China's new city project causes a speculative frenzy

Xiongan New Area is Xi Jinping's attempt to surpass the legacy of Deng Xiaoping
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BEIJING -- China is thinking big, again. The country has launched a national project to build a new city on the outskirts of Beijing, which has aroused a frenzy of speculation in the region. 
The creation of the Xiongan New Area in a rural village in Hebei Province, located some 100km southwest of Beijing, is aimed at easing overconcentration in the capital city. With a major financial institution estimating that the project will require an investment of 2 trillion yuan ($290 billion), speculative property investment is already well underway.
But while President Xi Jinping is eager to make the project one of his greatest achievements, it is possible that the historic plan could end up denting his legacy. 
Mother of all developments
Zhang Ming, a company employee in Beijing, was in Xiongxian, Hebei, returning home on April 2 when he encountered a huge traffic jam. He was surprised at all the cars, especially those with license plates from other provinces, such as Shanxi, Shandong and Yunnan.
The congestion was triggered by the state-run China Central Television's headline report at 7 p.m. on April 1 about Xi's "millenarian" plan to have the government build a city straddling Xiongxian, Anxin and Rongcheng.
The project will be undertaken in an agrarian region that is covered with fields of wheat and other agriculture. But with a new city coming in, real estate prices will undoubtedly soar, which has lured speculative investment to the region. Housing prices have reportedly jumped to 20,000 yuan to 30,000 yuan per square meter from 5,000 yuan to 6,000 yuan.
Morgan Stanley estimates that the project will involve a 15-year investment of 2 trillion yuan and push up China's gross domestic product by 0.13 percentage points to 0.19 points. Planned investment is estimated to be seven times more than the amount spent on the 2008 Beijing Olympic Games. ag
Stock prices of local real estate agencies, cement makers in Beijing and other companies expected to benefit from the project have risen sharply.
When we visited Xiongxian in late April, all of the local realty agents were closed because of the government's ban on property trading. Violators have been arrested.
By;Worldcoinsmoney.blogspot.com
China.

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