The capital of Liaoning Province, Shenyang is the industrial center and aviation hub of Northeast China. The city is only 500 kilometers away from the North Korean border, and serves as a transportation and trade center with countries such as Japan, Russia, and Korea. Shenyang is known as one of China’s original “heavy industry bases,” featuring prominent manufacturing sectors for automotive components, building materials, agricultural product processing, chemical product manufacturing, and steel and non-ferrous metal smelting. Today, the city’s economy also relies on electronics, textiles, and pharmaceuticals, as well as other light manufacturing industries.
In 2014, Shenyang’s GDP reached RMB 709.87 billion, up six percent from the previous year. Primary industry contributed RMB 32.53 billion of total GDP, and secondary industry contributed RMB 354.1 billion. The service sector grew 6.9 percent to RMB 323.2 billion the same year. According to the most recent statistics released by Shenyang Customs, total import and export volume reached US$15.8 billion in 2014, with a growth rate of 10.6 percent. Imports to the city increased 18.7 percent compared to the previous year. The United States has become Shenyang’s number one export destination and main trading partner in recent years. Major imports to Shenyang include automobile parts (particularly components of internal combustion engines), medicine and health products, steel, and pumps and liquid elevators.
Shenyang’s automobile market has been undergoing changes in recent years and offers exciting opportunities for U.S. companies engaged in the industry, particularly in electric car production. Heavy pollution in Northeast China has led to calls for more environmentally-friendly vehicles. In 2011, Shenyang was chosen by the central government as a model city for new energy vehicle promotion and the city has since established a special R&D fund for electric cars and components such as batteries, electric motors, and control systems. Individuals and companies purchasing new energy cars will also be entitled to additional subsidies, which have led to increased domestic demand.
Industry in Shenyang still faces challenges, including the high cost of developing clean energy automobiles and a lack of “charging” infrastructure. In order to reach its industrial output target of RMB 750 billion by 2020, the city encourages domestic automakers to cooperate with overseas companies to build charging facilities and introduce foreign technology and high-end car manufacturing equipment.
Shenyang is one of China’s primary aviation hubs and imports an array of advanced aircraft and parts such as aircraft motors and bearings. Driven by increasing demand, Shenyang recently signed new trade agreements with Wichita, Kansas with the aim of building future trade. Wichita is known as the “Air Capital of the World”. Its economy is dominated by aircraft manufacturing and is home to many of the world’s biggest airplane manufacturers, including Cessna Aircraft Co. and Beechcraft (merged into Textron Aviation).
While foreign investment in complete aircraft production and aircraft ownership remains restricted in China, exports of certain environmentally conscious and high-tech aircraft parts to local Chinese manufacturers can receive reduced import tariffs.
Shenyang is currently looking to develop seven “strategic emerging industries,” including new energy and biomedical technology. The city has recently set up a bio-medical industrial zone, which is located close to its airport and train station and specializes in developing chemical products, bio-medicine, modern Chinese traditional medicine, and medical devices.
As Shenyang’s bio-medical sector is still at an early stage of development, the city has not yet acquired the capability to carry out independent research of new medicines and consequently relies on importing foreign medicine and medical devices to maintain growth. For the past several years, medicine and health products have featured in Shenyang’s top 10 major imports. This trend looks set to continue as the local government introduces new incentives for foreign medical exporters.
Shenyang and Chicago Sister City Relationship
Shenyang maintains strong business connections with the United States. Shenyang became an international sister city of Chicago in early 1985 and has since worked closely with Chicago in certain sectors, including pharmaceuticals and education. Chicago has signed the Gateway Cities Agreement with Shenyang and seven other Chinese cities to fortify Chicago’s position as a gateway for Chinese investment into the U.S.
Shenyang’s main development zones include:
Approved by the State Council as a national-level development zone in 1993, the Shenyang Economic and Technological Development Zone features industries such as equipment manufacturing, automobiles, auto parts, chemicals, medicine, new materials, and bioengineering. Over 100 foreign companies have been established in the zone together with local companies such as Northern Heavy Industries and Shenyang Chemicals. The zone provides financial incentives and stipends for companies engaged in modern construction and software.
The Shenyang-EU Economic Development Zone is a new project launched by the Shenyang Municipal Government and is located in the central area of the Shenyang automobile industry zone. Though mainly focused on promoting investment from the European Union, the zone has also been making efforts to increase imports of high quality auto parts from all over the world, with an aim of building high quality automobile electronic parts and an advanced equipment manufacturing base in northern China.
Large European manufacturers such as Michelin and BMW have already set up factories and warehouses in the zone in order to facilitate trade and investment. Special tax benefits will be granted to car exporters or manufacturers seeking to start businesses with local carmakers in the zone.
U.S. Commercial Service - Shenyang
52 Shi Si Wei Road, Heping District
Shenyang, Liaoning 110003, China
Tel: (86-24) 2322-1198
Fax: (86-24) 2322-2206
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