In the coal and steel sectors, the government will allocate $15.4 billion in the next two years to help laid-off workers find new jobs, particularly in the service sector. In the short term, workers' training, re-skilling and fiscal support can alleviate some of their transition pain.

While restructuring the SOEs will reduce their work force, it will also contribute to the creation of new firms that will offer new job opportunities. As China moves toward a more entrepreneurial economy, the government is encouraging start-ups, particularly in new and emerging industries, which could help younger employees.

But channeling the right support to the right targets requires good planning and integrity. Consequently, misleading accounts－including the recent case about the plight of coal miners in Heilongjiang－underscore the importance of the ongoing anti-corruption campaign.

Therefore, the government has to make all-out efforts to promote productivity and upgrade innovation in Northeast China by, say, attracting domestic and foreign anchor companies, homegrown talents and more foreign direct investment, greater ease in doing business, including facilitating easier cross-regional labor flows.

Internationally, the Belt and Road Initiative can support China, its trade partners, including its neighbors in the northeast. As these countries, too, continue to industrialize and urbanize, they need more upgraded infrastructure facilities that China can help build.

The transition will be challenging but the alternative, following the old policies, is far worse, because that would bankrupt the SOEs, wreck banks, kill jobs and devastate regional economies. Reforms are critical.

While Chinese policymakers believe the national economy will create enough jobs to absorb the laid-off workers, the task won't be easy. But it is feasible.

The author is the founder of Difference Group and has served as research director of international business at the India China and America Institute (US) and a visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Centre (Singapore).