Liaoning is China's largest producer of heavy industrial products, and it supplies one fifth of China's electrical power. It is a major coal-producing area and contains a large percentage of China's iron ore reserves; there are large deposits of oil and magnesite and smaller ones of copper, lead, zinc, and molybdenum. Shenyang is the center of a vast heavy-industrial complex (metallurgy, machinery, chemicals, petroleum, and coal) that also embraces Anshan, a major city for iron and steel; Fushun, a coal and a shale oil producing center; and Dalian, the chief commercial port of Manchuria. Important manufactures include locomotives, tractors, and a wide range of heavy equipment. Liaoning is also a leading producer of machine-made paper, and it has numerous brick and tile factories that utilize waste ash and slag. Textiles and foodstuffs are also produced. In the late 20th cent. the huge state industries became increasingly uneconomical, and the province was the scene of labor unrest as workers went unpaid or were laid off and factories closed. The Supung Dam on the Yalu River, built by the Japanese, supplies power to Liaoning and North Korea.

Liaoning's fine harbors were long coveted by Russia and Japan for their strategic positions. Japan acquired (1895) the Liaodong peninsula after the first Sino-Japanese War, but was forced by Russia, Germany, and France to return it to China that same year. In 1898, Russia received the southern portion of the Liaodong peninsula as a 25-year leasehold. After the Russo-Japanese War (1904–5), Japan took this territory (which it called Kwantung). The growth of railroads after 1900 spurred the development of the province; the Japanese concentrated heavy industry there, especially after 1931. After World War II, an area approximately the same as Kwantung was made the Port Arthur Naval Base District, under joint Soviet and Chinese operation. The district, which is now the city of Dalian and includes the port of Lüshun (Port Arthur), has been under sole Chinese administration since 1955. The eastern part of what was Rehe prov. became part of Liaoning in 1956, and in 1970 more than 30,000 sq mi (77,700 sq km) of territory from the Inner Mongolian Autonomous Region were added to Liaoning in the west. This territory was returned to Inner Mongolia in 1979.