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China cancels 4,800 development zones
By Cao Desheng (China Daily)
Updated: 2004-08-24 01:08

China's tough measures to regulate its land market have paid off with the cancellation of more than 4,800 so-called development zones.

According to incomplete statistics from Ministry of Land and Resources, among 6,866 development zones across the country, 70 per cent were found to have illegally acquired land or were left unused.

A total of 24,900 square kilometres planned for development zones have axed, covering 64.5 per cent of the total. More than 1,300 square kilometres of lands have returned to agricultural use.

This is a result of a joint campaign launched in February last year by the Ministry of Land and Resources and four other ministries, including the National Development and Reform Commission, the Ministry of Construction and the Ministry of Supervision, to regulate the nation's land use.

The campaign aimed to stop the real estate sector from overheating and protect arable land, ministry sources said.

Over-development of industrial zones may lead to financial risks since many of them were built depending on bank loans, said Shu Kexin, vice-director-general of the ministry's Department of Land Use and Management.

More importantly, many development zones either under construction or in the pipeline are not attractive to investors, he added.

In late 1984, the Chinese Government approved the first batch of development zones in 14 coastal cities to provide preferential policies for foreign investors who inject capital into these areas.

Shu estimated that 200 million yuan (US$24 million) is needed to develop 1 square kilometre of an industrial zone.

This means that an investment of more than 600 billion yuan (US$73 billion) will be needed to develop around 10 per cent of the planned areas (around 30,000 square kilometres), Shu said.

"If there is no return on the investment in the development zones, the large sums of money will be 'buried' in the soil," he said.

Responding to the worries that the rectification of land market will dampen the enthusiasm of foreign investors, an unnamed ministry official said the influence of the campaign will be temporary.

Investment stimulus will not change due to the decrease of the number of development zones since investors attach more importance to the investment environment, he said.

With the nation's land market stabilizing, international investment will rise, he said.

Experts estimated the nation will witness a moderate increase in actual real foreign investment, by around 10 per cent from last year, the People's Daily reported.

The nation's rapid economic growth has created development potential for foreign investors, meaning that government departments should map out preferential policies to attract foreign capital, insiders say.

The land management system should be reformed and the system of long-term utilization of land should be formulated, they said.

While regulating the land market, the Ministry of Land and Resources is also stepping up the examination and approval of projects to ensure the nation's macro-regulation policies are carried out.

A total of 4,150 projects have been suspended, the ministry said.

Investigations into land price in urban areas are under way to supervise land price changes in 50 major cities.

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