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REGIONS ASIA-PACIFIC


China’s cities cluster R


THE GOVERNMENT’S URBANISATION PLANS WILL AFFECT FOREIGN BUSINESSES ACROSS MANY SECTORS. SETH O’FARRELL REPORTS


oughly 100km south-west of Beijing, in the centre of Hebei province, the construction of


the purpose-built Xiong’an NewArea is powering ahead. Touted as the first ‘national new


area’ of this century by the Chinese government, it is expected to be a high-tech, green urbandistrict, as the country turns the page on the urban- isation models of the 1980s.


Xiong’an will sit at the heart of the new


Jing-Jin-Ji development, which brings together the capital Beijing, the coastal city Tianjin and thewhole of Hebei province, to house some 100 million people. In its 14th five-year plan, the Chinese gov-


ernment has highlighted its desire to develop an urbanisation policy that is “dense, special- ised, coordinated and fully functional”, in a sign that such urban consolidation is set to accelerate over the next decade. It identifies nearly 20 mega regions, but plans to boost “high-quality development” in the three main ones: Jing-Jin-Ji, the Yangtze River Delta (which comprises Shanghai, Jiangsu and Zhejiang) and the Greater Bay Area (made up of Guangdong, Hong Kong and the Macau Greater Bay Area). Foreigndirect investment (FDI) has piled into


the latter two and Beijing over the past three years.According to fDiMarkets,betweenJanuary 2018andJune2021,Shanghai, Jiangsu, Zhejiang, Guangdong and Beijing ranked as the top desti- nations for greenfield investment projects. With many foreign investors already pre-


sent in these regions, China’s bid for urban con- solidation is far from merely a domestic issue. At different stages of development, each of the three main mega regions represents particular opportunities for foreign businesses operating


TOP 5 DESTINATIONS FOR GREENFIELD INVESTMENT PROJECTS, JANUARY 2018 - JUNE 2021


FDI HAS PILED INTO CHINA’S THREE MAINCITY CLUSTERSOVER THE PAST FEW YEARS


in consumer markets, infrastructure, high-tech innovation and financial services.


Clusters of specialisation Each region will have its own specialisation: ‘modernservices’ in Jing-Jin-Ji, including educa- tion, technology and financial services; green infrastructure in the Yangtze River Delta; and advancedmanufacturing and financial services in the Greater Bay Area. Kyle Freeman, a partner at Dezan, Shira &


Associates, says that foreign investment into the Jing-Jin-Ji area is less prominent at this point as Beijing has only started to develop trade and tax policies over the past year, while policies and incentives in the Greater Bay Area have been developed over a much longer timeframe. Since the establishment of Beijing’s Free


Trade Zone last year, the government has started to develop policies to facilitate modern services, Mr Freeman says. “We have an idea of what they’ll be, but we’re slowly seeing them come up in recent months and expectingmore this year and into next year,” he explains. In July, Huo Xuewen, director of the


Beijing Municipal Bureau of Financial Work, said in a statement that some 60 foreign- funded financial institutions have established themselves in Beijing. Broadly speaking, however, Mr Freeman


says across the different mega regions, foreign investors will be attracted to the consumer potential, not only because of their size but also because of their stratification. With an estimated 600 million people liv-


ing in the three mega regions by 2035, he says, “these regions will not only represent a large consumer base with higher-than-average dis- posable income, but offer differentiated first-, second- and third-tier markets in a densely pop- ulated area”. Zhouchen Mao, Asia-Pacific analyst at AKE


International, expects the investment implica- tions of city clusters to be “huge”, irrespective of tensions between China and theWest. “I think there are going to be a lot of oppor-


tunities [for FDI] in technology, infrastructure, manufacturing, agriculture and energy,” he says, citing a greater demand for food and elec- tricity in these urban areas.


Green infrastructure opportunities In May, French manufacturing company Saint-Gobain, which has been present in China since 1985, opened a new plaster plant in Yangzhou, Jiangsu, to serve the local con- struction industry. Ludovic Weber, chief executive of Asia


Source fDi Markets 66 www.fDiIntelligence.com August/September 2021


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