China's Hebei to build 100 service industry business compounds

SHIJIAZHUANG - Hebei province, which surrounds Beijing, aims to build 100 business compounds to attract companies to pivot the local economy away from pollution-spewing industries, local authorities said this week.

The North China province has traditionally relied on industries such as steel and glass, but it is under growing pressure to shift growth toward the service sector amid central government mandates to clean up air pollution caused by heavy industry and address overcapacity in steel.

The province plans to build 100 business compounds within the next three to five years, featuring lush vegetation, accessible transportation and modern amenities such as public wi-fi. The hope is that businesses ranging from tourism and healthcare to musical instrument makers and art studios will set up shops there.

Such campuses will cover a combined 300 square kilometers and be scattered in suburbs approximately a one- to two-hour drive from Beijing.

Authorities did not specify the amount of investment needed for the compounds, but added it will seek funding, mostly from the private sector.

To cut excessive capacity, the province is also shutting down some of its steel mills. Hebei once churned out one-fifth of the country's total steel output.

To meet the target of capping its steel production capacity at 200 million tonnes by 2020, Hebei needs to cut capacity by nearly 100 million tonnes. It has vowed to cut 17.26 million and 14.22 million tonnes in iron and steel production respectively this year.

Such cuts have weighed on local economic growth, which has underperformed compared to national GDP growth in recent years.