China pledges more support for struggling northeast

BEIJING (Reuters) - China will offer more financial support to drive the rejuvenation of its struggling northeast rustbelt over the next five years, an official with the state planning agency said on Tuesday.

The government plans to launch more than 130 infrastructure projects in the northeast over the next three years, Zhou Jianping, head of the National Development and Reform Commission's office in charge of transforming the region's moribund resource-dependent economy, told media.

China would expand the financial support available to the region, including additional funds to help a large number of "resource-depleted" cities handle bankruptcies and layoffs and also pay huge environmental clean-up costs, Zhou said.

"In the northeast, some cities have gone through more than 100 years of coal exploitation and China needs to pay attention to them and solve problems like looking after the old, the shortage of pension funds, paying the costs of resource depletion and the environment," Zhou said.

He did not say how much additional funding the central government would make available, saying the final amount would depend on needs, adding the government would rely primarily on the market to achieve goals in the region.

The heavy-industrial northeast, made up of the provinces of Liaoning, Jilin and Heilongjiang, as well as the region of Inner Mongolia, has struggled to cope with the problems of resource depletion as well as an economic downturn that has devastated sectors like coal and steel.

At 3 percent, Liaoning experienced the lowest growth rate in the country in 2015, while growth in Jilin and Heilongjiang were both lower than the national average.

The oil city of Daqing in Heilongjiang experienced negative growth for the first time ever in 2015 following a sudden collapse in crude oil prices.

The coal cities of Jixi and Qitaihe also saw their economies shrink over the year after the state-owned Longmay Group, which owns most mines in the area, closed down capacity and laid off more than 100,000 workers.

Longmay has allowed many of its staff to take early retirement in order to cut labor costs, but Zhou said that could not become official state policy because it would increase the strain on pension funds.

China is planning to close 500 million tonnes of surplus coal capacity and up to 150 million tonnes of crude steel capacity over the next three to five years, and has already allocated 100 billion yuan to help local governments handle job losses.

($1 = 6.5171 Chinese yuan)

(Reporting by David Stanway; Editing by Robert Birsel)

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