Baoding, a city just outside Beijing, in Hebei province will create 34 districts to absorb branches of institutes and companies based in the overcrowded capital, authorities say.
Baoding would set aside 115,000 hectares for the project, Mayor Ma Yufeng told the Beijing Times yesterday.
Plagued by pollution, traffic jams and population pressure, Beijing is pushing labour-intensive businesses out.
Baoding, located about 150 kilometres away, and neighbouring Langfang will become satellite cities for the capital, according to directives issued by the provincial government and a Communist Party committee last week.
"Some of Beijing's leading hospitals have already moved some of their functions to Baoding," Ma said. The construction of the PLA General Hospital's base in Zhuozhou, a county-level city administered by Baoding, started in December, he said.
Three of Baoding's new districts will located at stations for the high-speed railway which connects the capital with Shijiazhuang .
With Beijing just 40 minutes away by rail, Baoding officials hope these districts can become high-tech hubs for university facilities and firms.
Ma has also suggested his city could support exhibition centres and wholesale markets. Baoding and Langfang are competing to attract the massive wholesale market located next to Beijing Zoo. Baigou, a county in the north of Baoding, had already finished a venue with 5 million square metres of floor space, Ma said. It would also waive rents for five years for vendors who relocate from the capital.
To improve air quality, Beijing has ordered many of big polluters out, which often means they go to the surrounding province. In the coming three years, another 1,200 large polluters are expected to be kicked out of Beijing. However, Ma is adamant they won't be welcome.
Covering an area of 2.2 million hectares and home to more than 10 million people, Baoding was named Hebei's capital at the founding of People's Republic of China.
It lost the status in 1958 to the more industrialised Tianjin , and then to Shijiazhuang.
Mainland financial magazine Caijing reported earlier last month Baoding would be designated a "deputy" seat of power to Beijing.
Both the National Development and Reform Commission and Beijing's executive deputy mayor denied it had been given the designation.