China Establishes Landmark Xiong’an New Area

On 1 April 2017, the CPC Central Commission and State Council announced to establish a new national economic zone (Xiong’an New Area) based in north China’s Hebei province.

Located in and around Xiongxian, Rongcheng and Anxin counties to the west of Baoding city in Hebei province, Xiong’an New Area joins the Shenzhen Special Economic Zone and Shanghai Pudong New Area as China’s third central-level economic zone. It initially will comprise 100 square kilometres and eventually encompass 2,000 square kilometres. The region possesses convenient transportation, a moderate geography with rich freshwater resources, a relatively low level of development with abundant room for growth, and other basic conditions for development.

Xiong’an New Area is intended to facilitate the development of a northern economic axis connecting Beijing, Tianjin and Hebei province’s capital city Shijiazhuang with a view toward:

  • Redirecting some of Beijing’s “non-capital functions”.
  • Alleviating congestion and pollution in Beijing and Tianjin.
  • Speeding the growth of a relatively poor section of north China.
  • Creating a new, more environmentally stable development model by attracting high-technology “clusters” and other innovative businesses.

The government will support planning and financing arrangements for major transportation, ecology, water conservancy, energy and public service development projects.

Market Reaction

Paul McKenzie, Partner, Morrison & Foerster, Beijing and Shanghai

“Beijing is abuzz with discussion about the establishment of the Xiong’an New Area. It is viewed by many as likely to have immense historical impact. Certainly, if successful, launch of the Xiong’an New Area will effect dramatic changes on Beijing, easing environmental and social pressure on an urban area that cannot accommodate further growth itself. Meanwhile, in its implementation, Xiong’an New Area represents an epic public infrastructure project that will likely present significant opportunities for foreign investors.”

Action Items

General Counsel for companies in industries such as technology, transportation, energy and environmental protection may wish to work with business colleagues and officials from the Xiong’an New Area to determine if the new economic zone offers significant investment opportunities.

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