The invisible hand puts the handbrake on Xi Jinping’s pet project

According to local officials and residents, a Chinese development project advocated by President Xi Jinping is in trouble due to cost disputes and the company’s unwillingness to move to the area.

Xiong’an City is located in the central part of Hebei Province, only 130 kilometers away from the Beijing Leading Compound of the Communist Party of China. It was designated as a priority “New District” by Xi Jinping in 2017.

The project is critical to the Chinese President’s vision of capital to reduce congestion and pollution, with hundreds of state-owned enterprises and government agencies planning to relocate to Xiongan.

It also aims to Polishing Xi Jinping’s legacyJust like the transformation of Shenzhen in southern Guangdong into the transformation of Deng Xiaoping.

Xiongan City, with a population of 1.3 million, is already one of the largest cities in the world train station Divided by building area, the building began operations in December. But this is economic stagnant water, with dirt roads, monotonous buildings and suspended construction sites everywhere.

In a recent workday visit, only 30 of the more than 2,200 seats in the waiting hall of Xiong’an Station were occupied. The construction cost of these seats exceeded 30 billion yuan (US$4.6 billion).

Zhuang Bo, chief China economist at TS Lombard, a London consulting firm, said: “Xiongan is a product of a central plan that violates market principles.” “It’s difficult to take off because of invisible hands. [of the market] Has a greater impact than government intervention. “

Projects scheduled to be completed before the end of 2023, when Xi is expected to begin construction. Unprecedented third semester As the president, it will cost 146 billion yuan. However, in the first nine months of last year, the long-term loan of China Xiongan Group, the main investment tool for local infrastructure projects, was only 749 million yuan.

People close to CXG said the company is unwilling to increase borrowing.Unpaid government debts of Hebei Province, excluding Local government financing toolsAs of the end of last year, RMB 111 million was higher than RMB 615 billion in 2017.

The provincial government, which is short of funds, hopes that the central government will try Control stimulus It was released at the height of the Covid-19 outbreak in China last year.

A Xiong’an official, who asked not to be named, said: “The result of the battle is that the construction progress is slower than expected.” “There is no guarantee that CXG can generate enough cash flow to repay debt. If things go wrong, Hebei will have to. intervention.”

Some residents also complained that Xi Jinping’s project caused a sharp increase in local real estate prices. When the president’s vision was announced in 2017, Speculator People from all over China came to Xiong’an to buy real estate.

In response, local officials stopped many real estate projects, restricted supply, and tempted home buyers who paid high rents while waiting for their houses to be completed.

Li Yang, a 35-year-old office worker, said that while he waited for the completion of the apartment he bought in 2016, the rent had more than tripled in the past four years.

He said: “Because of government policy, I use most of my income for rent and mortgage loans, and for unfinished and unfinished houses.”

In turn, local officials accused the central government of apologizing for Li Zhaoxing’s plight, saying that Beijing should decide when to lift the ban. An Xiongan housing official who asked not to be named told the Financial Times: “Chairman Xi said that unless there is a clear plan to use every inch of land, we will not be able to start construction.”

The construction ban has also increased financial pressure on CXG and local governments, which rely on land sales for most of their income. Last year, the Xiongan government’s fiscal revenue was 3.3 billion yuan, 25% below the target.

Another obstacle to the local economy, once known for its clothing and plastic industries, was the forced closure or relocation of more than 4,000 factories. The polluting industry is inconsistent with Xi Jinping’s vision of a clean and green Xiong’an, and the expected inflow of state-owned enterprises and their employees from Beijing must be allowed.

As the factory closed, Soaring unemployment rate. Xiongan created fewer than 10,000 urban jobs in 2019, while the official target is 40,000.

In a report published last year, Lin Shunli, a professor at Hebei University, stated that state-led industrial reforms have caused a “major blow” to local employment, resulting in a reduction in household income because young people have been “unemployed” for a long time. “.

A shopkeeper, Ye Shanshan, said: “The arrival of state-owned enterprises will benefit us a lot.” “They want people who have a college degree with few local residents.”

However, many state-owned enterprises and their employees are still reluctant to move to Xiong’an, which lacks the level of public services in Beijing.

A senior executive of a state-owned enterprise has been ordered to resign: “Xiongan wants to catch up with Beijing, and it will take many years to reach a good school and hospital.” “We are worried about the loss of employees after the relocation.”