Daqing

The model worker, a self-proclaimed "yellow ox," dedicated himself selflessly to the Communist party and to Chairman Mao. He paid so little heed to his personal comfort that one day in winter, he jumped into a vat of wet cement to stir it by thrashing his body back and forth.

Propaganda photographers were on hand to record his every deed until he died in 1970 of stomach cancer brought on, it is said, by overwork. His example inspired millions across China and his name still commands respect in Daqing today.

But so many other things have changed. Daqing's oil, once thought to be virtually inexhaustible, is running so low that the thousands of "nodding donkey" rigs now yield eight parts of water for every two parts of oil.

In common with most places in China's northeastern "rustbelt," Daqing's city government is fretting over a destiny of imminent decline. Beijing has taken note, and earlier this year it launched a campaign to Former premier Zhu opening Shanghai's stock exchange in the early 1990s "revitalise the northeast and other old industrial bases."

So far the movement is remarkably low key. After a flurry of media activity following the campaign's launch, newspapers and television has paid only modest attention. There are no new model workers to lionise and no investment megaprojects to match 4,200 km "west-east pipeline" that helped publicize a key campaign to "develop the west" that was launched in 1999.

However, the relative lack of publicity should not be taken as a sign that nothing is happening. Provincial officials met recently in Heilongjiang and Liaoning, two of the three northeastern provinces (the other is Jilin). They have been preparing to sell off their state owned enterprises, either in their entirety or in stakes, to foreign and local investors.

In Harbin, the capital of Heilongjiang, the provincial government is ready to sell assets in over 100 state enterprises. Local governments across the northeast are ready to let go many of the assets under their ownership, officials said. Anheuser-Busch, the US brewer, has agreed to buy a controlling stake in Harbin Brewery, a famous local brand, for $498m.

GE, the US engineering giant, is in preliminary talks to take a stake in Harbin Power, a national champion that makes generating equipment. But although these corporations are well-known, their effect on the economy pales next to that being wrought by thousands of private companies from the south and east of China.

People like Jin Fushe, an entrepreneur from Wenzhou, a boomtown near Shanghai, are quietly transforming old Soviet-era factories with money and management techniques imported from their hometowns. Mr Jin bought part of a plastic sack factory employing 3,000 workers.

In Daqing alone, there are around 2,000 Wenzhou entrepreneurs running modest companies employing mainly workers that were made redundant from collapsed state behemoths. A complex of new plastics factories called "the kingdom of plastics" have been built mainly with money from Taizhou, another boomtown near Shanghai.

This wave of domestic investment by private enterprises between Chinese provinces is not exactly new. But it has reached a critical mass and officials in the northeast say that it represents a more dynamic transforming force than the direct investments of foreign companies.

To realise this is to understand a turning point in China's economic development. For the past 25 years foreign investment was the holy grail for many a local government. But increasingly foreigners will find themselves playing second fiddle to agile private Chinese firms.

The rise of the private sector in China over the past decade, a trend applauded by foreign governments and businessmen alike, may over time be regarded as an inverse indicator on the fortunes of foreign corporations.