Xion­gan’s suc­cess hinges on pru­dence

China Daily (Hong Kong) - - VIEWS -

The on­go­ing CCTV doc­u­men­tary Carry the Re­form Through to the End has be­come a buzz­word among Chi­nese peo­ple, high­light­ing the achieve­ments of the re­forms over the past five years un­der the lead­er­ship of the Com­mu­nist Party of China with Xi Jin­ping as its core.

The mil­len­nium plan to es­tab­lish Xion­gan New Area span­ning Xiongx­ian, Rongcheng and Anxin coun­ties, which was an­nounced on April 1, re­flects Xi’s new think­ing on how to re­lo­cate the non­cap­i­tal func­tions out of Bei­jing and fur­ther in­te­grate the devel­op­ment of Bei­jing, Tian­jin and He­bei prov­ince. And the de­ci­sion to build a Bei­jing-Xion­gan high­speed rail­way just three months af­ter that an­nounce­ment can be re­garded as the first step to fur­ther pro­mote the con­struc­tion of Xion­gan and move non-cap­i­tal func­tions out of Bei­jing.

Un­like Bei­jing’s Tongzhou dis­trict, the cap­i­tal’s ad­min­is­tra­tive sub­cen­ter, Xion­gan is ex­pected to be an “in­no­va­tion high ground” fea­tur­ing smart in­dus­tries, in­stead of just a man­u­fac­tur­ing clus­ter or a real es­tate project.

In other words, what Xion­gan as­pires to fol­low is ei­ther Zhong­guan­cun, a tech­nol­ogy hub for star­tups in Bei­jing, or Shen­zhen, a sym­bol of China’s re­form and open­ing-up, or even the Sil­i­con Val­ley in the United States. Ex­pected to be in­no­va­tion-driven, en­vi­ron­men­tally friendly and a salu­tary res­i­den­tial zone, the new area will be marked by bet­ter city plan­ning, more af­ford­able hous­ing and a so­phis­ti­cated trans­port net­work fa­cil­i­tat­ing the in­te­gra­tion of Bei­jing, Tian­jin and He­bei.

How­ever, the con­struc­tion of Xion­gan New Area hinges on con­sis­tent and huge in­vest­ments that can amount to hun­dreds of bil­lions of yuan per year, which war- rant ex­tra fi­nan­cial as­sis­tance from the cen­tral govern­ment. And since Xion­gan is essen­tially un­der the juris­dic­tion of He­bei’s pro­vin­cial govern­ment, the later will also have to con­trib­ute funds to help de­velop the new area.

But the ques­tion is: Does He­bei have the fi­nan­cial ca­pa­bil­ity to con­trib­ute its share of the funds?

A rou­tine prac­tice for many lo­cal gov­ern­ments that have Xion­gan-like devel­op­ment zones un­der their juris­dic­tion is to start in­fra­struc­ture work by bor­row­ing funds and make prof­its from the sales of land-use rights and/or high prop­erty prices. Au­thor­i­ties have made it clear that the use of land and the prop­erty mar­ket in Xion­gan will be tightly con­trolled. In such a case, en­list­ing the help of pri­vate cap­i­tal would be worth it, al­though it could make sus­tain­able fund­ing a tricky af­fair.

Ex­pand­ing the lo­cal tal­ent pool will not be easy ei­ther. An in­no­va­tion-driven econ­omy re­lies on the con­cen­tra­tion of tal­ents and tech­nolo­gies as much as it does on flex­i­ble man­age­ment. Un­like Shen­zhen, Xion­gan has many ad­min­is­tra­tive strings at­tached to it, which could hold it back in the race for build­ing in­tel­lec­tual prow­ess. Com­peti­tors such as Bei­jing-based Zhong­guan­cun aside, sim­ply re­lo­cat­ing sci­en­tific re­search in­sti­tutes and uni­ver­si­ties to Xion­gan does not guar­an­tee that they will re­tain their in­no­va­tive char­ac­ter.

For Xion­gan-like zones, sus­tain­able devel­op­ment and vi­brant com­mu­ni­ties are a neces- sity. Suc­cess­ful prece­dents sug­gest new devel­op­ment zones are more likely to pros­per af­ter ac­com­mo­dat­ing lo­cal govern­ment or­gans, which would also help them im­prove in­fra­struc­ture, and of­fer more busi­ness op­por­tu­ni­ties and bet­ter trans­porta­tion ser­vices.

Xion­gan, on the other hand, will ab­sorb only some of Bei­jing’s non-cap­i­tal func­tions that carry lit­tle ad­min­is­tra­tive power and, hence, lim­ited po­ten­tial to make the new area pros­per. These ques­tions should be an­swered and la­tent risks as­sessed in ad­vance as the Xion­gan project pro­ceeds. De­signed to serve long-term devel­op­ment goals, Xion­gan needs care­ful plan­ning and proac­tive think­ing to boost re­gional in­te­gra­tion. But then we need pa­tience and pru­dence to sci­en­tif­i­cally ad­vance the con­struc­tion of Xion­gan.

Xion­gan needs care­ful plan­ning and proac­tive think­ing to boost re­gional in­te­gra­tion.

The au­thor is a re­searcher at the Devel­op­ment Re­search Cen­ter of the State Coun­cil.

Xuan Xiaowei

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