China’s New Megacity: The Anti-Beijing

In a surprise move that caught most of China off guard, the Communist Party’s powerful Central Committee, along with the State Council, which functions as China’s cabinet, issued an April 1 resolution unveiling a planned Xiong’an New Area, which encompasses three existing counties in Beijing’s adjacent Hebei province. Development of the New Area will be phased: in the short term, a 38 square mile area, later doubling to about 77 square miles and, eventually, expanding to about 770 square miles, not much smaller than Tokyo.

That impressive size was not what generated the resultant awe permeating the Chinese Internet. Xinhua, the official news agency that carried the announcement, made it clear that this was not to be just another new special zone among an array of similar projects: “Xiong’an is a New Area that follows the path of Shenzhen and Shanghai’s Pudong New District. It is an initiative for the next millennium, a major event of national significance.”

By elevating Xiong’an to the level of Shenzhen, a megacity built out of a fishing village, and Pudong, a previously desolate area of Shanghai that now houses its signature skyline, Xinhua fanned anticipation for a project of historic proportions. In 1980, the opening of Shenzhen, at that time just a small village bordering Hong Kong, was the decisive moment of China’s policy Reform and Opening after the country broke away from the grip of Maoist ideology. In 1990, the decision to develop Pudong as China’s new window to world symbolized one of leader Deng Xiaoping’s last major efforts to give momentum to the reform that suffered major setbacks in the late 1980s. Joining the ranks of Shenzhen and Pudong would mean that Xiong’an would bypass its “older brother” in North China, the Binhai New Area in Tianjin, set up in 2005, as the heir apparent to China’s new style of reforms.

Since the start of the country’s very successful Reform and Opening under Deng, Chinese society has come to cherish the “invisible hand” of the free market. The memory of shortages still lingers in the minds of those born before the 1980s, when the supply of basic goods such as food had to be rationed. In addition to unleashing the creativity and can-do spirit of its people, China’s reforms have reshaped their perception of the state’s role in the economy. Government interventions have, since then, become a kind of necessary evil to be tolerated, not embraced. Until very recently, catchphrases such as “Guojin Mintui” (the state advances, the citizen retreats) were good proxies for widespread uneasiness with the state’s corrosive touch on the economy. Progress towards an open economy friendly to the participation from a vigorous private sector has been seen as the ultimate barometer of a reform’s success.

But the reaction to the Xiong’an New Area reveals a shift in China’s national psyche. Enthusiastic online discussion shows that for a considerable segment of Chinese society, the visible hand is no longer frowned upon. Rather, it is seen as a magic wand that can turn a backwater into a booming center of innovation and productivity.

For those with a nose for moneymaking opportunities, the resolution emitted the alluring fragrance of Renminbi. In no time, Chinese media were filled with stories about jammed streets and fully booked hotels in Xiong’an. Almost overnight, once obscure towns that nobody had ever heard of were transformed into bustling centers of real estate transactions. Rumors abounded of nouveaux riches from Beijing and Shanxi buying up entire residential compounds with piles of cash. Cash-wielding homebuyers saw the announcement as a clear signal of an imminent influx of money, people, and possibly preferential policies from the government, all pointing to a rising real estate market. Bet long on Xiong’an, their guts told them. Stock prices of cement and steel companies from Hebei province soared following the news, to the extent that a few of them had to downplay expectations.

That reaction was evidently not what the designers of Xiong’an had wanted. Measures swiftly appeared to quench the apartment-hoarding fever and deter speculators. A freeze on any real-estate trade in the region was announced, which quickly escalated into the arrest and lockup of rogue traders, and resulted in bizarre scenes on the streets of Xiong’an, with police officers chasing after real estate agents.

Xiong’an’s planners are faced with the tricky task of managing not just expectation but also imagination. There is visible frustration over what the government sees as a small-minded, reductionist reading of the New Area as nothing more than a real estate play. Wild speculation is “debasing” to the leadership’s vision for the New Area, an article in state mouthpiece People’s Daily declared. The grand plan, it argues, is an ambitious strategy to explore a new way to overcome “megacity disease,” to achieve more balanced regional development and to nurture innovative engines of growth.

The article introduces a few novel terms to the lexicon of urban development. Besides “megacity disease,” it also highlights the primary role of Xiong’an as the receiving base for “non-capital functions” to be moved out of Beijing (pictured above). In case this is not clear, it specifies that such functions include anything that’s inconsistent with Beijing’s self-image as China’s capital, i.e. the political, cultural, international exchange, and technological innovation center of the country. Corporate headquarters and financial institutions therefore do not belong to the capital and should be relocated.

In other words, for some, Xiong’an stands against everything that’s wrong with Beijing, the largest megacity in North China today. In addition to its notorious pollution, congested traffic, and overheated real estate market (megacity disease!), commentators also blame Beijing for its unconstructive role in the region: instead of acting like a sun that radiates warmth to neighboring towns and cities, it acts like a black hole that sucks resources from them. The relatively healthy symbiotic relationships among Yangtze River delta cities, wherein Shanghai and Shenzhen shine like stars, do not exist around Beijing.

Popular reaction to the Xiong’an announcement was full of implied dissatisfaction with the Chinese capital’s status quo. Upon hearing the news, many web users paid homage to Liang Sicheng, the defiant architecture scholar who, in the 1950s, insisted that old imperial Beijing be kept intact, while a new city should be built in its vicinity to accommodate the new capital’s expanding industry, commerce, and government. His vision of Beijing was diametrically opposite to that of Mao, who famously told colleagues that he would like to see industrial chimneys all over the city from the towers of Tiananmen. His Soviet advisors, at that time, were busy planning a public square in the city center in the fashion of the USSR’s Red Square. Liang’s advice was not heeded; worse, he was persecuted in later political movements for those very views.

If establishing Xiong’an is to some extent a belated correction to Mao’s extreme vision of the capital as the symbol of China’s industrial might, it is by no means a return to Jane Jacobs’ vision of an organically grown city. The effort is as deliberate as the meticulously ranked dancers at the opening ceremony of the Beijing Olympics. And attitudes toward the arbitrariness divide the country into bears and bulls.

One Weibo post, shared thousands of time, best encapsulates the bearish side of sentiment. “Is the government able to make some place prosperous simply by wishing it? What you guys have in mind is not Government; it’s God,” the post reads. The comment then offered examples of China’s Northeastern rust belt provinces to show that heavy state involvement does not necessarily bring the desired economic results. Those provinces have enjoyed decades of central government largesse in the form of state-owned industries and the associated public resources. Yet the region’s deepening economic woes since the 1990s, especially in comparison to the vibrant economies of coastal provinces dominated by private businesses, accentuates the limitations of state planning.

A more serious critique came from Chen Gong, a senior think tank researcher. He bluntly called the Xiong’an New Area “overrated,” predicting it will fail to imitate the success of Shenzhen. “Both Shenzhen and Pudong saw a great influx of investment and talent because China was in the process of integrating into the global economy. There was huge momentum at the time of their opening. All the government needed to do was to lift the restrictions and set free those market forces. ” Xiong’an will be different. “Forever gone is the era when government draws a circle, enacts a few policies, and capital automatically flows in to prop up thriving industries.”

China’s economic “new normal” means the absence of untapped reservoirs of capital and resources that, when tapped, used to drive dizzying growth. The arbitrary allocation of “non-capital functions” to Xiong’an is therefore seen as a zero-sum game. “Enterprises moving out of Beijing will bring down the city’s economic output, reduce its tax revenue, cut consumption and sap part of its service sector,” Chen predicted, causing a “major depletion of Beijing’s economy.”

By contrast, urban development observer Li Yan projected confidence in a Chinese-language article in the Financial Times. “North China hasn’t had such strong and clear anticipation of growth for a long time,” Li wrote. “The psychological need for such anticipation overrides any rational calculation.” Li directs readers to look beyond the relocation of “non-capital functions” to the Xiong’an’s stated objective of becoming “a showcase of innovative development.” This means the New Area will likely concentrate high-end, rising industries (as opposed to low-end manufacturing), powered by the inflow of new migrants. It will kick-off a “chemical reaction” that reactivates other economic elements in the North China eco-system. Unlike Shenzhen in the 1980s, this time Xiong’an will enjoy the backing of a central government with “unprecedented finance prowess and administrative resources.” And it will become the “ultimate test” of a developmental model that puts government mobilization and direction of resources at the center.

Weibo user Li Ziyang (no relation to Li Yan), known for his bullish views about China, echoed this faith in China’s government minders. “China has an army of officials and bureaucrats who know the country well, are proactive in their job and can execute competently,” Li wrote. “It is one of the secrets of China’s economic miracle.”

For those optimists, the details of the Xiong’an plan are not as important as its strategic boldness, the enthralling grandeur of setting up a new city from scratch. Some at the online margins have questioned the procedural integrity of the Xiong’an decision. But the fact that a decision of millennial proportion did not go through any public consultation or approval by the National People’s Congress, and was kept under an iron lid up to the moment of its announcement, seems not to have bothered the general public. After all, neither Shenzhen nor Pudong were the product of democratic deliberation.

Against the backdrop of public anticipation and confusion, the Party’s official outlets have continued to dole out information. A Xinhua release from later in April pegged Xiong’an’s long-term population at a projected 2.5 million — only a fraction of Beijing’s current population of over 20 million, and by no means “mega” where China is concerned. That release names Japan’s Tsukuba and Israel’s Haifa as role models for the new city. Both are centers of science and technology brainpower for their respective countries, with Tsukuba is also very much a “planned city.”

The designers of Xiong’an seem determined to deviate from China’s existing playbook for economic growth. But many are pining for another megacity from nowhere, with skyrocketing property values. Whatever happens next will be thrilling to watch.

This article originally appeared on the blog Chublicopinion.com. It is republished here with minor edits and permission from the author.

Image: Getty