Beijing unveils new economic area to give millennials a shot at the ‘China Dream’

By Oiwan Lam

On April 1, 2017, Beijing announced a “national” and “historic” plan to construct a new special economic zone called Xiongan New Area, which is located in Anxin, an underdeveloped county in Hebei province, about 100 miles away from the capital.

In a joint statement, the Communist Party Central Committee and the State Council described the plan as “a strategy crucial for a millennium to come”. According to the planning blueprint, Xiongan will be a liveable city designed to address problems that include pollution, over-congestion and the out of control property price challenges that haunt Beijing. Major institutions, such as state-owned enterprises, universities and science parks will be relocated to the new area, according to its official video introduction:

As soon as the plan was unveiled, property investors rushed to the new area. Within six hours, a number of local news outlets reported that property prices had surged to ten times their original value, from RMB 3,000 to RMB 30,000 yuan.

To suppress the frenzy of speculative investment, local authorities forcibly shut down property intermediaries and suspended all real estate transactions. But speculative activities have extended to the stock market, where listed companies packaged with the phrase “Xiongan concept” have all taken off like rockets.

Many have pointed out that such speculative activities are irrational, because the success of the new area depends on the abundance of an affordable housing supply. In fact, the central government has decided that the majority of properties built in the area will be public housing. As China policy observer Yang Shan pointed out on the investigative news platform, Initium:

Anxin. Photo: Xinhua, screenshot via YouTube.

However, many are sceptical about whether the plan will really work. For one thing, the speculative activities have disrupted the idea of “affordable” housing, inferring instead that people’s dreams are still resting on the bubbling stock and property market.

Moreover, when compared with other successful economic zones, Xiongan does not have a geographical advantage. Shi Han Bing, a famous blogger on China’s development trend, pointed out:

In past decades, China has made many attempts to build special development areas, but there are only a few successful cases thus far. Shi Han Bing pointed to one failed venture:

On Twitter, comments have been even more critical:

This article originally appeared on Global Voices.