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owned companies to have their headquarters stationed in Beijing.
The result is that Beijing enjoys a disproportionately high tax revenue
from these companies. In addition to other public facilities financed
by the revenue of central government, Beijing has become a magnet
that attracts capital and talent at the expense of other northern cities.
Sheng stressed that such a problem can only be solved by reducing
the government’s role in the distribution of resources, not by arbi-
trarily creating the Xiongan New Area. Sheng further argued that it
is unlikely that Xiongan will replicate the successes of Shenzhen and
Shanghai’s Pudong New Area, as these are located on the Pearl River
Delta and the Yangtze River Delta respectively, and are supported by
vibrant economic and trading activities in nearby trade hubs: Hong
Kong for Shenzhen, Shanghai for Pudong.
“Compared to Shanghai and Shenzhen, Xiongan is far away from a
major trading hub, and lacks the fundamental driving force to attract
both manufacturing and service industry,” said Sheng.
But advocates of the Xiongan project argue that Beijing’s “urban
ills,” which are shared by other Chinese cities to lesser degrees, result
from the lack of government regulation and urban planning. They
argue the location of the Xiongan New Area, where there is minimal
existing urban development, can ensure the maximisation of the ben-
eficial effects of urban planning.
In addition, supporters of the project argue that the scope of the
Xiongan project goes beyond economics alone, and has important

political and strategic significances, which cannot be addressed by the
market alone.
Wu Hequan, an academician of the Chinese Academy of Engineer-
ing who serves as deputy head of a committee of expert consultants
on Beijing-Tianjin-Hebei coordination, believes that besides solving
Beijing’s urban problems, the Xiongan project also needs to explore
an alternative development model.
Wu argued that with strong support from the central government,
the development of Xiongan provides a chance to conduct institu-
tional innovation and reforms, which would be impossible otherwise.
For example, to relocate commercial enterprises and other organisa-
tions and to attract Beijing residents to move to Xiongan, would
require some major reforms to the existing household registration
system that ties social services to a certain locality and, up to now,
each person to a locality. If such reforms prove to be successful in
Xiongan, they could be replicated elsewhere and have major national
Xiongan also affords the government a chance to explore a new
path in managing the property market, which would be of major sig-
nificance as soaring property prices have increasingly become a major
source of public grievance in China’s larger cities. Wu suggested that
China could adopt the model of Singapore, where the government
directly manages much of the land and builds public and low-rent
housing for those in need.
For Yang Kaizhong of Peking University, another major strategic
consideration for the government in launching the Xiongan project
is to foster the formulation of a “capital economic circle” to balance
the development disparity between China’s more prosperous south-
ern region where Shanghai and Shenzhen are located, and the less
developed northern and inland region.
But both Wu and Yang admitted that the eventual success of the
Xiongan project will depend on a balanced approach of government
and market. “While there are things the government can achieve with
its administrative power, more need to be achieved by the market,”
said Wu.
While experts are still debating the project’s feasibility, efforts to
push forward the scheme are underway. Following the establishment
of a preparatory committee for the Xiongan project staffed by offi-
cials from Beijing, Tianjin and Hebei, the National Development and
Reform Commission, China’s top economic planner, announced on
April 13 that the commission is drafting the development plan for the
first phase of construction in Xiongan and plans for protection of the
environment around Baiyangdian Lake, which will be financed by
the central government.
According to an estimate made by investment bank Morgan Stan-
ley, the Xiongan project will require an investment of 2.4 trillion yuan
(US$348 billion) over the next 10 to 20 years. Regardless of its even-
tual fate, the project will be a major focus for China watchers for years
to come.

Location of Xiongan New Area

First phase: 100 square kilometres
Mid-term: 200 square kilometres
Long-term: 2,000 square kilometres

Xiongan new Area’s GDP in Q1, 2016










Xiongxian County
1,469 Rongcheng
863 Anxin 581