Xi’s Xodó Town Project Stops Due to Lack of Market Support – 20/05/2021 – Worldwide

A Chinese development project championed by leader Xi Jinping is hampered by cost disputes and the reluctance of businesses to locate in the region, according to local officials and residents.

Xiong’an, located in central Hebei Province, just 130 km from the complex where the Chinese Communist Party command is located in Beijing, was designated as a new priority area by Xi in 2017.

The project is central to the Chinese leader’s vision for a less congested and polluted capital, and hundreds of state-owned enterprises and government agencies have been chosen to locate in Xiong’an.

The idea is that the region will also operate as part of Xi’s legacy, as well as the transformation of Shenzhen, in southern Guangdong province, by Deng Xiaoping (the country’s top ruler of the late 1970 to late 1980s)

Xiong’an, with a population of 1.3 million, is already home to one of the world’s largest train stations by area, which began operating in December. But economically it’s a backward place, full of dirt roads, drab buildings, and stalled work.

During a visit on a recent weekday, only 30 of the more than 2,200 seats in the lobby of Xiong’an Station, which cost more than 30 billion yuan (24.7 billion reais), were occupied.

“Xiong’an is a product of central planning that goes against market principles,” said Zhuang Bo, chief economist for China at London consultancy TS Lombard. “She struggled to take off because the invisible hand [do mercado] has a greater impact than government intervention. “

Projects slated for completion at the end of 2023, when Xi is set to start an unprecedented third term as president, will cost 146 billion yuan (120.6 billion reais). But China Xiong’an Group (CXG), the main investment vehicle for local infrastructure projects, received only 749 million yuan (619 million reais) in long-term loans in the first nine months of Last year.

People close to CXG, controlled by the heavily indebted Hebei provincial government, said the company was reluctant to increase its debt.

The official debt of the Hebei government, excluding loans for local government finance vehicles, was 1.1 trillion yuan (R $ 909 billion) at the end of last year, compared to 615 billion yuan (508 billion billion R $) in 2017.

The cashless provincial government, however, wants the central government to fund much of the construction at a time when the Xi government tries to contain the stimulus measures adopted last year, at the height of the Covid epidemic. 19 in China.

“The result of the battle is to build slower than expected,” said a Xiong’an official who declined to be identified. “There is no guarantee that the CXG will be able to generate enough cash to pay off the debt. Hebei should step in if things go wrong.”

Some residents also complained that Project Xi caused huge increases in local property prices. When the president’s vision was revealed in 2017, speculators from all over China came to Xiong’an to buy property.

In response, local authorities suspended many real estate projects, limiting supply and crippling buyers, who were paying high rents while their homes were delivered.

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

“Thanks to government policy, I spend most of my income on rent and mortgage payments for an incomplete house with no due date,” he said.

Local officials, in turn, blamed the central government for Li’s difficulties, saying it was up to Beijing to decide when to lift the ban. “President Xi said that we cannot start building until the use of every inch of land is planned,” a housing official from Xiong’an told the Financial Times who declined to be. identified.

The building ban also increased fiscal pressures on the CXG and the local government, which depends on the sale of land for most of its revenue – which reached 3.3 billion yuan (R $ 2.7 billion ) in the year 25% less than the target.

Another problem with the local economy, once known for its garment and plastic industries, was the forced closure or relocation of more than 4,000 factories. The polluting industries do not match Xi’s vision of a clean and green Xiong’an, and have had to give way to an anticipated flow of state-owned enterprises and their employees from Beijing. Unemployment has skyrocketed as the factories shut down. Xiong’an created less than 10,000 urban jobs in 2019, against the official target of 40,000.

In a report released last year, Lin Shunli, a professor at Hebei University, said the industrial reorganization had dealt a “blow” to local employment, leading to lower household incomes while young people remain unemployed “for long periods.”.

“We will hardly benefit from the arrival of state-owned enterprises,” said Ye Shanshan, a trader. “They want people who have a university degree, which a few residents have.”

However, many state-owned enterprises and their employees remain reluctant to relocate to Xiong’an, which has no Beijing-level public services.

“It will take many years for Xiong’an to match Beijing in terms of good schools and hospitals,” said an executive of a state-owned company ordered to relocate. “We are concerned about the loss of employees after our move.”

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