Plan for business zone near Beijing sets off investor frenzy ABOUT THE REGION
It didn’t take long for news that China would set up an economic zone near Beijing to touch off an investor frenzy.
Within 24 hours of Saturday’s announcement that the government would create the Xiongan area in Hebei province — in the same spirit that Shenzhen and Shanghai’s Pudong was built — hordes of prospective buyers had thronged to the region. Highways were clogged as they came to purchase real estate, with some camping outside property agent offices overnight, according to local media reports. On Sunday, the government banned all property sales in the zone to stem speculation, according to the National Business Daily.
On Monday, shares of Chinese cement, building and port-related stocks surged in Hong Kong amid optimism the decision will spark a flurry of construction activity. The move by President Xi Jinping, which evokes memories of the rise of Shenzhen since it was declared a special economic zone more than three decades ago, is seen as a historic milestone to power China’s growth for a “millennium to come,” the official Xinhua News Agency reported. The new | The new zone is expected to eventually cover about 2,000 sq km | Thenewdistrictwould
initiallycoveranareaof zone is expected to eventually cover about 2,000 square kilometres (772 square miles) and jump-start China’s economic growth.
“This would be one of the centrepieces of a high-level development plan for the Beijing-Tianjin-Hebei region,” about100sqkm | The development of the region will create an urban district in Hebei said Bill Bowler, a sales trader at Forsyth Barr Asia in Hong Kong. “I would liken it to the development of a brand new New York City, with Beijing as Washington. The regional plan has been termed a ‘1000-year project’; the first of its kind since Mao.”
The development of the region will create an urban district in Hebei that will help move some of the non-capital functions away from Beijing, Xinhua reported on Saturday. The new district would initially cover an area of about 100 square kilometres, and authorities want to turn the region into a new growth centre as China’s economy slows, according to the news agency.
Shares of cement company BBMG surged as much as 46 per cent in its biggest gain since July 2009. Tianjin Port Development Holdings rallied 14 per cent and China National Building Material advanced seven per cent. Mainland Chinese markets are closed for a public holiday and reopen on Wednesday.
“China’s new economic zone plan makes investors feel more optimistic about China’s economic outlook,” Castor Pang, head of research at Core Pacific-Yamaichi in Hong Kong, said by phone. “The investment plan could support demand for cement, steel and construction-related materials in the next ten years in China.”
Investor euphoria surrounding the plan may cause a headache for authorities, who have vowed to crack down on speculative buying frenzies spanning stocks to real estate.
BLOOMBERG