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China’s plan to build massive new city near Beijing triggers real estate boom

China’s plans to build a massive new city about 150 km from Beijing triggered a real estate boom, with authorities ordering a sudden freeze on property sales.

world Updated: Apr 04, 2017 19:32 IST
Sutirtho Patranobis
This photo taken on April 3, 2017 shows the office building of Party and Government Affairs of Xiong County in Baoding, north China's Hebei province. China will create a new special economic zone outside Beijing similar to those established in Shenzhen and Shanghai in a bid to boost flagging growth and reduce strain on the capital.
This photo taken on April 3, 2017 shows the office building of Party and Government Affairs of Xiong County in Baoding, north China's Hebei province. China will create a new special economic zone outside Beijing similar to those established in Shenzhen and Shanghai in a bid to boost flagging growth and reduce strain on the capital.(AFP)

Chinese authorities ordered an abrupt freeze on property sales less than 150 km from Beijing after the government announced a plan over the weekend to build a massive new urban settlement in the area to decongest the capital.

Xiongan New Area will be bigger than Beijing when the project is completed. It will initially cover 100 sq km and be expanded to 200 sq km in the mid-term and about 2,000 sq km in the long-term, the official Xinhua news agency reported.

The announcement was made by the State Council, China’s cabinet. “The counties of Anxin, Rongcheng and Xiong would be home to a new district to rival special economic zones like Shenzhen,” a media report said

The move is a “major historic and strategic choice made by the Communist Party of China (CPC) Central Committee with Comrade Xi Jinping as the core”, an official circular announced, describing the decision as “a strategy crucial for a millennium to come”.

“The move will help phase out some non-capital functions from Beijing, explore a new model of optimised development in densely-populated areas, and restructure the urban layout in the Beijing-Tianjin-Hebei region,” the circular said.

This photo taken on April 3, 2017 shows the office of the Party and Government Affairs of Xiong County in Baoding, north China's Hebei province. China will create a new special economic zone outside Beijing similar to those established in Shenzhen and Shanghai to boost flagging growth and reduce the strain on the capital. (AFP)

Besides a flood of online reactions, the announcement triggered a race among real estate developers from neighbouring urban areas such as Tianjin and Beijing, according to the National Business Daily. Property prices shot up overnight.

The newspaper reported authorities in Xiongxian held an urgent meeting and ordered real estate agents and developers to stop selling homes in the area.

The report quoted officials as saying that “the local government has worked overnight to close all outlets that sell homes in Xiongxian and also sent staff members to supervise developers”.

“The new area, which is not directly connected with the capital, Tianjin nor Shijiazhuang, and instead sits at the centre of the triangle formed by the three cities, marks a strategic shift in China's urban construction,” Cao Heping, professor of economics at Peking University, told the Global Times.