Caofeidian aims high

The central government's push to seek coordinated development among Beijing and Tianjin municipalities and neighboring Hebei Province has drawn a lot of attention to Caofeidian, a district in Hebei that is one of the candidates to receive manufacturers moving out from Beijing.

Caofeidian Industry Zone, located 80 kilometers (km) south of urban Tangshan in Hebei, is already home to some industrial manufacturers from Beijing. In 2009, a plant of leading steel maker Shougang Group from Beijing started production in the zone.

Under the central government's coordinated development plan, which recent media reports say will be released at the end of this month, some 300 companies in Beijing are expected to move out of the capital city.

"Caofeidian is surely one of the most competitive candidates to receive manufacturers moving out of Beijing," said the head of Caofeidian's financing department Hao Bolin, who is quite upbeat about the industrial zone's prospects under the government's coordinated development plan.

Officials revealed that the industrial zone had organized an ad hoc group earlier this year to visit every company in Beijing that intends to move out, hoping that more companies joining the zone will open a new window for its development.

While urging rapid economic growth, the government also requires companies in Caofeidian to meet high environmental protection standards to avoid pollution.

Still on track

Caofeidian is 192 km away from Beijing and 120 km from Tianjin. It was originally a small island with an area of merely four square kilometers located in the Bohai Bay with very few residents.

After a massive reclamation project that started in 2006, the area of the industrial zone now totals 210 square kilometers now and is expected to top 380 square kilometers in the future.

Caofeidian became a district of Tangshan in July 2012. So far the industrial zone has attracted some 400 billion yuan ($64 billion) of investment, among which around 100 billion has gone to infrastructure construction, Hao said.

Recent media reports have cast doubt on Caofeidian, alleging that the development of the industrial zone may have entered a bottleneck - restrained by the tight liquidity as well as the overall slowing economy.

Many buildings in the district remain unfinished and the area so far was still not densely populated. Some media raised concerns that if the zone has lost momentum to grow.

Local officials explained that there will be second-phase construction for the unfinished buildings and the zone is also already making progress in attracting more firms and people to come to the area.

Guo Jingkun, Party chief of the Caofeidian district committee, told media earlier this month that Caofeidian is like a "four-year-old toddler" and it was not easy for Caofeidian to achieve development in such a short period.

In 2014, a total of 52 new projects worth 62.3 billion yuan ($9.97 billion), including a solar project by Hanergy Solar Group, will start construction, according to a press release from the Caofeidian government.

Hao said that the zone is under capital pressure given the fast development and tight liquidity.

"But there is no single default," he said, noting that the government is trying to diversify financing channels and use tools like corporate debts, finance lease, trust fund and asset securitization to fund its growth.

Ma Lianju, vice president of Baojun Financial Street, a developer in Caofeidian, said that he is not worried about his firm's investment returns in Caofeidian, since the industrial zone has great potential.

The company invested 400 million yuan in a project targeting financial institutions such as banks and security companies. Now the project has generated returns of 160 million yuan, Ma said.

Ma's project is located in a business district in Caofeidian. Gu Yubin, an official at the managing committee of the business district, said that so far around 80 percent of the zone's properties had been sold out.

"The future of Caofeidian is bright, but I hope that there will be more supporting policies," Ma said, pinning his hope on the government's forthcoming coordinated development plan.

New boost

Officials at the industrial zone believe that the vast land in the zone will give it a head start in development because in other places, land resources are very rare and are subject to a very strict quota system from the land authorities.

The port of Caofeidian is also undergoing fast growth, which also gives it a competitive edge - throughput capacity of the port totaled 245 million tons in 2013, up 23 percent year-on-year.

Officials noted that Caofeidian will focus on the shipping of dry bulk goods like iron ore and coal, so there will be no head-on competition with the Tianjin port, which is located 38 km away from Caofeidian and focuses on container shipping.

A new boost is on the way. The State Council announced on June 4 that it plans to build seven chemical industrial bases throughout the country and Caofeidian will be one of them, which again showed that Caofeidian is on the central government's top agenda.

An oil-refining project of China Petrochemical Corp with annual capacity of 10 million tons is expected to land in the chemical industrial park and the project is now undergoing an environmental assessment by the Ministry of Environmental Protection.

"I hold a positive view on the area's development in the long run," Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times. The area is endowed with the full package for an industrial base - natural resources, convenient transportation and vast land, he said.

Caofeidian is prepared to accept some of Beijing's industrial companies, some of which generate high pollution and have comparatively low-added value.

But Caofeidian officials said that the environment is a top concern when introducing new companies to the zone and production technology has to be upgraded before the firms move in.

Shougang Group invested 67.7 billion yuan in the facilities of the Caofeidian plant, with 7.6 billion yuan being used for environmental technology, according to Shao Wence, an official with the local branch of Shougang Jingtang United Iron and Steel Co.

He said that new technologies were adopted to make sure that steam, heat, waste water, coal gas, and solid waste generated in production are not emitted and instead were used to generate power for the whole plant.

Also, the company introduced seawater desalination technology to produce fresh water for the production, and all this technology could effectively reduce costs, Shao noted.