Xiongan, Xi Jinping's Dream Megacity To Burnish His Legacy
Ground has been broken on the signature domestic project of the Chinese leader's next term. It is meant to be a massive model city of innovation, forever linked to Xi's Chinese Dream.
QIAOXI —Time in this village seems to be standing still. Since the Ming dynasty 500 years ago, the community has enjoyed peace and quiet, surrounded by the lakes and reeds of the Baiyangdian region, about 150 kilometers southwest of Beijing. To reach it, there is only one narrow road that winds between the wetland and fields of corn and wheat. The location is popular among the capital's residents, who come here on weekends to admire the lotus flowers and eat freshwater fish.
But last April 1, the village was brutally shaken awake from its slumber and flung right into the top national headlines. This is where President Xi Jinping decided to create a new city to rival Shanghai and Shenzhen: The so-called Xiongan New Area is expected to cover 2,000 square kilometers — 20 times the size of Paris and three times the size of New York.
"We first heard the news on television," remembers the owner of the village's mini-market. "Everybody was very excited. Some even threw firecrackers in the street to celebrate!"
A neighbor playing cards adds, "Since it was on April 1st, we thought it was an April Fools' joke."
There had been indications that something big was about to happen. Over the preceding months, orders had been given to suspend all construction in the area's 60-odd villages. A checkpoint was installed at the entrance of each village to make sure no building materials could enter, and slogans exalting the glory of the future Xiongan were painted in huge letters on the walls of houses: "Everything is for the new area, everything is for the people."
The Xiongan project, vigorously covered by the official media, has several goals: First, to unclog Beijing, a city of 23 million, faced with chronic pollution and not enough resources. "Beijing grew by absorbing suburbs and already has six ring roads," says Alain Bertaud, an urbanist who spent a long time working on Chinese cities and is now a senior research scholar at the New York University's Marron Institute. "This model radiating from the center is no longer tenable."
All "non-capital" functions will be transferred from Beijing to Xiongan.
The Chinese authorities have therefore decided that all "non-capital" functions will be transferred from Beijing to Xiongan: State-owned companies, cultural institutions, universities and other public services are expected to move south.
But the goal pursued by Xi is also to build a model city, "open and innovative," following the examples of Shenzhen, which was a fisherman's village just 40 years ago, and of Pudong, near Shanghai, where skyscrapers have replaced the rice growers' cabins and swamps of 25 years ago. According to the propaganda, the emphasis will be put on "ecological protection" and on "improving people's well-being," as part of a lab city for a "new urbanization of China." The Chinese president, who described the project as "crucial for the next millennium," promised "blue skies, fresh air and clean water," according to the Chinese media.
Faced with these great promises and media hype, hordes of people flocked from Beijing and Tianjin only hours after the new area was announced, in search for bargains. The price of plots immediately shot up, forcing local authorities to ban all transactions and close down all real-estate agencies.
After that first weekend of April, the regions' listed companies saw their stocks skyrocket. "People came with trunks full of cash to buy apartments," the owner of a small packaging company in the Xiongxian district remembers. "Many offered to buy my company because it's no longer possible to register a new company to do business here."
Since then, however, the euphoria has given way to caution. Some locals wonder whether they are not simply going to have their lands expropriated and worry about how little compensation they might get. One of the card players here in Qiaoxi lost his job when all construction work stopped. Another, who works in a small shoe factory, guesses it will close down soon.
What about us, who aren't educated, what are we going to do?
Textile, shoes, plastic, packaging, cabling, all these old, polluting industries dominate the region. "The new area will be a great opportunity for future generations, without a doubt, but what about us, who aren't educated, what are we going to do?" asks a man who sells watermelons.
The path is still long before this poor district of 100 square kilometers and a million inhabitants becomes a model city. Currently, it is worth just 3 billion euros ($3.5 billion), 1% of Beijing's GDP. But why build it here precisely?
"Just like a blank book, this area, with its low population density, low level of development and sufficient space to grow, checks all the boxes for starting such a demanding project," says Xu Kuangdi, the former mayor of Shanghai. Xu, considered to be the creator of Pudong's financial district, now heads an experts' committee for the development of a great region gathering Beijing, the port city of Tianjin and Xiongan.
Everything needs to be built from scratch. Steel, copper, aluminum, concrete — the demand could be huge. Economists are working on different scenarios to assess the financial benefits. Citi forecasts a global investment of $75 billion over the first five years, while Morgan Stanley's estimates are at $350 billion over 10 years, in the best case, for a city that would then have close to 7 million inhabitants.
But before any of this can happen, Xiongan needs to actually exist. This is not the first time that the authorities in Beijing want to make a city rise from the ground. China already has 19 "new areas," 13 of them launched since 2014. But few have really made a difference. Some of these projects even ended up as ghost cities.
"So far, the central government's initiatives to create new cities haven't been successful," warns Xu Chenggang, professor of Economics at the Cheung Kong Graduate School of Business in Hong Kong. "The government wants Xiongan to fall in line with Shenzhen and Pudong because these projects have been successful, but there are many more differences than similarities."
Many economists share the point of view that the comparison does not stand. First, because the times and goals are different. When Shenzhen was built, "the Chinese economy was booming and the idea was to let market forces attract foreign capital," says Chen Gong, founder of the Beijing-based think tank Anbound.
Shenzhen was conceived as a laboratory for China's policy of openness regarding foreign investments, and with ambitious economic and financial reforms aimed at attracting private companies. The whole project was led by local authorities.
The Xiongan project, meanwhile, is being promoted by the central government, which wants to impose the relocation of state-owned companies from Beijing and push northern China's growth through big infrastructure projects.
To create wealth, the city will need to do more than just relieve Beijing.
There are also geographical differences. Shenzhen is located on the coast and near Hong Kong, Pudong sits on the bank opposite Shanghai. The Xiongan New Area is more isolated, located in the heart of the Hebei province, an arid region where air pollution is among the highest in China. A local NGO made a splash when it published aerial photos showing dark swamps the size of 42 football fields, soiled by waste water, on the outskirts of the Xiongan area. The authorities retorted that the damage had been done years earlier but that the cleaning up would be long and expensive. Not very attractive.
"Many conditions are required for it to work," says Bertaud, the urbanist. "Building a city from scratch requires huge and immediate investments without return for many years. The biggest challenge will probably be that of transportation because they'll need to cover a vast territory where population density varies widely. For the project to create wealth, the city will need to do more than just relieve Beijing and also attract migrants from the countryside."
It is a Herculean task with enormous challenges. But China has proven in the past that it knows how to lead big infrastructure projects. Most importantly, Xiongan is not a city like the others: Xi is personally involved in the project; he visited the site and chose it himself, according to the propaganda.
Forty years after Deng Xiaoping and Shenzhen, 25 years after Jiang Zemin and Shanghai, China's uber-president wants his city.
Alain Bertaud was working for the World Bank when the Chinese authorities showed him a project to turn a fisherman's village beyond the Pearl River delta into a city of 2 million. He admits he laughed at the idea. Now, 12 million people live in Shenzhen, which has become China's technological showcase. The lesson Bertaud draws from this is that "as long as you don't have evidence to the contrary, you should take the Chinese seriously!"