Innovative finance policy in new area could help stabilize property market
An innovative fundraising model for construction projects in China's Xiongan New Area and the creative property policies being discussed for the area could become national benchmarks as the country explores a long-term mechanism to stabilize the property market, according to a senior executive of one of China's largest construction contractors.
The new model－integrating investment, construction, operation and fund management－was jointly launched last year by China State Construction Engineering Corporation Ltd (CSCEC) and China Xiongan Construction and Investment Group Co Ltd to build the Citizen Service Center in North China's Hebei province.
"That model is unprecedented in China, based on an idea of the sharing economy that could effectively ally investors with various resource advantages and jointly manage projects during the whole lifecycle," said Zhou Yong, vice-chairman of China Overseas Holdings Ltd, the listed subsidiary of CSCEC.
On Nov 22, 2017, the CSCEC won the bidding for the 100,000-square-meter Citizen Service Center construction project－the so-called first bid of Xiongan New Area.
The project, located in Rongcheng county, is a building complex composed of multiple government service centers, training centers and office buildings, and it will be used for exhibition of the New Area's planning, government services and conferences. The whole project can provide offices for 3,000 people and accommodations for 500 people, according to data provided by the group.
"The construction is going well so far, and it has entered the final decoration stage. We hope it will be the first high-quality, satisfactory project to set the benchmark for the area's development," said Zhou, who is also a member of the 13th Chinese People's Political Consultative Conference.
Zhou, who leads a group that had a total asset value of 579.8 billion yuan as of June 2017, also suggested that the Public-Private Partnership management model being used in Xiongan could help prevent illegal fundraising and increased debt risks.
"Investment of the Citizen Service Center is following the PPP model ... which we can study for a more efficient and fair coordination between the government and social capital," Zhou said.
The entire construction process, including designing and collecting funds, is expected to be complete in only a five-month period. Even during the Spring Festival holiday in February, more than 3,000 workers remained at their posts at the center's construction site.
"High-quality" and "high-speed" can reflect the key principles of building the New Area, according to the political advisor.
"Innovation is also encouraged in the area and I believe some of the existing policies could be replaced by new models, targeting a longterm mechanism for healthy development of the property market."
Possible measures may include encouraging the rental market and speeding up the renovation of shanty towns, while stabilizing housing prices and preventing bubble bursts, experts said.
Some pilot programs could be launched first in Xiongan New Area and then extended to the whole country when the programs have matured, they said.