China Launches Major Economic Zone

(Beijing) – China is creating a new zone south of Beijing for economic reform in a project heralded by state media as the most significant one of its kind in a quarter century.

The new economic zone – called Xiongan New Area – will facilitate the economic integration of Beijing, Tianjin and Hebei province, state-run Xinhua reported Saturday. The choice came as a surprise, but Xinhua said President Xi Jinping had personally visited one of the counties in February and hosted a meeting with local officials on plans to construct the new area.

The Xiongan New Area, located about 130 kilometers (80 miles) to the south of Beijing and Tianjin, forms essentially an equilateral triangle with the two municipalities. It consists mainly of three counties in Hebei province and initially covers 100 square kilometers. The plan is to ultimately expand it to 2,000 square kilometers, Xinhua said.

China has created many special zones with emphasis on different areas to experiment with more free-market oriented policies and encourage private and foreign investment. These regions were given different names depending on their priorities, and the most oft-mentioned ones include Special Economic Zones (SEZ), such as the one in Shenzhen created in 1980, and the so-called “national new areas,” which include Xiongan.

Xiongan is the 19th “national new area” created since 1992. All of them were approved by the State Council, China’s cabinet, but Xiongan is the first to be simultaneously endorsed by the Central Committee of the Chinese Communist Party.

Xinhua said the Xiongan New Area is the first to be of the same national significance as the Shenzhen SEZ and the Shanghai Pudong New Area, the first national new area, which was opened 25 years ago. It didn’t explain the difference between a SEZ and a national new area.

The new area’s mission is to deepen institutional reform, explore ways to build smart and ecologically friendly cities, develop better infrastructure and efficient transportation networks, and pursue further opening-up in a comprehensive way, Xinhua said. Non-governmental functions of Beijing will be moved into an appropriate part of the zone, Xinhua said.

The launch of Xiongan caught people by surprise. Previous discussions about relocating Beijing’s non-capital functions had centered on the city’s Tongzhou District, about 20 kilometers to the east of downtown areas.

Both local and central government documents have mentioned developing Tongzhou to help relieve the pressure of congestion and smog in downtown Beijing and to facilitate the integration of Beijing, Tianjin and Hebei province. 

The Tongzhou initiative aims to relocate up to one million government workers to a new hub under construction by the end of 2017. Housing prices in the district have surged after the city government unveiled the plan in June 2015, prompting the district government to put restrictions on home purchases.

An earlier version of this story misstated the original size of the Xiongan New Area.