Proposed modern economic hub makes progress; but change rattles some local firms

It's one year since the nation announced its plan to develop Xiongan New Area into a demonstration hub for innovative development - and local small-sized companies, which are often major polluters, are quickening up the pace of going green, in order to meet strict environmental standards.

On April 1 last year, when Liu Jianhong, president of Xueruisha Feather and Down Product Co, which makes winter-wear like down jackets, heard about the news about Xiongan New Area, he had no idea if the plan had anything to do with his company.

 

The company is located in Dazhangzhuang village, Anxin county, Baoding, which is a less developed region in the central part of Hebei province.

He got some initial idea of what the region would be like from news.

According to an earlier report by Xinhua News Agency, Xiongan New Area would have a global perspective and conform to international standard, making it a national model for high-quality development.

Located around 100 kilometers southwest of Beijing, the new area will initially cover 100 square km and later cover Xiongxian, Rongcheng and Anxin counties in Hebei province, eventually taking up 2,000 square km.

Liu found his company was located at the very center of Xiongan New Area. "It was something like hitting a jackpot," he said. "Something big is going to happen here, bringing new opportunities."

He thought influx of more new residents into the region might increase sales of his firm, but later found that an immediate challenge ahead was to adapt to stricter environmental standards. The central government had put protection for the local ecological system high on its agenda.

For the past several decades, the down and feather industry has been pivotal to local economic growth. Local manufacturers of down clothing could easily get raw materials: for example, the soft layer of duck feathers was sourced from the nearby wetland Baiyangdian, a region that is home to more than 140 lakes.

Villagers either started business at home, worked for local factories, or set up small firms to produce down products. But sewage generated in the process was dumped directly into the wetland, damaging the ecological system.

There were 68 small-sized companies and family-owned workshops in the village, but half of them had to shut because they failed to meet the new environmental standards by the end of last year.

The remaining 34 factories were asked to cut production time by half to reduce pollution, mainly sewage flowing into Baiyangdian lakes.

"Local governments have tightened up regulation over environmental protection since last year. Officials conducted random inspections and no one dared to restart factories that had to shutter," said Chen Yue, a villager who has closed his family-owned down production workshop last year.

"Any company that failed to meet the environmental standards or failed to get license for operations had to shut down. There are no other options. The low-end manufacturing sector won't be allowed to continue."

It will not be an easy task for local people to find a new economic driver in the short run, experts said, as the whole province has long relied on resource-dependent industries, falling behind other comparable regions.

Official data showed in 2017, the tertiary sector accounted for 41.7 percent of the total economic output in Hebei province, around 10 percentage points lower than the national average.

The indicator was way lower than that of Tianjin and Beijing.

"Moving away from traditional highly polluted industries will be a painful process for enterprises, and yet it is an irreversible trend," said Chen Jian, vice-president of the China Society of Economic Reform.

Liu's firm is one of the remaining businesses that took timely steps to remake themselves so as not to violate the environmental standards and thus stand a better chance to stay competitive in the new situation.

He moved production lines of all products to another base in Linyi, Shandong, that he established in 2010.

The relocation would also help avoid the rising labor costs in Xiongan, which have almost doubled since last year, Liu said.

In the future, he plans to renovate the factory and turn it into a hotel for young talents seeking work here.

Part of the space will be turned into a museum as well, to keep alive memories of the Anxin county, he said.

"Large-scale high-tech, clean energy, water treatment and financial industries are encouraged to come to Xiongan during the early stage, and later there will be more measures to encourage entrepreneurs to start their businesses," said a researcher who has participated in drafting the construction plan.

"Entrepreneurs and innovators who are able to help local companies to transform, through the Internet Plus strategy, will be welcomed in particular," he said.