President Xi has ordered the construction of a new city to showcase China’s system of governance and urban planning
A detailed plan to build a city from scratch in Xiong’an, Hebei province, is to be completed by the end of the month. The project, announced by President Xi Jinping on April 1, aims to relocate Beijing’s “noncapital functions” to alleviate Beijing’s overcrowding, congestion, water scarcity and air pollution, and is intended eventually to be ‘China’s Silicon Valley’.
What next
As long as the country’s most powerful leaders continue to champion it, Xiong’an will not become another ‘ghost city’ or failed economic zone because state institutions will be compelled to populate it. However, these same factors diminish its value as a model that can be replicated elsewhere.
Subsidiary Impacts
- Xiong’an will receive massive investment over the next decade, whether it grows ‘organically’ or not.
- A successful Xiong’an would be a triumph for China’s economic planners over market-championing sceptics.
- Unlike in Shenzhen and Shanghai, Beijing does not appear to envisage a large foreign role in Xiong’an.
- Attracting talent in the technology sector will depend in part on offering a more pleasant living environment, which Xiong’an hopes to do.
Analysis
Xi has made the integration of Beijing with its surrounding areas a signature policy. Known as the ‘Jing-Jin-Ji integrated area’, it was approved by the Politburo in 2015. One of the first concrete steps came in November 2016 with the announcement of a 36-billion-dollar high-speed rail plan to link Beijing, Tianjin and cities in neighbouring Hebei province.
Other projects will get under way on the outskirts of the capital this year, including a municipal government complex in Tongzhou, a new international airport in Daxing and several high-quality environmental-protection projects. New highways and high-speed rail links to Daxing airport are to follow, as well as tax incentives and bonded facilities in Qinhuangdao Port, to transform the capital region into a world-class city cluster.
So far, the project has stimulated the region’s economy, but glaring imbalances remain between the major cities of Beijing and Tianjin and their hinterland in the surrounding province of Hebei. The plan to build a new city aims to integrate them and galvanise the regional economy.
Xi has repeatedly called for moving certain functions of the capital to Hebei. Instead of choosing the industrial city of Baoding as the destination, as was earlier speculated, the authorities instead lighted upon Xiong’an, a rural backwater nearby. The area’s current population is small and its level of development low, making it a “blank page” (as Xi put it), offering plenty of low-cost land to build a city from scratch.
Located 160 kilometres south of Beijing and roughly the same distance of Tianjin, the new city is intended to be far enough away not to become a satellite suburb, while keeping close links with the capital just 40 minutes away by high-speed train. It is expected to cover an area of 100 square kilometres initially and then expand over the next decade to 2,000 square kilometres – about one-third larger than Greater London. It will house many non-government facilities, including markets, schools, research institutions and hospitals that will be relocated from Beijing. Among top-level state-owned enterprises, Sinopec and China Railway Construction have already stated their intention to support the project.
2.5mn Target population of the new city
Garden city
The current population of the Xiong’an area is 1 million, and the target population for the new city is just 2.5 million (one-quarter of Greater London’s). It is not intended to be a mega-city, but rather to demonstrate how the problems associated with mega-cities can be avoided.
The government says it will focus on green development and protecting the local ecology, exploring a new, more sustainable urbanisation path. According to the chief architect, transportation, water and electricity infrastructure will be underground, making space for green spaces and pedestrians.
China’s Silicon Valley
The new city will be a special economic zone, offering tax breaks and financial incentives to kickstart growth. The Xinhua news agency report on the announcement of the Xiong’an project likened it to the Shenzhen Special Economic Zone and Shanghai Pudong New Area, which both played key roles in China’s economic reforms in the 1980s and 1990s, and described it as “an initiative for the next millennium”.
Xiong’an is supposed to headquarter the region’s logistics and tertiary industry, public and administrative services, corporate headquarters and financial institutions – as well as education and research institutes. Rather than a ‘deputy capital’, it is intended to become ‘China’s Silicon Valley’. The high-tech aspirations show in the appointment of Shenzhen mayor Xu Qin to lead the project as provincial governor of Hebei.
Xu, who has a background in the technology sector, helped make Shenzhen a technology hub by promoting innovation-driven business related to the IT sector. With Xu at the head, Xiong’an is meant to spearhead innovation and reforms, as Shenzhen and Pudong did in the 1980s and 1990s. It is supposed to play a key role not just in regional development but also more broadly in the modernisation of China’s slowing economy.
Xu also has the advantage of not belonging to any political faction. Xiong’an’s distance from vested interests and political struggle should position it to be a testing ground for new ideas and reforms before extending them nationwide.
Beijing’s support
Political support is critical in the capital region, which has a tradition of strong vested interests and fierce competition between administrative divisions. Xi has a key asset in the person of Cai Qi, appointed as Communist Party chief of Beijing municipality last month.
A long time protege of Xi and one of the top contenders for a place on the Politburo at the Party Congress later this year, Cai has vowed to reduce the capital’s non-core activities, including manufacturing, logistics and wholesale markets, removing all functions unrelated to the city’s status as the country’s capital. He also promised to cut concentrations of fine particulate matter (PM2.5) pollution drastically.
His plan includes establishing a police force to crack down on environmental hazards, cutting coal consumption by 30% and reducing new construction. Meanwhile, to drive migrant workers from the city, Cai’s administration pledged to tear down neighbourhood shops and wholesale markets where they work and shut their children out of the public education system.
Risky project
Xiong’an will be a more difficult project than Shenzhen and Pudong. It faces tougher economic conditions and real estate pressures.
Many recent ‘new city’ projects have proved much less successful. There has also been a frenzy for ‘national new areas’ – ten out of the 18 established since 1990 were set up after 2014. This has created many ghost towns, including Caofeidian New Area in Hebei and Yujiapu financial district in Tianjin, prompting sceptics to question why nearby Xiong’an should fare better.
The spectre of real estate speculation looms large
Real estate prices rocketed within hours after the announcement. Local officials promptly froze purchases, but face a tough task trying to balance the needs of the real estate industry, urban planning, residents' interests and economic growth.
However, the government is committed to the project. Unusually, it was jointly initiated by both the Communist Party Central Committee and State Council, instead of the State Council alone. There are also rumours that the new zone could be granted sub-provincial administrative level, giving it greater stature within the bureaucracy.
This article was first written for the Oxford Analytica Daily Brief, which is the copyright holder.