Beijing-Hebei-Tianjin integration to challenge local leaders' power

China is readying an assault on the “fortress economies” of local governments by creating a super region around Beijing, with proposals that sources suggest will be more aggressive than have been publicly revealed.

The plans, expected to be considered by the cabinet on Wednesday, will be the first time standards for customs, tax, pollution and industry have been unified across local government areas, the sources say.

Combining bloated Beijing, the smog black spot of Hebei province and the port city of Tianjin will create a region with a population of 110 million and an economy the size of Indonesia’s in a move that encapsulates President Xi Jinping’s ambition to overhaul the world’s second-largest economy.

By challenging the power of local leaders, Xi wants to produce better allocations of wealth and investment and get an environmental dividend.

Academics involved in the policy discussions said the government wants to improve the “layout” of the region by shifting industries such as car manufacturing and chemicals out of the capital, giving polluted Hebei an incentive to clean up and congested Beijing the breathing space it needs.

The integration will be driven by unified customs regulations, social service provisions, industrial standards and environmental rules across the three local governments, as well as cross-regional markets for labour, resources and investment, researchers and officials involved in drawing up the plans said.