BEIJING • China will establish a new special economic zone in the heavily polluted province of Hebei to promote integration with the neighbouring cities of Beijing and Tianjin, the government has announced.

The Xiongan New Area will be of the same national significance as the Shenzhen Special Economic Zone, which helped kick-start China's economic reforms in 1980, the official Xinhua news agency said, citing a circular released by the Chinese Cabinet.

The new special economic zone is located around 100km south-west of Beijing, close to the Hebei provincial capital of Shijiazhuang, and will house some of Beijing's relocated "non-capital functions".

Beijing, home to 22 million people, is trying to curb population growth and relocate industries and other non-capital functions to Hebei in the coming years as part of its efforts to curb pollution and congestion.

The removal of non-capital functions from Beijing is part of a greater strategy to integrate the development of Beijing, Tianjin and Hebei for a better economic structure, cleaner environment and improved public services.

With that strategy, the authorities intend to transform the region into a new growth pole as China's economy slows.

The decision to set up the Xiongan New Area is a key stroke in solving urban woes and creating new growth, said a commentary carried by the website of the People's Daily, the flagship newspaper of the Chinese Communist Party.

The move will also explore a new model of optimised development in densely populated areas and restructure the urban layout in the Beijing-Tianjin-Hebei region, according to the circular.

The Xiongan New Area is 100 sq km in area now but will eventually be expanded to 2,000 sq km.

President Xi Jinping had said earlier that priority should be given to developing an area to pool non-capital functions that will be shifted from Beijing. Xiongan New Area is a result of that vision.

The area should prioritise ecological protection, improve people's well-being as well as protect and carry forward Chinese traditional culture, Mr Xi had said.

The Xiongan New Area covers the counties of Xiongxian, Anxin and Rongcheng, and is home to Baiyangdian, one of the largest freshwater wetlands in north China. The combined gross domestic product of the three counties was about 20 billion yuan (S$4 billion) last year, or less than 1 per cent of Beijing's gross domestic product, according to local government data.

The new area has geological advantages, convenient transportation, ample resources and lots of room for development, according to the government circular.

Besides non-government facilities, Xiongan New Area is expected to include markets, schools, research institutions and hospitals, which will be relocated from Beijing.

Xiongan New Area aims to rival the two special economic zones in Shenzhen and Pudong in southern China founded by Mr Xi's predecessors Deng Xiaoping and Jiang Zemin. Shenzhen has grown from a fishing village into a bustling city, while Pudong has turned from a wetland into China's financial hub, the South China Morning Post reported.

Xiongan New Area marks the first time the idea for a new zone came directly from Mr Xi, the Post added. Details are expected in the coming months but there have already been predictions of soaring property prices in the area.

To curb such activities, China is banning new property sales in the counties that form the new special economic zone.

Government officials alerted developers and agents of the halt at emergency meetings yesterday morning in Hebei's Xiongxian and Anxin counties, according to the National Business Daily.

Officials had already been investigating some real-estate sales operations in the region, the report said.

REUTERS, XINHUA