China Plans to Create Large Development Zone

China’s government plans to create an economic zone that it hopes will become a center for technology.

Chinese President Xi Jinping recently announced plans for the project. It would turn a huge underdeveloped area southwest of Beijing into a modern and technologically advanced zone.

The Xiongan New Area will be about three times the size of New York City when completed. It is expected to become like Shenzhen -- a modern, high-tech city that acts as a bridge between Hong Kong and mainland China.

Xi said that the zone will create growth for places like Beijing, Tianjin and Hebei.

China’s North has long been less of an economic force and innovator than the south. But now, officials are trying to reshape the capital to create new models of growth.

But critics say state-led plans for development, rather than letting market forces decide, will fail. In fact, soon after the plans for Xiongan were announced, problems quickly began.

Stock prices of companies in the area rose sharply when the plan was announced. But officials halted trading for those stocks for several days last week. When trading was permitted to restart on Monday, the share prices of many companies dropped sharply.

When the plans were announced last month, housing prices in the area rose sharply. Officials then quickly stopped all housing development projects, including home improvements.

State media report the central government has begun to develop a “high-quality master plan” for Xiongan. But people who live in the area, property companies and possible investors and homeowners are not sure what is happening. Some people say that although the plan was announced just recently, there has been uncertainty for months.

One farmer spoke to VOA: "The rumors were already starting to fly last year. “We don’t know what’s going on. At first you couldn’t plant crops and now you can’t build. This is not normal.”

On the internet, some people say they believe the government is trying to control property values so it will not have to pay a lot for home demolitions. It is not clear how long restrictions on property in the area will stay in effect.

Li Jie is managing director of North China for the real estate company Colliers International. Li says, "It seems that the government is extraordinarily determined to apply the ban permanently. In Xiongan, there will be no residential development by private companies and no residential units."

Li says Colliers believes the Xiongan New Area will be different "from the rest of the country, where the real estate industry has an important part in economic growth."

Vice Premier Zhang Gaoli recently said large property development will not be permitted in Xiongan.

It is not clear what officials will do with already finished developments or projects still being built.

A VOA reporter recently visited sales offices of some large developments in the area. All of them had signs that said property sales had been cancelled.

People who live there say the rise of housing prices will make it even more difficult for them to buy a home. Some said they may be forced to move away from the area.

One woman was asked about the new development area.

“After hearing the plan, all I wanted to do is cry. I haven’t been able to sleep or eat for days. I’ve worked half a lifetime and now I have to throw it all away.”

On the internet, many people strongly oppose the plan for the new development zone.

Businessman and blogger Ren Zhiqiang wrote a long commentary that was removed from a Chinese social media website. In the message, he said the market decides what cities are created and where -- not the government.

Ren wrote, “An unwillingness to accept these differences and competition, and instead use administrative power to force the creation of a unified city, will inevitably fail.”

The central government has suggested that some offices could be moved from Beijing to Xiongan. There is talk that schools, universities and non-essential government departments will be moved to the zone. There are also reports that state-owned companies will be forced to move there. But many people say that is not likely to happen.

One Hong Kong-based website said the new zone is an important part of Xi Jinping’s legacy and part of efforts to support his “Chinese Dream.”

The site said if the zone is properly developed, it could reduce the effect of issues such as overpriced property, pollution and a large gap between China’s rich and poor.

I’m Jonathan Evans.

VOA Correspondent Bill Ide reported this story from China. Christopher Jones-Cruise adapted his report for Learning English. George Grow was the editor.

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