Apr 06, 2017 06:50 PM

SOEs Cozy Up to Government’s New Economic Zone

(Beijing) — Less than a week after the central government announced the creation of an economic zone to relieve pressure on the capital Beijing, state-owned enterprises (SOEs) are already publicizing their intentions to support, and benefit from, the mega-project.

China Petroleum & Chemical Corp. (Sinopec, 中石化) — which already provides public heating generated by geothermal energy in Xiongxian, one of the three counties to be included in the Xiongan New Area — said on Wednesday that it may extend the heating system to the other two counties in the zone.

China Railway Construction Corp. Ltd. (CRCC, 中国铁建), one of the country’s largest railway and bridge builders, announced that it will create a task force to investigate how the company can “serve the overall development of the country.” The company said the central government’s plan to turn the region into an “eco-friendly smart city” will entail the construction of high-quality public infrastructure — including a transport network — which are part of CRCC’s core business.

The government’s surprise announcement last week that Xiongan, a region some 130 kilometers south of Beijing, will be turned into a national economic zone that will eventually be two and a half times bigger than New York has sent the country into a frenzy.

Average home prices in the area to be included in the zone tripled within 24 hours, as an army of buyers descended to snap up properties. Share prices of construction companies and property developers soared on Wednesday when the stock market re-opened after a three-day public holiday.

The Xiongan New Area plan has two main goals: to relocate some industries into the area and encourage people to move out of the capital; to redevelop the economy in the northern region as part of a project known as Jing-Jin-Ji, which aims to integrate Beijing, the port city of Tianjin, and the surrounding province of Hebei into one super-connected urban conglomeration.

Xiongan joins Tongzhou District on the eastern outskirts of Beijing, as part of a coordinated long-term development project to offload some of the “non-capital” functions of Beijing and help the city cope with overcrowding, pollution and traffic congestion. President Xi Jinping said in 2015 that Beijing should be a political, cultural, international and technological center and everything else that falls outside of these four categories should be considered as “non-capital” functions.

In the wake of the Xiongan New Area announcement, debate has erupted on the internet about whether the zone will become a second capital city and whether all Beijing-based SOEs will be required to relocate their headquarters. Dozens of central government-owned companies employing thousands of people, including oil giants Sinopec, PetroChina and CNOOC, along with telecoms operators China Mobile, China Unicom and China Telecom, have their headquarters in the center of Beijing.

However, officials who engineered the plan have denied that Xiongan will become a second capital and that companies will be forced to move out.

“Although in principle, SOEs don’t belong to one of those four functions, the central government has not said that companies should be moved to the new area,” said Wu Hequan (邬贺铨), deputy director of the State Council committee responsible for the Jing-Jin-Ji project, told Caixin this week. “When and whether they’re going to move their headquarters or just open branches or research centers, all these decisions need to be taken step by step. There are no compulsory moves.”

Contact reporter Chen Na (

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