Professor’s opinion: Imperial and inclusive - Is Xiong’an the new model for urbanization with Chinese characteristics?

Xiong’an is the name of China’s currently most breath-taking urban mega-project officially endorsed and promoted from the highest level. It is imperial in its sheer size, political importance and ambition levels. It is inclusive in its embrace of innovative economic, social, ecological and cultural agendas. If successful, it may well be an export product to countries that have joined the Belt and Road Initiative. Ideas emerging from this large-scale experiment are likely to seep into policy-making processes of the Western world too. But what is Xiong’an and how does it work?

A legacy of urban mega-projects

As any of us who have been there know only too well: Beijing, China’s capital, is overloaded. The inhabitant count may well have reached 21 million. Although a spaghetti of highways cuts through the city’s precious tissue and the length of its subway network has no equal in the country, traffic congestion is still among the worst. Beijing has three times the urban space as Shanghai and hosts somewhat lower population numbers (Shanghai has 24 million), yet its liveability is distinctly inferior. Beijingers look up to a clear blue sky only a few days per year and their pale skins consequently rarely feel the burn of the blazing sun, in which incidental case they would almost universally make use of umbrellas to avoid any chance of getting a suntan. The manufacturing and mining industries in and around the nation’s capital have contaminated the air for years, and there is little indication of structural improvement. Only a drastic and lasting intervention can preserve Beijing’s reputation as a global city worthy of an arriving global hegemon and attractive enough for the world’s most talented high-tech workers and glorious high-value service industries.

Mega-projects to handle large-scale urbanization and overpopulation are not new to the Chinese government. When ‘small’ helmsman Deng Xiaoping initiated the opening up and reform movement of China and steered it away from old-style communism which had clearly led to economic disaster and social turmoil, he created conditions for a small town bordering Hong Kong to become the Shenzhen Special Economic Zone. This urbanity of 2000 km2 is now the most innovative and wealthiest municipality in the country, and home to various global techno-powerhouses of which Huawei, Tencent, Vanke, ZTE, China Mobile and BYD are internationally best-known. Any international businessman or woman of some importance has crossed through it at some point of his or her life and marveled at its energy, dynamics and restlessness. A decade later when Jiang Zemin, the not so handsome President who encouraged the entry of large numbers of successful businessmen to China’s Communist Party wanted to counterpoise Shenzhen’s success by promoting his home-base Shanghai, he developed plans to build Pudong (‘East of Pu’) from scratch. It now has a most impressive new skyline and represents a wonderful sight from the Bund, the neo-colonial heart of Puxi (‘West of Pu’), located on the other side of the river Huangpu. Pudong has proven a meritorious successor to Shenzhen: grand, large, tall and an equally impressive economic powerhouse that has put Shanghai even more on the international map than it already was. China’s current President Xi Jinping has obviously not failed to notice the impact these massive investment programs have had on the economic structure of global city regions, nor how these are seen as imperial legacies of great men in China’s history.

Beijing has not benefited from such privileges since 1978, but given its plight the Chinese government would do well to honor it with them in the upcoming third round of urban mega-investments. Times have changed, however. If Deng and Jiang attempted to steer China’s administrative system away from classical communism and towards a form of undemocratic capitalism, Xi has clearly taken strides in the opposite direction. While the former two were driven by what in China is seen as a right-wing agenda (more economic liberalism and potentially less social equality), the latter has adopted a left-wing agenda (more social inclusion and less economic freedom). Given that the Chinese population (especially in its more developed East) is accustomed to higher levels of wealth and technological advancement, the starting position for developing a new and legendary developmental powerhouse near Beijing are not the same as when Shenzhen and Pudong were set in motion.

Xiong’an as the zenith of People Planet Profit ambitions

Xiong’an is a collection of rural communities in Hebei province, located 105 kilometers Southwest of Beijing and 105 kilometers West of Tianjin. Its population of roughly 1 million souls is less prosperous and less educated than the Hebei province average. Unsurprisingly, it is even less advanced than the average of Beijing. Its main economic functions are currently agriculture and low-value manufacturing. And yet this is the surprising location for an experiment in China’s new-type urbanization, aimed at helping move many of Beijing’s non-capital functions to a safer and quieter haven. Xiong’an, named after two of the three counties in which it is situated, has been redefined as a “1,000 Year Plan of National Significance”. It is expected to accomplish the transformation of an economic model in which economic growth is driven by urban competition into one of synergistic development of the whole Beijing-Tianjin-Hebei city cluster with Xiong’an acting as its engine. In order to realize this, Beijing’s non-capital functions including institutions for higher education, health and finance, high-tech companies and corporate headquarters are planned to relocate there. All of the Shenzhen-headquartered corporations mentioned above, as well as Baidu from Beijing and Alibaba from Hangzhou, already have a nominal presence. Making Xiong’an such a world-class innovative metropolitan area and engine for the region would imply the importation of highly talented workers and the establishment of innovative industrial clusters. A nearby brand-new airport and four new stations for high-speed rail, one of which is now the largest railway hub in the world, would also be instrumental in realizing this ambitious goal.

If those economic ambitions were not impressive enough, the President’s agenda includes cultural, ecological and social components too. Local heritage present in the various existing towns and villages should be respected, amplified and utilized to promote cultural creation and tourism in the traditional (Northern) Chinese style. The magnificent Baiyangdian marshland ecosystem which had deteriorated from widespread pollution is to be rehabilitated and 70% of the whole region is to be covered with blue-green space, partly through reforestation and lake expansion. Blending ecological concerns with high-tech development, inhabitants are to adopt green and low-carbon modes of production and consumption lifestyles such as sustainable transport, smart power supply and recycling-based sanitation systems. Finally, housing supply shall be accessible to low-income groups, since most of Xiong'an’s newly built houses will be so-called ‘shared property’ housing: the government and buyers will jointly finance housing construction. When private (partial) homeowners sell their property, the government is entitled to buy it back and the buyers can only monetize a small increase in the value of their own assets. This prevents a rapid rise in housing prices through market speculation and other forms of private capital accumulation. Moreover, for newcomers in Xiong’an wishing to buy homes, a multi-dimensional social credit system is put in place measuring an individual’s personal score with legal compliance, moral character, contribution to society, public service activities, and green lifestyle behavior as key indicators. Residents with higher scores get priority in obtaining a variety of social services, including housing.

Early beginnings of a long march

When on 1 April 2017 it was announced by the State Council (China’s national government) and the Central Committee of China’s Communist Party that the Xiong’an New Area was the new national project where all this would happen, a large number of speculants poured in resulting in sharp increases of real estate prices overnight. Consequently, on 2 April, the county governments implemented an emergency order indicating that both formal and informal real estate transactions were immediately suspended. From June on, a broader “five freezes” policy entered into force: new plans, changes in land ownership, citizen registration, real estate transactions and construction activities were all banned indefinitely. From May 2019 on, compensation was provided to people whose dwellings were demolished and the construction of small houses in personal ownership could be resumed, but much of the Five Freezes policy remains firmly in place.

Other important steps towards realizing Xiong’an’s ideals have also been taken. Since 1 April 2017 nearly 10,000 energy-intensive enterprises, mainly in shoe-making and non-ferrous metal recycling in the area have been shut to reduce environmental pressure. It is hoped that the now redundant ex-laborers can continue their work in upgraded high-tech and service industries through vocational training programs, but given their lack of connection with educational needs in the modern labor market, the lack of growth in remaining ‘old’ enterprises and the expropriation of agricultural land, prospects for lowly-skilled farmers and factory workers to find their way in the region look rather grim. Moreover, the environmental quality of Baiyangdian has improved dramatically. 216 km2 extra forest has been planted and artists from China and around the world have contributed artwork thus giving a major boost to local cultural creative production.

An unpaved road for the old and new

Having extremely high ambitions such as these is far from new in China. Its recent history is replete with astounding achievements in urbanization and industrial development and this mega-project is unlikely to become an exception to that rule. What does make its goal more complex is the value attached to issues of ecological preservation and social inclusion. During our visit to the area, it dawned on us that these lofty words were more than hollow rhetoric: President Xi and his team mean business when they speak and write about Xiong’an. Life for its future inhabitants is truly meant to be simpler and more low-carbon than much of the Chinese population, used to growing wealth, larger and more expensive homes and better cars. Many of the emerging dwellings are simple and small apartments. Accessibility by road is restricted to electric vehicles operated by the government and fossil fuel-dependent vehicles are banned in the new town. Shiny commercial facilities such as fancy shops and entertainment facilities that materialistic young urban professionals might be looking out for are few and far between. All workers can do is work, as we should be able to tell from their name. The existing land-finance driven model of urbanization where municipalities use land expropriated at low prices from rural communities and sell its usage rights at high prices to developers are abolished. Generating half or more of their revenue from land is no longer possible for municipal governments. This has been provisionally replaced with a practice where current inhabitants become shareholders and participants in the new urban development, effectively making them stakeholders. Although this new model has clear merits in that it is far more inclusive for existing low-income groups and less reliant on capital accumulation from land, it offers very different things than many expect. A big challenge therefore is how to deal with the expectations of ‘oldcomers’ who had hoped to sell their properties at high prices but are now stuck with them with no opportunity to sell and cash out. Many of them also fear for their labor opportunities and monthly income once the economic structure of the area has changed. Jobs for which they meet the educational requirements will have evaporated and retraining is difficult. Prices of various products and services that have not been frozen by government intervention have in fact risen sharply and made life for the existing population increasingly expensive. The newcomers on the other hand, who are expected to represent the other half of the 2 million Xiong’an population, will have radically different qualifications, earning and spending potentials and lifestyles. They will probably operate in stark contrast to and in segregation from the original rural population. Relocating prestigious institutes, agencies and companies to Xiong‘an is likely to drive substantial numbers of talented employees to the area, but they will compare luxury-life in overcrowded, urbanized and ‘hip’ Beijing with a modest high-tech but low-carbon existence in a frugal new town surrounded by a flat and swampy countryside. In other words, it will take some social and administrative pressure to fill these professional vacancies. But in China, stranger things have happened: most new towns once decried as empty or boring ghost towns have eventually been filled with residents after universities, agencies, state-owned enterprises and other organizations under government control saw themselves outplaced there. If mega-projects are too big to fail, public authorities will certainly leverage their power resources to push through that first step. Once that has occurred, enough commercial and non-commercial activity has taken off to let the rest follow in its wake.

From local blueprint to global footprint?

Nonetheless, the challenges in this case are enormous. Xiong’an is performing the role of pioneer and prime example of new-type urbanization to the nation and the world: it is expected to be state-of-the-art but low-carbon, professional yet simple, naturally blue and green yet at least partly artificially built from scratch, and socially inclusive yet having to handle deep economic and cultural cleavages between newcomers and oldcomers. Last but not least, it faces the challenge of teaching initially a regional 2 million and later on a national 1,400 million-strong population to once more embrace the values of frugal and egalitarian communism where it had just learned to savor those of exuberant and materialist capitalism. Most outside observers may have their reservations about the forced nature of this urban transformation, the limited freedom of expression guiding this process and the utilization of scores in a social credit point system for obtaining access to vital urban services. For most Chinese it is not those, but the possible full turn-around in social, economic and ecological expectations that will prove the hardest to swallow. The left in China has developed a blueprint of its urban legacy at home and potentially for Belt and Road export abroad, but it is clearly still in its experimental phase. To turn it from local blueprint to global footprint, President Xi may have to learn one important lesson from predecessor Deng: he is likely to need his own version of ‘crossing the river by feeling the stones’. Given China’s past dynasties where the imperial and the inclusive were virtually in total contradiction to each other, he has faced himself with a major policy task: turning a thesis and an antithesis into a synthesis. Let this be the ultimate litmus test for his Marxian credentials.



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