It did not 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 an economic zone the the Xiongan area of Hebei Province — in the same spirit that Shenzhen and Shanghai’s Pudong were built — hordes of prospective buyers had thronged to the region.
Highways were clogged as they came to purchase real estate, with some camping outside real-estate agent offices overnight, according to local media reports.
Photo: Reuters
On Sunday, the government banned all property sales in the zone to stem speculation, the National Business Daily reported.
Shares of Chinese cement, building and port-related stocks surged in Hong Kong yesterday amid optimism the decision would spark a flurry of construction activity.
The move by Chinese President Xi Jinping (習近平), 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,” Xinhua news agency reported.
The zone is expected to eventually cover about 2,000km2 and jump-start China’s economic growth.
“This would be one of the centerpieces of a high-level development plan for the Beijing-Tianjin-Hebei region,” Hong Kong-based Forsyth Barr Asia Ltd sales trader Bill Bowler said. “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 is to create an urban district in Hebei that would 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 100km2 and authorities want to turn the region into a new growth center as China’s economy slows, it said.
“China’s new economic zone plan makes investors feel more optimistic about China’s economic outlook,” Hong Kong-based Core Pacific-Yamaichi head of research Castor Pang (彭偉新) said by telephone. “The investment plan could support demand for cement, steel and construction-related materials in the next 10 years in China.”
Investor euphoria surrounding the plan might cause a headache for the Chinese authorities, who have vowed to crack down on speculative buying frenzies spanning stocks to real estate.
Xi and his policymakers have pledged to curb excess leverage in the financial system, and have committed to enforce prudent and neutral monetary policy to deflate bubbles.
Soaring property prices in cities such as Shenzhen, Beijing and Shanghai have prompted authorities to impose restrictions to cool the market.
The Chinese central bank last month asked banks in Beijing to scrutinize home loans to newly divorced couples and funding sources for borrowers, adding to other curbs to cool the real-estate market.
Beijing has been suffering from pollution and traffic congestion with heavy smog prompting more than 60 cities across China, including the nation’s capital, to issue health alerts this year.
The Beijing City Government plans to spend 18.2 billion yuan (US$2.6 billion) to tackle air pollution this year, Xinhua reported in January.
China is targeting growth of about 6.5 percent “or higher if possible” this year after GDP slowed for a sixth year last year.
Economic and social stability are key priorities before Xi and the Chinese Communist Party gather for a reshuffling of top officials in the fourth quarter.
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