Tianjin’s new “Manhattan” – the best is still to comeNovember 27, 2015 / By
September 30th, 2015 marked a big day for the Yujiapu Financial District as the railway station opened up, linking Yujiapu to both Tianjin and Beijing via high-speed rail within an hour’s time. The Yujiapu area has come under criticism from Western media – many considered the region’s construction a sign that China was at the height of its property bubble. It is rare for a CBD, like Yujiapu, to get its own railway station and the station’s completion is a signal that the government is capable and committed to establish Yujiapu as a regional commercial centre.
The Yujiapu Financial District is a government-financed new development area located in Tianjin’s Binhai New Area. Resting on a peninsula formed by the Haihe River, 45 km east of Tianjin, it spans a total land area roughly the size of New York’s Central Park. The area is to be developed in four phases covering more than 100 plots of land, equating to roughly 9.5 million square metres of new development space. The project aims to diversify the regional economic base, which has traditionally depended on manufacturing and logistics.
To comprehend the genesis of Yujiapu and similar new commercial districts development in China, it is important to understand that developers motivated by profit are unlikely to undertake a greenfield development where there is no market and there is no infrastructure, hence the need for a policy directed kick start. The plan for Yujiapu is a grand one. Take an unused former industrial site and transform it into a major base for the service sector. That process involves creating a master plan, building the base infrastructure including transportation links, securing several anchor tenants (like SOEs) and allowing time for the project to develop. Eventually once a critical mass of tenants, services and other support functions has developed, commercial developers will develop available land plots. More importantly, if successful, the local government will have created a tax base with companies and individuals attracted to the area and providing income when the local manufacturing base eventually declines.
Many scoff at such plans, but don’t realise, Shanghai’s skyline in Lujiazui was created in much the same way. Although today it has nearly a hundred skyscrapers, it served as an industrial zone until 1992 when the government financed construction of several buildings like the Bank of China Tower and the Shanghai Stock Exchange. Lujiazui was kick started by central planning, not free market forces.
With a few anchor tenants now secured (like Huaxia Insurance and the Tianjin Rural Construction Bank), an interesting skyline in place, and a train that connects with Beijing in 45 minutes, now is the time to start watching to see if Yujiapu will be successful. If it is, in a few years, we will see more investment from the private sector and the local government will be able to do what the government did in Shanghai’s Lujiazui, step back into the shadows and let visitors believe it was all the work of private enterprise and capitalism.