New tech city could help China’s economic transition

A new development zone south of Beijing could turn out to be the most important domestic infrastructure project in China in the decade to come and lead to large-scale economic change.


At the beginning of April, the Chinese government caught people by surprise by unveiling plans to create the Xiong’an New Area, a new development zone about 130 kilometres south of Beijing. According to the announcement, the first phase of development will cover an area of 100 square kilometres, with long-term plans to expand it to 2,000 square kilometres. According to the State Council, the project is of “national significance” and “a strategy crucial for the millennium to come”.


The first mission of the Xiong’an New Area will be to help alleviate the problems associated with Beijing’s ballooning population after the failure of all its previous efforts. The second is to promote the economic integration between the cities of Beijing, Tianjin and Hebei Province to form a vibrant economic region comparable to the Pearl River Delta (with its centre in Shenzhen) and the Yangtze River Delta (centred on Shanghai).

The third mission of the Xiong’an New Area, according to the authorities, is to deepen structural reforms, to explore ways to build smart and environmentally friendly cities, and to develop better infrastructure and more efficient transportation networks.

The direct impact on the Chinese economy in the near term may be limited. However, the long-term impact of the Xiong’an New Area could be substantial if implementation lives up to the policy makers’ expectations.

First, the relocation of industries to the New Area will surely give a big boost to Hebei Province, and help the entire region formed by Beijing, Tianjin and Hebei to achieve higher medium-term growth.

Second, Xiong’an will be a test ground for new strategies of urban development and environmental protection in China in other regions in the future. Third, the creation of Xiong’an New Area could be the catalyst for a new round of reforms in the governance of state-owned enterprises (SOE). For example, relocating SOEs out of Beijing as planned could serve to weaken the political networks and patronage systems that lie behind them.


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