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He said the rejuvenation of China's traditional industrial base requires abandoning old industrial capacity as soon as possible to make way for new industries and services. "Sticking to the old path can only go further astray," the president added.

Li, speaking to the Heilongjiang delegation, urged the deputies to act more quickly in business restructuring.

He also said the central government may offer financial incentives for the provinces' industrial transition.

Zhang's company, which is barely afloat with State subsidies after registering a 5 billion yuan ($800 million) loss last year, is planning to reduce its full-employment payroll by as much as 28 percent this year.

Qi Yingfei, a professor of economics at Dongbei University of Finance and Economics, said the difficulties faced by the northeastern economy reflect changing times. The local governments will have to learn to help enterprises grow by producing products and services of a higher quality.

"This year is therefore a critical point. By requiring lower growth targets, the local governments may leave more room for reform and hopefully give more help to businesses seeking a transformation," Qi said.