The Chinese government has since last summer begun to seriously tackle the development of the Northeast. Its policies have attracted strong attention both internally and externally.

The Northeast, which consists of the provinces of Liaoning, Jilin and Heilongjiang, was the main backbone which sustained heavy industry in the then newly-born China. However, its economic weight has become conspicuously lighter than that of coastal areas during the past 10 or so years, during which the market economy has replaced the socialist economy. Facilities centered around state-owned enterprises have become decrepit and, just like a problem child, the area has been plagued by serious problems such as huge debts and many unemployed people. This is known as the Northeast phenomenon and, at the same time, the Chinese government faces another most urgent issue of dealing with the disparity between the east and the west. The inland has been left behind the developed coastal areas of the east.

Last summer, Premier Wen Jiabao made an inspection tour to various places in the Northeast and determined that both the reconstruction of the aging industrial base in the Northeast and the "grand development of the West" were the most urgent issues to be tackled. While the Chinese government has increasingly been confident about the success of the market economy in coastal areas, further expansion of their reform and opening up policy depends on the success of the Northeast development.

The central government has invested 61 billion yuan (800 billion yen) in 100 projects, aiming at the rehabilitation of state-owned firms and the unemployment solution. In the meantime, they have begun establishing development banks to financially support the development of a social infrastructure and railroads.

The nurturing of private enterprises and the attracting of foreign investment are decisive factors in the success of the development policy. In addition to financial funding, management know-how and the introduction of advanced technology are also vital for the policy's success. The government above all regards investment by Japanese and South Korean companies as an important issue since they are geographically close to China and can complement their Chinese counterparts.

Cooperation in the Northeast undertaken by Japan, China and South Korea has entered into a new era. South Korean President Roh Moo-hyun quickly hammered out a blueprint for the peace and prosperity of Northeast Asia when he assumed presidential office. Japan is positive about economic cooperation with China and South Korea. Last October, the joint communique of the summit meeting of the three countries, which was held in Bali, Indonesia, called for the promotion of economic cooperation in the Northeast and peaceful dialogue. This announcement proves Japan's forward-looking stance on such cooperation. The fruitful results of the Northeast development will enhance regional cooperation in Northeast Asia.

The Northeast region, which largely overlapped with Manchuria before World War II, has deep links with Japan. Negative factors remain but, looking from a completely different angle, one can recognize that there is a good opportunity for the development of cooperation. There are many universities, senior and junior high schools that teach Japanese language. The educational organizations have talented students. Moreover, a new transportation route via Tumenjiang has been already opened between Japan and China. Close attention is being paid to Japanese companies, with high expectations being held about their role.