Economy

Three in one

More talk that Beijing will integrate further with Tianjin and Hebei

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The Jing-Jin-Ji jigsaw

As early as 1981 China’s planning agency the State Development Planning Commission (a predecessor of the NDRC) made the integration of Beijing, Tianjin and Tangshan into one of its top priorities. Labelled the “No.1 Project”, the emergence of a new megalopolis was seen as a way of propelling northern China’s economy forward.

But the No.1 Project never took off as its authors hoped. Instead it ran into stiff local resistance as the three cities were always competing with each other. Beijing in particular cornered resources thanks to its prestige as the capital city, China News Weekly has noted.

“A Tianjin mayor once wrote to the central government, warning that if Beijing keeps sucking up everything from its neighbours, Tianjin would be reduced to the grassless shade under a big tree,” the magazine reports. “That is why the rift between Beijing and Tianjin has widened over the years.”

But the idea of further integration has been revived. In fact, the plan has been broadened to include Hebei province to create the so-called Jing-Jin-Ji region (Jing for Beijing, Jin for Tianjin, and Ji as the ancient name for Hebei).

“Thirty five years after China’s reformist mastermind Deng Xiaoping identified several coastal cities in southern China as economic front lines, President Xi Jinping produced his vision for another integrated sphere in the north,” China Daily reported last year, after the Party’s leading group for overall reform made Jing-Jin-Ji a top priority.

“This is Xi Jinping’s own No.1 Project, and a national strategy to drive economic growth,” Singtao Daily opined.

The initiative gathered further momentum late last month when a working team identified the future positioning of the three localities. Beijing will remain a national political and cultural centre; Tianjin is to develop further as a manufacturing base and shipping hub; while Hebei is expected to provide a focal point for logistics and ­– among other roles – be a “pilot zone for industrial upgrades”.

Why the renewed urgency? One timely trigger came in the form of the deadly explosion in Tianjin’s port last month, which has claimed 160 lives. The devastating blasts will likely weaken some of the – formerly stiff – local bureaucratic resistance to the integration (see WiC292).

The Beijing city government, meanwhile, is under greater pressure to disperse more of its political and economic functions. According to Xinhua, the root of the problem in Beijing is “big city disease”, i.e. overpopulation, soaring home prices, air pollution and traffic jams. The integration is being portrayed as a way of alleviating some of these pressures, with the publication of a timetable on how to get things done for the first time.

By 2017 “obvious progress” is required in relocating Beijing’s “noncore functions” such as the headquarters of the healthcare and education bureaucracies, Xinhua said. “Beijing’s permanent population is expected to be controlled at around 23 million by 2020, and the pressure of congestion and air pollution would be eased,” it reported.

During several visits to the Jing-Jin-Ji region Xi Jinping has reiterated the need to reduce the barriers that block the flow of capital, technology and labour across the region. So analysts are also claiming to see significance in the news that China Unicom has eliminated mobile phone roaming charges across the Jing-Jin-Ji zone last month. The speculation is that China Mobile will soon follow.

A bigger challenge is how to extend the higher standards of social welfare enjoyed in Beijing across the region as a whole (a Beijing household registration permit, or hukou, is one of the most sought-after). This is going to require much more spending to raise the level of public services in Tianjin, and particularly in the less developed province of Hebei.

“As China’s economy slows, the programme is designed to add momentum to growth,” Xinhua explained last month. Major projects are being discussed, such as the new Rmb80 billion ($12.5 billion) airport to be built in southern Beijing on the border with Hebei. Total spending on Jing-Jin-Ji’s transport-related infrastructure could reach Rmb1.5 trillion over six years.

The improvements in infrastructure and social security are set to make the areas surrounding Beijing more attractive. As such astute investors have been snapping up residential properties in cities such as Shijiazhuang (the provincial capital of Hebei), Baoding (halfway between Beijing and Shijiazhuang), Tongzhou (the eastern gateway to the Chinese capital) and Zhangjiakou (the co-host city with Beijing for the 2022 Winter Olympics).

Regular WiC readers may remember reports in March last year that Baoding would become an “auxiliary capital” to absorb some of Beijing’s government departments (see WiC231). “Last year Baoding’s house prices were running up like they were on steroids,” the CBN newspaper reported last month.

Similar speculative activity continues. In recent months rumours have been rife that Tongzhou would become a “sub-administrative centre” for local governments in Jing-Jin-Ji. In mid-August that led the Beijing government to impose homebuying curbs in the Tongzhou district. Under the new rules, buyers must have a Beijing hukou, or prove they’ve paid more than five years of taxes or social insurance in Tongzhou.

The property market in Shijiazhuang has been less affected by speculation. Yet home prices there have still climbed more than 25% since early 2013. Nearly 4 million square metres of residential property has been sold in the first half of this year, or 40% more than the 2014 figure.

Developers with interests in the region have become more popular with investors too. Longjitaihe, which has 15% market share in Baoding, went public in Hong Kong in May via a backdoor listing. It said it plans to invest Rmb100 billion in the Jing-Jin-Ji area in the next five years, which is twice as much as its 2014 revenue (see Who’s Hu). Zhangjiakou also looks certain to be getting a facelift. Property prices in Chongli, a poverty-stricken county in the city, jumped 60% in just a few weeks after Zhangjiakou won the right to co-host the 2022 Winter Olympics with Beijing. “Zhangjiakou will become part of the one-hour economic circle of the Chinese capital [a term for the surrounding area via which people can get to central Beijing by any means of transport],” China Economic Weekly suggests, pointing to a new high-speed railway linking Zhangjiakou with Beijing that is expected to be complete by 2019.

There is another incentive for the current leadership to make the No.1 Project work. “The 2022 Winter Olympics will provide the stage for Xi Jinping to announce the achievement of his governance to the world,” the Hong Kong Economic Journal says. “Just like Hu Jintao did in the 2008 Olympics.”


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