Shanghai earmarks 10bn yuan for facelift that includes 'mini Hong Kong'
Construction spree part of efforts to create mini-HK in free-trade zone that will include a complex of office blocks and shopping centres
Shanghai has earmarked an initial investment of 10 billion yuan (HK$12.4 billion) for the facelift of Lingang New City, which is connected to the Yangshan deep-water port, as the city seeks to create a mini-Hong Kong amid the development of its free-trade zone.
The construction spree at Lingang represents a renewed effort by Shanghai to build a free-trade zone with substance despite suspicions and criticism surrounding the test bed for economic reform since its launch in September last year.
"There will eventually be a huge amount of investment in Lingang," said a Pudong government official, who asked not to be identified. "City officials want to make sure the free-trade zone will be a success, with a focus on Lingang."
State-owned developer Shanghai Lujiazui Group plans to build a commercial complex of office buildings, entertainment facilities, exhibition halls and shopping centres covering up to 500,000 sq metres in Lingang.
According to the media, city officials envision Lingang as an upgraded version of Lujiazui, which is at the heart of Pudong and is dubbed as China's Wall Street.
Beijing endorsed the blueprint for the mainland's first free-trade zone in Pudong last year, hoping to create an investment magnet to attract foreign capital and talent.
The 28.78 sq km zone was designed to conduct further financial liberalisations on a trial basis, such as the introduction of a market-based interest rate mechanism and full convertibility of the yuan.
However, the financial authorities have yet to publish detailed operating guidelines for the much-anticipated reforms, and foreign business interest in the zone has been lukewarm at best.
Among the three designated areas for the development of the zone - Yangshan port, Waigaoqiao and Pudong airport - Yangshan, which includes part of Lingang, is the biggest, covering about 14 sq km.
The 32.5km Donghai Bridge links Lingang with Yangshan.
When the city launched the zone, it was aiming at creating a bustling mini-Hong Kong, with free cross-border flows of capital and cargo.
Two Pudong officials told the South China Morning Post that Yangshan and Lingang had the potential to be the closest thing on the mainland to Hong Kong since there were vast land reserves in the area.
Early this year, Shanghai relocated its administrative committee for the free-trade zone from Waigaoqiao to Lingang, a sign that it was looking to make the most of the area to develop the zone.
Shanghai Lujiazui president Yang Xiaoming was quoted by the media as saying that the planned property development in Lingang was in line with the free-trade zone's policies and of great significance to Shanghai's future.
Construction of the mammoth project is expected to start next year.
Another Pudong official involved in designing Lingang's development blueprint said the government was in talks with powerful multinational and local companies to set up businesses in the area.
The official was not able to provide a clear-cut figure for the total investment in Lingang but said the Pudong government was targeting big influxes of foreign capital and talent.
How successful the ambitious Lingang development will be remains to be seen.
Without concrete examples of policy deregulations, foreign manufacturers and financial institutions are taking a wait-and-see attitude towards the Shanghai zone.
Potential rivalry is increasing pressure on Shanghai to attract foreign capital, with the State Council having agreed in principle to allow 12 more free-trade zones to be set up across the mainland.
Reports have said Beijing will grant the zone in Guangdong more preferential policies to help the economy better integrate with Hong Kong and Macau.