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Touted as the next Shenzhen, Xiongan may be replicated in other parts of China if it succeeds.
Xiongan what, where, why? Suddenly, investors gone berserk have swarmed into the small farmland located about 100kms southwest of central Beijing. Housing prices there tripled overnight until the local government had to ban all real estate transactions temporarily.
These early bird investors wanted to get in early before prices rise to stratospheric levels – Xiongan has been touted as the new Shenzhen. Shenzhen is a spectacular success story – from a sleepy fishing village of 30,000 40 years ago to a world class tech hub of 12 million people in 2016. Its GDP per capita grew an astonishing 24,569% during that period, according to reports.
So when Chinese President Xi Jinping announced on April 1st the establishment of Xiongan New Area as a model city following the success of Shenzhen and Shanghai Pudong New Area, no one wanted to be left out.
Located in the northern province of Hebei, Xiongan covers the counties of Xiongxian, Rongcheng and Anxin – mostly drab towns, and is home to Baiyangdian, one of the largest freshwater wetlands in North China.
It will initially cover 100 sq km which will be expanded to 200sq km in the mid-term and about 2,000sq km in the long term, according to official news. It’s intended to relieve congestion in Beijing and Tianjin by phasing out some noncapital functions from Beijing and exploring a new model of optimised development in densely populated areas.
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The big picture (details are still hazy) is to restructure the urban layout in the Beijing-TianjinHebei region and cultivate new innovation-driven engines, according to official news.
In essence, Xiongan can be seen as Xi’s vision of a Chinese utopia where fresh air, blue skies, clean water, efficient and advanced infrastructure; and beautiful, sustainable and smart buildings are the order of the day – where you are close to a scenic ecological environment while driven by high-end innovative industries as the new growth engines.
It will also be an open environment where foreigners are welcomed for joint co-operation and where there will be institutional and structural reforms to stimulate the market.
They seem like the very things the Chinese are seeking (and taking their money along) outside of China – in countries like Australia, New Zealand, Europe and America. Perhaps Xi wanted to replicate that in China – Xiongan is like an experimental future Chinese city. If it works out, they could replicate more of that and can prevent more outflows of funds and talent out of China.
Analysts are scrambling to predict the numbers – some say as much as 4 trillion yuan (USD580 bil) may be needed over the next 20 years to build it to the size of twice of Singapore. That means a whole lot of investment opportunities – it’s no wonder share prices of developers with exposure to Xiongan spiked after the announcement. The same goes for share prices of construction related companies such as those involved in steel, cement, transportation, infrastructure, etc.
It’s a brilliant move – it kills many birds with one stone. A new Utopian megacity, keeping funds inside of China, absorbing overcapacity, relieving congestion in the capital city and developing an innovation-driven economy. This is the kind of future city China wants to have, a model city to be replicated everywhere – and chances of success are pretty high.
That is if the government could repair the fallout from the recent revelations that two toxic ponds with untreated waste water were discovered about 100kms away from the economic zone. They are part of the 20 giant ponds covering an area of 300,000 sq meters in total, or the size of 42 soccer pitches which contain untreated wastewater. This was confirmed by the Ministry of Environmental Protection which in a rare public admission said the wastewater had been dumped there for years in Tianjin and Hebei province.

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