China's premier warns worst-performing provinces to boost economic growth

Premier Li Keqiang has urged leaders of the northeastern provinces to meet their economic growth targets this year, after the region - the country's "rust belt" industrial base and home to 120 million people - registered the nation's worst performance last year.

The unusual rallying call by Li, during a tour last week to Changchun , capital of Jilin province, has raised speculation that first-quarter gross domestic product (GDP) figures, due on Wednesday, will show cooling growth in the national economy.

"The three northeastern provinces must guarantee their annual economic and social development targets are met smoothly," Li told provincial leaders, according to a government statement on Saturday.

"People's job security and improvements in income aren't castles in the air. They must be bolstered by a certain speed of economic development."

Last week, Liu He, an economic adviser to President Xi Jinping , also embarked on a trip to hear feedback on economic policy, reform and innovation from local government heads and enterprise leaders in Shanghai, Jiangsu , Guangdong and a few other provinces.

"The economic situation isn't optimistic judging from advanced indicators released so far," Steven Zhang, a senior economist with Morgan Stanley Huaxin Securities, told the South China Morning Post.

"The government officials are investigating how bad the situation is and seeking solutions to cope with the downward pressures."

While market consensus is for GDP to grow about 7 per cent in the first quarter, Zhang said he would not be surprised if growth slipped below that level. In the fourth quarter last year, GDP grew 7.3 per cent from a year earlier.

The government statement said growth in the northeastern provinces had slowed further in the first quarter of this year, but did not elaborate.

Liaoning, Jilin, and Heilongjiang registered GDP rises of 5.8 per cent, 6.5 per cent, and 5.6 per cent respectively last year, missing their annual targets. This put them among the five worst provinces on the mainland.

The national economy expanded 7.4 per cent in 2014, the slowest in 24 years.

Liaoning and Heilongjiang are targeting GDP growth of 6 per cent this year, while Jilin is aiming to maintain the same growth as last year.

The local economies are dominated by state-owned heavy-industry manufacturers with low efficiency and excess capacity. The government has ordered plants with outdated technology or polluting facilities to cut production.

"Problems do exist in the economic structure of the northeast. When the Daqing oilfield or [state-owned car manufacturer] FAW sneezes, Heilongjiang and Jilin get a cold," Li said, referring to the state giants that are backbones of local development.

He urged local authorities to support small, innovative firms, while increasing investment in infrastructure, boosting consumption and expanding equipment exports.

However, Zhang said such measures, while helpful in the long run, might not stimulate the local economy quickly enough.

"The government may have to adopt a more active fiscal policy. It could increase fiscal subsidies to the industrial bases that are being restructured," he said.