Business

New Chinese planned economic zone brings tears amid cheers

XIONGAN, CHINA: Business owner Hu Weibing wept at the prospect of losing everything, including his home, after China's surprise announcement to transform a rural spot outside Beijing into a modern metropolis nearly three times the size of New York City.

Mr Hu's family-run clothing factory in the northern province of Hebei could close at the expense of a new special economic zone similar to those in Shanghai and Shenzhen.

The planned Xiongan New Area currently measures 200,000 ha and has less than 1 per cent of Beijing's economic output, but the announcement last week sparked a real estate speculation frenzy as out-of-town home buyers from across the country descended on the previously unknown area.

"It is certainly good for Hebei and the regional economy, but it is a disaster for mid- and small-sized business like ours," said Mr Hu, staring at the concrete walls of the four-storey home he began building last year but will never be able to finish.

Though authorities have yet to tell him what is next, he is bracing for things to progress in the fashion that has become typical for government mega-projects: forced relocation and modest monetary compensation.

The changes will scatter his 40 local employees, who were each painstakingly trained for two years to produce the winter jackets that Hu's Yuhua Clothing Manufacturing sells to clients in Moscow.

Land prices elsewhere are guaranteed to be out of his reach.

'IMPOSSIBLE'

"To build another factory or another villa like ours will be impossible. It is a terrible shame," Mr Hu said quietly.

"There will be no way to ever compensate us, but this is a huge national issue, so whatever comes, we must support it."

There are some 19 national-level "New Areas" scattered across China, 13 of which have been established since 2014.

But Xiongan New Area stands out: Chinese President Xi Jinping personally designated its location during a February trip to the fields just outside Mr Hu's village of Dawang, according to Xinhua News.

Following the announcement, housing prices doubled in a single day, as speculators queued outside real estate offices, clogging the streets with luxury vehicles as they battled to snap up properties for cash.

Shocked by the chaos, local authorities quickly imposed strict bans on home sales and ordered brokers to close up shop.

By mid-week, offices across the area were closed, their metal grates pulled down and crosses of white tape over them for good measure.

But individuals with properties for sale were still willing to approach potential buyers with prices that had gone up 300 per cent in three days, they told AFP.

Analysts, however, predict its overall economic punch will be "limited", as the venture lacks measures to spur the types of exciting new financial reforms that were the real drivers of growth for the Shenzhen Special Economic Zone, established in the 1980s, and Shanghai's Pudong New Area, set up in the 1990s.

"The project is still effectively just a major push to improve the infrastructure and integration of the Hebei region, rather than a test bed for deeper market reforms that could have a much wider economic impact," said Mr Julian Evans-Pritchard of Capital Economics. - AFP

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