologies in the face of economic woes.

(China Daily 05/18/2009 page5)