Debunking China Myths: Xiongan will boost China’s economy

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Xiongan New Area is the new development hub in Hebei Province and it turns one year old on Sunday. The hub’s main function is to serve as a growth center for the Beijing-Tianjin-Hebei economic triangle.

However, some are skeptical that the extensive investment and supported policies will provide good returns.

Xiongan New Area, different from the special economic zones in the development patterns, was born during a rising tide of prosperity, while the Shenzhen and Shanghai special economic zones have flourished since China's opening-up in 1978.

The establishment of the Xiongan New Area is a natural need for Beijing, as the capital city seeks to host jobs and people in the new area.

“There is a huge burden of population in Beijing, skyrocketing property prices and a completely saturated job market that leads to restriction to what you want to develop in Beijing. The Xiongan New Area greatly releases the pressure,” said Tony McQuade, managing director of Savills in North China.

Shenzhen has its economic focus on exports while Pudong has been helpful in establishing one of the world’s key financial centers. The Xiongan hub is a reflection of China’s progress in its economic restructuring.

“Xiongan becomes a place for innovation industries, and it can also move the development to the inland region. The project is set to accomplish many different goals, not only economic ones but also social and political goals,” said Valdim Rossman, a visiting scholar at UIBE.

The state-level new area will focus on green development and innovation. It will prioritize the development of emerging industries such as artificial intelligence (AI), the Internet of things, and big data. That’s to support improvements in the quality of life for all Chinese.

In addition, the right infrastructure in place will help Xiongan attract significant investment. Stated-owned enterprises are making plans to relocate and invest in the new area. That’s while the government would provide public housing to subsidize the companies that respond to the national policy.

McQuade said that five years from now, we could start seeing companies move to Xiongan. He said it will be a large success if Xiongan gradually grows and maintains its feasibility.