On the face of it, Liaoning's economy is a star performer even by the mainland's amazing standards. The province's annual gross domestic product growth has averaged 13 per cent over the past five years compared with 10.8 per cent for the nation, serving former party secretary Li Keqiang well in his rise to vice-premier. Officials across Liaoning speak fondly of their 'old secretary' and point to the growth of private enterprise as the main force behind the apparent economic miracle. Indeed, following the wholesale reform of state-owned enterprises, private firms have emerged as key drivers of employment and trade. What's more, their steady growth is generally considered sustainable. But the focus on private enterprise belies the real reason for Liaoning's recent boom. In fact, the main trigger of growth in the province in the past five years has been enormous investment, much of it driven by state spending and a property boom that is bound to result in a few tremendous white elephants. Fixed-asset investment across Liaoning increased seven-fold over the 10 years to last year. At the same time, GDP on an absolute basis increased slightly less than three-fold. To put that into perspective, fixed-asset investment grew from 27.2 per cent of the province's GDP in 1998 to an astounding 67.4 per cent last year. The nation's average was an already massive 55 per cent last year. If a glut of state spending leads to a bursting of the bubble, Liaoning's best bet is likely to be those young and emerging private enterprises. The economy of Anshan has long been carried by state-owned Anshan Iron and Steel Group, traditionally accounting for more than 50 per cent of the local GDP. But fast-growing and relatively unknown private firms such as Senyuan Group are rapidly becoming the chief growth driver in the city. Founded just 10 years ago, Senyuan had turnover of almost 30 million yuan (HK$34.27 million) last year selling heavy machinery used for asphalt resurfacing. 'We're competing against huge companies from the US and Germany,' said chief executive Guo Songsen . 'But there are a lot of roads in China.' Vice-mayor Wang Zhongzhe sums it up: 'Anshan steel is growing fast, but private companies are growing much faster.' To a certain extent, the bustling private sectors of centres such as Dalian and Shenyang risk falling victim to their own success as an influx of foreign investment fuels wage inflation and creates shortages of skilled workers. Genpact, a corporate services outsourcing firm, arrived in the Dalian Software Park in 2000. Today it employs 2,500 staff in Dalian, but the arrival of Accenture, Intel, IBM and Hewlett-Packard has created a 'local talent war', says Genpact China chief executive Mitsuru Maekawa. It was not uncommon for competitors to offer to double or triple salaries in an effort to poach top staff, Mr Maekawa said. Average salaries are growing at about 10 per cent a year, while the firm's staff numbers are growing at a 30 per cent clip. 'Our growth is limited by supply - how much good talent we can attract,' Mr Maekawa said.