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But unlike all existing special zones and new areas, most of which
were kicked off in a “trial and error” fashion, the Xiongan New Area
was declared to have “strategic significance” from the very beginning.
More importantly, it bears the hallmark of Chinese President Xi Jin-
ping himself.
According to the announcement released by the Central Commit-
tee of the Communist Party of China and the State Council, the deci-
sion was made under the “explicit directive” of Xi, who has “ordered
that a modern urban district should be built at a suitable location in
Hebei, guided by new development concepts.”
Calling the decision a “major historic and strategic choice,” which
will be “crucial for a millennium to come,” the announcement says
that Xiongan will be developed into “a demonstration area for in-
novative growth.” According to the vision outlined by President Xi,
Xiongan will be “green, modern, and with a beautiful environment,
with high-end industries and efficient transportation.”
The announcement also puts the Xiongan New Area in parallel
with Shenzhen Special Economic Zone along the Hong Kong border
and Shanghai’s Pudong New Area, saying that Xiongan will become
the third new zone that has “national significance.”
Among China’s dozens of special economic zones and new areas,
Shenzhen and Shanghai have been the most successful and iconic
ones. Established in 1980, the Shenzhen SEZ was part of the jump-
start to China’s economic reform, and turned a fishing village into a
manufacturing and high-tech centre. Likewise, the Pudong area in
Shanghai, established in 1992, developed a wetland into China’s ma-
jor financial centre.

Uncertainties
While the ambitious plan has fuelled the enthusiasm of financial
and real estate speculators, it has led to bewilderment among many
investors and analysts regarding what the project really means for
China, and more particularly, for Beijing.
According to the official announcement, the Xiongan New Area
will take over Beijing’s “non-capital functions,” and will facilitate the
“coordinated development of the Beijing-Tianjin-Hebei region.” It
means Xiongan will serve to address various “urban ills” of Beijing,
including soaring house prices, overpopulation, traffic congestion,
and, most notoriously, air pollution, by relocating Beijing’s industrial
sectors to Xiongan, albeit in cleaner forms.
Some analysts have likened the future relationship between Beijing
and Xiongan to that of Washington and New York, meaning that Bei-
jing’s industry will be gradually relocated to Xiongan, leaving the capi-
tal to concentrate on being the administrative centre of the country,
while the administrative functions of Beijing itself are being relocated

to the neighbouring Tongzhou district development.
“Except for their headquarters, all enterprises ought to be relo-
cated to Xiongan,” Liu Yong, an economist from the Development
Research Centre of the State Council (DRCSC), told ChinaReport.
Liu said that the authorities are also considering various options to
relocate a variety of organisations in Beijing to the new area, includ-
ing major universities, hospitals, social service agencies and even some
government agencies.
But according to Yang Kaizhong, an expert from Peking Univer-
sity and former deputy director of the municipal Development and
Reform Commission of Beijing, who has been a major advocate for
the Xiongan project, the vision for the new area’s future goes beyond
simply taking over Beijing’s industrial sectors, and will take over some
of Beijing’s role as administrative and cultural centre as well. “Eventu-
ally, it will serve as China’s ‘supplementary capital,’” Yang told Chin-
aReport.
Yang argued that with its location by the Baiyangdian Lake, one
of the largest lakes in Northern China, the dense population in the
surrounding area, and its relevant proximity to major transportation
hubs such as the new Beijing airport that is now under construction
south of Beijing (50km away) and Tianjin port (100km), Xiongan
has the potential to develop into a major metropolis.

Government vs. Market
But despite the enthusiasm and optimism of state media and main-
stream economists, some experts remain suspicious of the project.
While some who are questioning Xiongan’s “green city” prospects
point to the fact that Hebei itself is one of the most polluted provinces
in China, and that Baiyangdian Lake in the new area has been subject
to industrial run-off and drought, others question the feasibility of
the project as a whole, pointing to the meagre success, if not failure, of
similar (yet smaller-scale) projects previously launched to relocate Bei-
jing’s industry, such as Tianjin’s Binhai New Area and Hebei’s coastal
Caofeidian area.
But most of all, critics of the project argue that the project’s top-
down planning and the massive government-led reallocation of re-
sources runs counter to market rules.
In an article published by the Chinese-language edition of the
Financial Times, Sheng Hong, Director of the Unirule Institute of
Economics, a Beijing-based non-governmental think tank, argued
Beijing’s “over-population” and its various “urban ills” result from ex-
cessive government intervention in resource distribution in favour of
Beijing with its capital status.
Sheng said that given the central government’s heavy presence in
resource distribution, it becomes essential for China’s powerful state-

Rongcheng, part of
the Xiongan New
Area, taken by drone,
Photo by CNSApril 6, 2017