Posts Tagged ‘Chinesium’

“Beijing Mini-Me” Xiongan Is China’s Largest “Rotten Tail” Project

Sunday, January 22nd, 2023

Due to issues of politics, congestion, or just plain corruption, nations get the bright idea to build brand new capital cities far away from existing urban areas. Sometimes it works out (as with Washington D.C.), and sometimes it doesn’t. China’s Xi Jinping is trying something different with Xiongan, which is being built not so much a replacement to Beijing but as sort of “mini-me” Beijing to relieve overcrowding by offloading functions to the new built-from-scratch city in Hebei* province.

About 60 miles south of the center of Beijing, a new city is being built as a showcase of high-tech ecologically friendly development. Its massive high-speed rail station and “city brain” data center have been heralded by Chinese state media as evidence of the speed and superiority of China’s growth model—not least because the city is a “signature initiative” of Chinese President Xi Jinping.

Commies (and their American fans) do love their high speed rail projects. Never mind that high speed rail in China has mostly been a trillion dollar, money losing sinkhole.

Xiongan New Area is also a test for whether China can boost domestic innovation and climb into the ranks of advanced nations in the face of slowing economic growth and efforts by the United States and others to restrict its access to advanced technology.

Xiongan offers a window into what Xi’s vision of state-led innovation looks like on the ground. Xi has called the city his “personal initiative” and a qiannian daji, or “thousand-year plan of national significance.”

You know who else had a thousand year plan?

Sorry, I just can’t resist a good Hitler meme when you pitch a slow ball right over the center of the plate…

The plan for Xiongan, which was formally unveiled in 2017 to relieve pressure on Beijing and promote the “coordinated regional development” of the Beijing-Tianjin-Hebei region, has faced financial struggles due to the huge investment costs—even more of a problem given China’s mounting real estate crisis. Overall, the new area encompasses about 650 square miles, with a planned population of around 3 million; currently, the three counties comprising the zone have around 1.4 million long-term residents. As of September 2022, 400 billion yuan (about $57 billion) in completed investment had been reported in the city overall.

While Xi has stacked the new Politburo Standing Committee with officials loyal to him, he has also elevated those with strong science and engineering backgrounds. In his speech at the 20th Party Congress last October, Xi declared that “innovation will remain at the heart of China’s modernization drive” and that China has “worked hard to promote high-quality development and pushed to foster a new pattern of development.” Nevertheless, a confluence of factors including COVID-19 lockdowns and trade tensions is contributing to overall slower growth in China.

In Xi’s vision, however, party control is not a hindrance to innovation. Rather, Xi’s vision of innovation is one in which the state and party play a leading role. Xi has led a crackdown on private technology firms such as Alibaba but has also promoted policies, such as his Made in China 2025, that aim to boost research-and-development spending and subsidies to give Chinese firms competitive advantages in industries including biotechnology, robotics, artificial intelligence, and semiconductors.

We know from experience that this approach almost never works, because the profit motive of capitalism is always a superior discovery mechanism for innovation than top-down bureaucratic mandates. We know that the state-led approach has already been a colossal failure for semiconductors even before the sanctions came down, and it’s a good bet that it’s been just as colossal a failure in all the other areas mentioned.

Xi’s policies favor “hard tech” over software-based platform app companies. The first party secretary of Xiongan was Chen Gang, who oversaw Beijing’s Zhongguancun high-tech park before being transferred to Guizhou, where under Xi ally Chen Miner he helped turn the southwestern province into a center of big data and cloud computing.

The approach to innovation in Xiongan involves embedding technology within the fabric of the city as well as innovation processes within the party-state. Xiongan Group was created as the investment vehicle for the area’s overall development, under the control of Hebei province but backed partially by loans from China Development Bank. The first central state-owned enterprises to begin construction of offices in the new area were China Satellite Communications Co., the energy giant China Huaneng Group, and Sinochem Holdings. Others now include the big three telecoms and China State Grid, as well as China Mineral Resources Group, a conglomerate set up last year to centralize China’s coal mining industry. These state-owned enterprises could use Xiongan as a test bed for new technologies. Research institutes and satellite branches of several Beijing universities are planning to open in the area around 2025. The relocation of these major units and their thousands of employees will determine how quickly Xiongan’s development proceeds.

Even as China’s economy has slowed during COVID-19 lockdowns and the global downturn, construction of the first phase of Xiongan has marched on: A huge high-speed rail station to connect the city with Beijing opened in 2020, followed by residential slabs, massive underground utility corridors, and the city brain data center, which will serve as the nerve center of the city’s digital systems. The first section, Rongdong, has been mostly completed, with housing for 170,000 people. Media reports of new schools opening show the effort to build high-quality public amenities to attract residents to the city: Branches of Beijing institutions such as Shijia Primary School and Tsinghua University High School are among the new educational institutions being built in Xiongan.

The Foreign Policy piece is OK as a sort of sanitized, high level overview, but lacks several key words (“shoddy,” “rotten,” “unsafe,” “tofu dregs,” etc.) that reflect the grittier reality of Xi Jinping’s dream:

Takeaways:

  • “This is arguably the world’s biggest rotten tail project.”
  • “The project, which was billed as a Millennium Project and a major national event, fell apart after only five years.”
  • “According to the official website of Xiongan New Area, in 2021 the area arranged more than 230 key projects with a planned investment of more than 200 billion RMB. In 2022, 232 key projects were arranged with an investment of another 200 billion RMB and the cumulative total investment has exceeded 700 billion RMB, i.e. nearly 100 billion US dollars.”
  • Add area rail and road infrastructure investments and the total rises to $150 billion.
  • “Located 105 kilometers from both Beijing and Tianjin, the new area is positioned to decongest Beijing’s non-capital functions and will host administrative and institutional units, corporate head offices financial institutions, universities, research institutes and other organizations evacuated from Beijing.” I bet workers who have already gone through the expensive and difficult process of buying their own condos in Beijing will just love being forced to move an hour away.
  • “The initial planning area is about 100 square kilometers, with plans to slowly expand to an eventual area of about 2,000 square kilometers.” 2,000 square kilometers works out to about 772 square miles, or larger than Houston, one of America’s most sprawling cities.
  • “Average folks have wondered why did the central government put this new area…in a sparsely populated and heavily polluted poor rural area.”
  • The idea seems to be to bring Beijing, Tianjin and Xiongan into a single economic circle with a population of 130 million.
  • Deng Xiaoping, Jiang Zemin, and Hu Jintao each decreed creation of their own special areas, and Xi is following in their footsteps.
  • After the new area was announced, “real estate speculators from all over the country flocked overnight. The local property price soared from 4 000 RMB per square meter to 40,000 RMB, catching up with the first tier cities such as Beijing and Shanghai.”
  • There was an explosion of construction, but then it stopped.
  • “For more than five years, the large-scale construction of the Xiongan New Area didn’t move. The streets were empty, and people from outside had left one after another.”
  • A high speed rail station said to be the largest in Asia the size of “66 soccer stadiums” has only one train a day.
  • “In August 2021, the CCP issued a regulation that downgraded Xiongan to a regional level jurisdiction.” So instead of being it’s own special area, it’s now run by Hebei province, which means “this ‘Millennium Project’ is no longer possible, and the central government has simply dumped this hot potato on the local government.”
  • Official use words like “expedite, start construction, registering land, basically confirmed, etc didn’t explain any more specific progress. This actually allowed the public to read its true meaning, that is there is no substantial progress.”
  • The same pagoda seems to have been constructed several times.
  • “No one wants to go there at all. Even if you force them out of Beijing, they still don’t want to go there. There are no actions from the universities either.”
  • Chinese people think the area has bad “Feng Shui,” and it’s in a low-lying area near a lake that used to be flooded. The local lake and river also have very poor water quality. “However, the [water] treatment project hasn’t yet been completed.”
  • “Xiongan New Area is like building a mansion in a garbage dump, and people don’t want to live there.”
  • “More than five years later, no decent state-owned enterprises have really moved to Xiongan.”
  • “Given China’s objection to objective reality, the only way to make people move to Xiongan is by force. This is what happened in 2017, when the Beijing government forcibly evicted the so-called low-end population and people took to the streets in protest.”
  • Shenzhen New Area benefited from China’s opening, foreign investment and proximity to Hong Kong. “The dysfunctional mechanism of the CCP which had suppressed economic momentum for decades was released at the moment when the country opened its doors, so that Shenzhen could rise with the momentum.”
  • By contrast, Xiongan suffers from global economic headwinds and local finances are “very poor.”
  • Banks poured money into the area, accompanied by corruption. Natives forced out of their homes got low compensation and the new homes were shoddy. Many still haven’t found new homes.
  • “Videos provided by local residents show that the most common problems with homes are water leaks cracked exterior walls and sinking floors in some homes water leaked all over the floor.” A video shows a stairway turning into a waterfall during heavy rain.

    • It’s hard to find on Google maps, but I think this spot shows the same cookie cutter buildings seen in the video.

    Ghost city, tofu dregs, rotten tail; parts of Xiongan seem to check all three boxes.

    *Note: Hebei Province is completely different from Hubei Province further south…

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    Posted in Communism, Economics, Foreign Policy | 9 Comments »

    This Is Your City On Chinese Construction Standards

    Sunday, September 18th, 2022

    I talked about buildings made of Chinesium and rotten tail buildings, upon which construction stops but upon which mortgage owners are still expected to make payments.

    Shoddy Chinese construction practices don’t stop there. This week an entire Chinese residential skyscraper went up in flames:

    Fires are hardly unknown among American skyscrapers, but usually they occur in older buildings, not ones built this century, as modern construction practices like firewalls and sprinkler systems generally prevent fires from spreading from floor to floor. The Lotus Garden China Telecom building in Changsha was finished in 2000.

    Buildings made from subpar constriction materials in China are know as “Tofu Dregs” buildings, as though they were built out of tofu:

    About 6:19 in you can see a concrete crossbeam mostly filled with sand.

    Shoddy construction practices extend to buildings, roads, bridges, flood walls and other infrastructure. It’s hard to do quality work when cutting corners seems to be your national ethos…

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    Posted in Communism, Foreign Policy, video | 13 Comments »

    This Is Your Skyscraper On Chinesium

    Wednesday, May 19th, 2021

    Only recently did I learn the word Chinesium, a much needed neologism describing the crappy, subpar metal that cut-rate Chinese manufacturers build their products out of.

    So what happens when you build skyscrapers out of Chinesium? This happens:

    Engineers were inspecting a skyscraper in southern China on Wednesday, a day after it triggered widespread panic when it suddenly began shaking, as people took to social media to ask if shoddy construction may have been to blame.

    Shoddy construction? In China?

    The 1,000-foot SEG Plaza in the southern city of Shenzhen near Hong Kong began swaying in the early afternoon on Tuesday, prompting people inside and those on the streets below to flee.

    Emergency management officials quickly ruled out an earthquake as the cause of the wobble in the tech hub’s Futian district.

    Officials said no further movement had been detected and experts found “no safety abnormalities in the main structure and surrounding environment of the building.”

    The building had stopped shaking by the time people were evacuated, state media reported, and the plaza remained sealed off.

    Building collapses are not rare in China, where lax construction standards and breakneck urbanization over recent decades has led to buildings being thrown up in haste.

    You don’t say. It’s cut corners all the way down.

    Poor construction standards are often linked to corruption among local officials, most recently after the collapse of a quarantine hotel in southern China last year.

    As opposed to that corruption among national officials reporters aren’t supposed to mention.

    Completed in 2000, the tower is home to a major electronics market as well as various offices in the central business district of Shenzhen, a sprawling metropolis of more than 13 million people.

    The building is named after the semiconductor and electronics manufacturer Shenzhen Electronics Group, whose offices are based in the complex.

    It is the 18th tallest tower in Shenzhen, according to the Council on Tall Buildings and Urban Habitat skyscraper database.

    I’d never heard of Shenzhen Electronics Group, AKA Shenzhen Fine Made Electronics Group Company Ltd., which doesn’t necessarily mean anything. There are lots of fabless semiconductor manufacturers in various vertical markets I’ve never heard of. Bloomberg says they have 899 employees. So why do they have a website that would have looked ancient even in 2005?

    Hopefully their semiconductors are better constructed than the building they work in.

    Chinese authorities last year banned the construction of skyscrapers taller than 500 meters (1,640 feet), adding to height restrictions already enforced in some other cities such as Beijing.

    Sounds like Chinesium may be a widespread problem in China…

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    Posted in Communism, Foreign Policy, Waste and Fraud | 3 Comments »