He is now staring at imminent retrenchment and the end of an era for his native Fuxin city, where its coal mines are close to depletion or becoming too expensive and inefficient for further extraction. Just as Fuxin's coal resources once brought it progress and prominence, depletion has set off a sharp reversal of fortunes marked by massive unemployment, economic stagnation, and a long list of social and environmental woes such as land subsidence and pollution.

Three of Fuxin's eight major coal mines were declared bankrupt in 2001, and 156,000 workers previously working at the mines or related state-owned enterprises (SOEs) are currently jobless. About one in every four of the city's 780,000 residents now survives on a monthly social security handout of 156 yuan (S$33), while 28,000 households are living in areas endangered by land subsidence caused by underground mining, according to Fuxin officials quoted in media reports here.

""It's the domino effect,'' said Dr Wang Qingyun, a research fellow with the government's National Development and Reform Commission (NDRC), which conducted extensive field studies in at least 20 resource-based cities last year. He added: ""When the main industry built around the mineral resources fails, related industries in the city will decline or collapse, leading to unemployment, a drop in the population's purchasing power, falling government tax revenues and so on.''

According to NDRC's authoritative report, China has 118 resource-based cities in provinces like Heilongjiang, Henan and Shanxi, of which 30 are grappling with problems similar to those in Fuxin. Mining cities in the country's northeast, the so-called ""industrial cradle'' of modern China, seem to be the worst hit. However, these cities owe their decline not just to the inevitable exhaustion of natural resources, but also to the legacy from China's failed attempt at a centrally planned economy, analysts said. During China's early industrialisation efforts after 1949, massive human and material resources were deployed quickly to regions rich with mineral deposits to speed up their extraction.

Large SOEs, then under the central government's direct supervision, were built around the mines or oil fields with the sole mission of meeting production targets. They had little incentives to develop other industries or businesses. Typically, they dominated the local economy, accounting for more than 90 per cent of a city's industrial output in some instances. When China began its economic reforms in the 1980s, the inefficiencies and uncompetitive nature of these SOEs were exposed, leading to factory closures and massive retrenchments.

""The legacy of the central economy is so deeply rooted in these societies that workers or administrators from failing SOEs dare not even venture out to the market to find another job or set up their own business despite imminent retrenchment,'' said the NDRC report. Dwindling resources, the collapse of large state-run companies, the virtual absence of a private sector, and a risk-averse workforce combined to drive the economy down for cities like Fuxin, which only managed a 2.6 per cent average annual economic growth between 1996 and 2001. Shuangyashan, a coal city in Heilongjiang, managed only a 2 per cent growth for the past five years. The decline is all the more apparent when compared with the double-digit growth of the past decade in many of China's southern and eastern coastal cities.

Professor Zhang Pinyu, who is with the Chinese Academy of Sciences, told The Straits Times: ""To put it bluntly, some smaller mining cities or towns should be allowed to decline if they are already failing. ""It's an inevitable economic reality. But for cities which have reached a certain scale, the local and central governments must definitely take action to turn things around.'' The Chinese government recently declared its intent to ""rejuvenate'' the industrial northeast in a campaign that analysts said would also address the problems of resource depletion in cities like Fushun and Fuxin.

The NDRC has short listed a small group from among the 118 resource-based cities to be the first to receive government aid. The commission acknowledged in its report last year that realistically, cities like Fushun and Fuxin could do little on their own to restructure their crisis-hit economies without help from the provincial and central governments. Although specific policies have yet to be announced, experts said the central government's stand was clear: Don't expect a blank cheque.

Even Premier Wen Jiabao, who is championing the new ""Rejuvenate the Northeast'' campaign, stressed repeatedly the importance of ""self-reliance'' in his speeches to officials in the northeastern provinces. That is the right ""prescription'', analysts said, though it will be a bitter pill to swallow.

Jilin University's Professor Liu Shaojie said: ""These cities have all these problems in the first place because they could not compete in a market economy. ""Yet, if they rely solely on the central government to solve all their problems, they are just going to repeat the same mistakes of the state-planned economy.''

Back at the Haizhou mine, Wang put his helmet back on and left for work with a lament heard all too often in his city: ""All this talk about economic reforms is too remote for me. ""I have no idea when or if it will happen. I'm just glad to have a job today.'' - Published in The Straits Times on 20 Sep 2003. [PART 2]