Experts attending the second session of the Cooperation and Exchange Convention of Overseas Chinese Enterprises said Monday that China should lower the proportion of state economic sector in NE China.

There are 4,187 state-owned enterprises in China's northeast region, accounting for 10.2 percent of China's total, with a gross assets of 1.3 trillion yuan (about 157 billion US dollars).

The relatively single ownership system hinders the healthy economic development of this region, said Zhang Guobao, an official of the State Council.

Northeast China started reforming its state-owned enterprises in the 1990s through merger, regrouping and bankruptcy, reducing the state economic sector to some extent.

However, private enterprises developed slowly in the past decades, said Zhang, adding that there were few competitive ones.

By the end of 2002, only 30 private enterprises of the northeast region achieved a sale of over 500 million yuan (about 60 million US dollars), comparing with 160 ones of the eastern Zhejiang Province.

The birthplace of Chinese industry, northeast China used to have a large number of important enterprises and great industrial capitals.

The planned economy, however, caused most northeast China enterprises to be alienated from the market, which hindered their development, the official said.

Besides, the 1,424 state enterprises in northeast China had their own schools, hospitals and kindergartens with a total of 1.4 million staff members, costing the government 19.3 billion yuan (about 2.3 billion US dollars) each year.

In 1980, the three northeast provinces of Liaoning, Jilin and Heilongjiang, contributed 13.9 percent to China's gross output value, as opposed to just 9.9 percent in 2002.

Zhang said the reduction of state economic proportion, together with strategic adjustment in economic structure was the best choice for northeast China.

He said that innovation in industrial systems and mechanisms with advanced, fresh thoughts such as the separation of government and business and the encouragement of the private economic sector is important to the economic development of the northeast region.