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Economy

China's Liaoning lurches into negative growth

DALIAN, China -- The heavy-industry-driven economy of China's Liaoning Province contracted in the first quarter of 2016 under the stress of structural adjustments meant to relieve overcapacity and other ills.

     Liaoning's output shrank by 1.3% in real terms compared with the January-March quarter last year -- an unusual setback for a local economy in China.

     The province has not suffered a full year of negative growth since 1981. But it expanded only 1.9% in the year-earlier quarter and 3% in all of 2015, logging the slowest pace in the country.

     Liaoning aims for 6% growth this year, the same target as in 2015, but will likely struggle even harder to get there.

     The smokestack industries that constitute much of the province's economic activity -- coal, steel, shipbuilding and others, many run by state-owned enterprises -- were the first to lose steam as China's economic growth slowed. A depressed property market adds to Liaoning's troubles.

     China's government has vowed to combat excess industrial capacity and put unprofitable "zombie"companies out of their misery. Steelmakers and others are moving to cut payrolls as well as production. But with no new industries ready to take up the slack, low growth looks likely to persist.

     China's economy expanded 6.7% on the year in real terms in the first quarter, slowing for a third straight quarter.

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