By Scott Cendrowski
April 28, 2017

China’s plan to create a brand new city for at least 2.5 million people a couple hours south of Beijing received its first state funding yesterday.

The $19 billion loan from state-owned China Development Bank begins the process of turning farmland in Hebei province into the “green, livable and modern urban area” the government envisions.

The money spent on infrastructure and relocation services for Xiongan may top $290 billion in 15 years, Morgan Stanley predicts, and the new city is expected to receive every penny: President Xi Jinping himself has publicly backed the idea as a way to usher in innovative companies and universities into to the area some 60 miles from Beijing.

The government calls it an area of national significance, a similar designation to previous build-outs of the tech hub Shenzhen and the oft-photographed, neon-skyscraper-dominated Pudong area of Shanghai. After more than a decade, Xiongan will grow to 2,000 square kilometers, the size of Shenzhen, according to state press.

The city is being billed as a solution to China’s urban ills: overcrowding, pollution, and urban sprawl. Better urban design planning will reduce pollution and improve economic output, the government hopes.

Planners are starting from a low bar. Beijing and some of China’s other biggest cities are usually gray, uninspiring sprawling areas, seemingly designed without much care for the people inhabiting them. Residents scoffed when Beijing ranked as one of the world’s most livable cities in a ranking by The Economist Intelligence Unit two years ago.

Those Beijing residents might welcome Xiongan, however, which is expected to ease congestion in the capital city by providing cheaper housing just a 30-minute high-speed train ride away.

Today, Beijing housing ranks as one of the least affordable markets in the world, relative to income. Affordability could rise if Chinese are given an option to live outside the city.

“The most important function of Xiongan New Area is to help phase out functions from Beijing that are not related to the capital, explore a new model of optimized development in densely-populated areas, and restructure the urban layout in the Beijing-Tianjin-Hebei region,” Xi said when he visited the new city area in February.

Officially launched on April 1, Xiongan is now preparing for international bids to help plan and design the city.

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