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HONG KONG (Reuters Breakingviews) - China's next megacity has some merits. The central government will construct an auxiliary capital city out in the sticks, 100 km south of Beijing. Plans to build the Xiongan New Area in a rural corner of Hebei province have fanned speculation in property and stocks, and led state media to make excited comparisons with the Shenzhen Special Economic Zone, a reform pilot which drove economic reform in the 1980s. As a mammoth construction project rather than an experiment in policy liberalisation, this bureaucratic backwater won't do anything of the sort. That doesn't make it a bad idea.
Planned cities, like Brasilia or Canberra, get a bad rep. They are often criticised as architectural playgrounds that ignore the needs of residents. But the case for a secondary government centre in China is strong. Beijing is a polluted traffic jam running low on water. Millions of government and quasi-government workers play a big role clogging its arteries. Planners say they will move "non-capital functions" to Xiongan. That could mean transferring back-office functions with big footprints like payroll. Some state-owned enterprises and semi-official bodies could move too.
There are other potential benefits. A mass of underemployed labour is hovering in the northeastern rust belt above Beijing, and is looking south for work. But officials want to cap the capital's population at 22 million in 2017. Building the new area might lure them away from Beijing with temporary construction work, and keep them there with urban services jobs later.
Getting private companies to move will be trickier. Officials want to make Xiongan a technology centre, but the tech sector needs access to Beijing's prestigious university cluster, and to regulators. Other industries, including state-owned ones, will resist relocation for similar reasons.
Just three years ago Chinese officials claimed the Shanghai Free Trade Zone would be the next Shenzhen SEZ; it wasn't, and neither will Xiongan be. But Brasilia, Canberra and Washington, D.C. have ended up viable for all their top-down planning. China could use one of its own.
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