Countless towering cranes dominate the skyline in the Xiongan New Area of northeastern Hebei province, as construction ramps up at ground zero for one of China’s most ambitious projects – building a dream city from scratch.
China has vowed to spend billions on infrastructure projects this year in a bid to boost the nation’s economic recovery and stabilise the job market after the damage caused by the coronavirus pandemic. Xiongan, located about a two-hour drive south of central Beijing, is in the early stage of becoming a new metropolis after President Xi Jinping personally picked the site in April 2017 to form a “city of the future”.
The development is supposed to be innovative, green and resident-friendly – it is designed to accommodate head offices, institutions, schools and even hospitals to be relocated from Beijing to ease the capital’s growing congestion.
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The central government also wants Xiongan to play a pivotal role in accelerating the development of the broader Beijing-Tianjin-Hebei corridor, which is intended to become an economic powerhouse in northern China – similar to the Pearl River Delta in the south near Shenzhen and Hong Kong, and the Yangtze River Delta in the east around Shanghai. Xi toured Xiongan in January 2019 and encouraged state and private companies to redouble their efforts to make it a success.
There is steady work here. We can get paid more than 10,000 yuan (US$1,462) a month. It’s not bad, but it’s hard work
Steel rebar worker
Xiongan is the new zenith of China’s building spree. Unlike many ambitious development plans backed by local authorities, the Xiongan project has been blessed directly by China’s top leadership and showered with central government resources. It is expected to be completed in 2035.
However, questions remain as to whether state planning can mould Xiongan into the “perfect city” that Communist Party leaders envision. As traditional manufacturing businesses – from shoemaking to garment manufacturing and metal recycling – are displaced, Beijing is betting big that they can be effectively replaced with advanced manufacturing and technology. Hebei is known as one of the most polluting provinces in China, and so far there are few high-end value chain facilities in the area surrounding Xiongan.
On the surface, the construction of Xiongan, which is estimated to cover an area of similar size to that of Shenzhen, is generating a lot of jobs, especially for migrant workers in construction. Local media reported that about 100,000 workers would be employed this year in Xiongan.
“We are all from elsewhere,” said a steel rebar worker at Xiongan’s high-speed railway station that is under construction. The worker, in his twenties from Hunan province, did not want to give his name. “There is steady work here. We can get paid more than 10,000 yuan (US$1,462) a month. It’s not bad, but it’s hard work,” he said while playing games on his mobile phone during an afternoon break, still wearing his safety helmet.
The station, expected to start operating by year’s end, is at the Hebei end of a high-speed railway line connecting the new city to Beijing. The railway line itself has a price tag of 33.53 billion yuan (US$4.9 billion) and was approved in 2018 by the National Development and Reform Commission, China’s state planner.
The railway station, the size of 66 football pitches and “the biggest high-speed rail station in Asia”, is one of the many grand projects under construction. During a recent site visit, the air surrounding the station was filled with dust, churned up by trucks driving in and out of the construction site. After a short suspension during the coronavirus outbreak, construction crews are making up for lost time.
A number of workers told the South China Morning Post that work on many of Xiongan’s infrastructure projects now goes on 24 hours a day. “It just doesn’t stop,” said a worker who gave only his surname as Li, at the Rongdong residential construction site.
“[Working conditions] are not that bad. I guess I can put up with it,” said Li, also in his twenties, who was shopping for clothes in the market in front of the construction site where many workers dine and socialise.
The Rongdong residential block will house about 80,000 residents who will be relocated from their old homes in Rongcheng county to the middle of the Xiongan project area. The new flats boast entertainment and leisure facilities, but not all the local residents are happy.
“I am not moving anywhere,” said a shop owner selling children’s clothes in Rongcheng county, who only gave her family name as Tuo. “I don’t know if these buildings are green or not. This is my home. I grew up here.”
About a quarter of Rongcheng’s population of 260,000 residents worked in clothing manufacturing in 2016, according to Chinese data provider Askci.com. However, many local factories, including those in garment processing, have had to shut down because they did not meet new environmental standards, Tuo said.
“It hurts my business, of course,” Tuo said. “Many people here lost jobs; it puts them off shopping.”
The situation is similar in Xiong county, one of the three counties in which Xiongan is being built, and which was once a major powerhouse in manufacturing plastic products. A drive into the county features a number of packaging factories that appear to have been abandoned, with piles of steel pipes occupying large, open spaces.
It’s great to have hi-tech and non-polluted industries, but you still need a full supply chain
As of the end of 2016, there were more than 4,000 upstream and downstream manufacturers of plastic products in Xiong county, with an annual output value of more than 10 billion yuan and employing more than 50,000 people, according to statistics from Askci.com. The plastic industry in Xiong county accounted for 70 per cent of its gross domestic product that year.
Like garment processing, the plastic packaging industry has also fallen out of government favour. According to a three-year industry makeover plan released in 2017 by the Hebei government, 123 factories that were identified as “heavily polluting” were shut down or relocated.
Michael Mittasch, an Australian engineer who used to have an equipment design and production company in Yanjiao, a Hebei city bordering the Tongzhou district of Beijing, said he had to move his factory to Nanjing, Jiangsu province, in 2018 following a clampdown on pollution in Yanjiao.
“In the end, it was nearly impossible to continue to work there,” Mittasch said. “There were a number of factors. One is the people there became more white-collar. They were no longer manufacturing people.
“If there was pollution [on any given day], all industries had to shut down. It just became very difficult [to operate]. We were also told [by the government that] we would never be able to get bigger. I think [in the area] around Beijing they didn’t want manufacturing.
“I can understand why they want that [hi-tech industry]. The problem is, it’s great to have hi-tech and non-polluted industries, but you still need a full supply chain.”
Li Gaosi, an entrepreneur who started his career in power equipment manufacturing, said it was mainly state firms and big private enterprises that could afford to move to Xiongan, citing government policies and problems with resources.
As the chairman of Naisi Technology Investment and a member of the National People’s Congress representing Hebei, Li has set aside 6.5 billion yuan (US$950 million) to invest in the development of an industrial estate in the Hebei city of Baoding, which will be connected to the Xiongan-Beijing railway network.
Li said his investment aimed to lure local companies from elsewhere in Hebei, as well as foreign firms focusing on the digital economy, life sciences, smart applications and high-end services. China’s efforts to develop Xiongan offer an opportunity for Hebei to diversify from the traditional equipment-making and steel industries, Li said.
According to the Hebei government, Chinese tech firms Alibaba, Tencent, Baidu and JD.com, as well as state-owned companies China Telecom and the People’s Insurance Company of China, were among the businesses that had received approvals to set up offices in Xiongan. Alibaba owns the Post.
The new area has also been designated as one of the four places to test China’s new sovereign digital currency, which is still in the works.
Dr James Wang, research director at the Belt and Road Hong Kong Centre and an expert in transport and logistics, said that while infrastructure spending continues to boost employment in China, better transport links do not always attract more people or businesses.
In some other countries, this kind of new capital has failed … From a central government’s point of view, you have to have something to facilitate the potential in the new city
“The central government made [Xiongan] a satellite city of Beijing intentionally from the beginning, which is an ambitious objective to achieve,” Wang said. “In some other countries, this kind of new capital has failed. They planned very well, but eventually not many people move there and stay there … From a central government’s point of view, you have to have something to facilitate the potential in the new city.”
The Chinese government has a strong belief in state planning, both in terms of urban development and in industrial upgrading. For industries that it regards as necessary, it provides generous supportive policies and fiscal subsidies, as it is doing with new semiconductor plants.
But for those businesses that have fallen out of favour, the opposite can be true, even though some low-end manufacturers account for many local jobs.
For foreign manufacturers such as Mittasch, who has been in China for 20 years, now may be the time to pack up and leave.
“We are already starting to plan, to lower our dependence on our [Chinese] manufacturing base,” Mittasch said. “I see it from both sides. We are looked at as a foreign company in China; sometimes our Chinese customers aren’t so happy. And then I also see it when I try to sell outside China, [there is] negative sentiment about Chinese companies.”
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