SOEs, financial institutions line up to invest in new economic zone

By Li Xuanmin Source:Global Times Published: 2017/6/4 17:33:39

Blueprint emerges for Xiongan

Two months after the birth of China's new economic zone - ­Xiongan New Area - on April 1, the local government is on its way to drawing up development plans. So far, several State-owned enterprises (SOEs), financial institutions and other entities have pledged to support construction in Xiongan, in North China's Hebei Province, highlighting its potential for infrastructure construction and as a harbor for innovative industries. Although authorities have suspended real estate transactions in Xiongan, analysts predicted that it will become a testing ground for innovations in the housing market and local residency policy.

A view of Rongcheng county in Xiongan New Area, in April. Photo: CFP

Authorities have created a clearer blueprint for Xiongan New Area - a new economic zone located 100 kilometers south of Beijing in North China's Hebei Province. 

The new area, which is expected to initially encompass 100 square kilometers and eventually grow to cover 2,000 square meters, is on the way to showing its "historic significance for the development of the next millennium" as highlighted in the announcement by China's State Council, the country's cabinet, on April 1, experts said.

Currently, the planning of Xiongan includes one general plan and several specific plans such as the Baiyangdian ecological environment protection, social and economic development, as well as industry layout plans, the Xinhua News Agency reported in May. Six urban planning and design institutions are working on improving the general plan.

International bids to plan and design the first 30 square kilometers of Xiongan started on April 27, according to a statement on the Hebei provincial government's website.

"After the market frenzy and speculative practices cool down, the top priority for the new area is to get an early start on scientific long-term sustainable planning," said Zhang Gui, executive director of the Beijing-Tianjin-Hebei research center at Hebei University of Technology.

Some of the plans concerning infrastructure construction and upgrading local industry have taken shape over the past two months, but planning in areas such as real estate remains sketchy, Zhang said.

Industrial development

In terms of infrastructure, the area's connectivity with neighboring regions has improved. For example, construction of the Beijing-Bazhou high-speed rail line, a key link between the capital's new airport and Xiongan New Area, started on May 21, the China Railway Group said.

In addition, some State-owned ­enterprises (SOEs), financial institutions and other entities have shown interest in investing in the economic zone.

"Such participation not only facilitates infrastructure construction in the area, but also contributes to the government's goal of making ­Xiongan the home of Beijing's non-capital functions, such as some of the city's administrative agencies and colleges," Zhang told the Global Times over the weekend.

As of the end of May, more than 40 centrally administrated SOEs, such as China Railway Construction Corp, Shenhua Group, PowerChina, Sinopec Group, China Shipbuilding Industry Corp and China Unicom, have pledged to support Xiongan's development. Some have proposed establishing offices in the area.

Shenzhen Huaqiang Industry Co announced in May that it would invest 60 billion yuan in six to 10 projects in the new area.

Meanwhile, the State-owned policy bank China Development Bank also said in May that it will provide 130 billion yuan in loans for road ­construction and infrastructure improvements in Xiongan, Xinhua reported in May.

Top Chinese universities also vowed to build educational institutions in the new area. For example, The Beijing News reported in May that Peking University will build a first-class medical center to support the new area's development.

But as the national plans focusing on high-end industries kick off, local entrepreneurs involved in labor-intensive and heavily polluting industries such as clothing manufacturing, shoe making and plastic packing have been scrambling to find alternative locations for their businesses, news portal reported in May.

Echoing the government's plan to turn Xiongan into an area driven by innovation, Zhang suggested that current local businesses upgrade through mergers and acquisitions or transform themselves into green industries. 

"But the relocation will take time," he added.

Innovative experiments

In its announcement, the State Council equated Xiongan to the Shenzhen Special Economic Zone and Shanghai's Pudong New Area.

However, unlike Shenzhen and Pudong, which were designed to try out market economy reforms, the goal for Xiongan New Area is more to explore innovative models for development and fast growth, Zhang said.

One of the innovations lies in property and land market regulations, said Yan Yuejin, research director at Shanghai-based E-house China R&D Institute.

In April, local authorities in Xiongan imposed tighter restrictions and froze transactions for land and property.

The suspension came after investors swarmed the area, looking to get in early on a potential real estate boom, real estate agents told the Global Times in earlier interviews.

In the wake of the suspension, local regulators are carrying out an investigation into the new area's land, population, homes and rental apartments, in a bid to develop a complete understanding on the area's housing demand and land supply, which would lay a foundation for devising new property policies.

In a recent interview with Xinhua, Yuan Tongli, temporary secretary of the Party committee in Xiongan, stressed that the economic zone will establish a housing security system, making low home prices a core competitive edge for spurring innovative industries there.

Although the housing policies have not been released, Yan suggested that Xiongan's property market will not be developed and operated in a market-oriented manner.

"The area's housing market is supposed to be dominated by low-rent and public rental apartments," Yan told the Global Times on Thursday, noting that local regulators can draw on the lessons of Singapore, where about 85 percent of the residents live in public housing that is built and maintained by the country's housing board.

Zhang agreed. He also suggested that the region should roll out flexible residency policy to attract and retain experienced and professional workers.

For example, authorities could allow people with Beijing residency who work in Xiongan to receive social and medical benefits in both the capital and the new area, experts said.

Experts see a promising future for the area.

"Just look at how Shenzhen and Shanghai Pudong, have grown from small villages into manufacturing powerhouses and leading financial centers… the prosperity of these economic zones is what we expect to see in Xiongan in the future," Yan said.


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