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4,800 Development Zones Canceled

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

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

Plans to build the zones on a total of 24,900 square kilometers of land have been axed, accounting for 64.5 percent of the total. More than 1,300 square kilometers of land have been returned to agricultural use.

The MLR is stepping up project reviews and inspections to ensure the nation's policies are carried out. A total of 4,150 projects have been suspended.

The campaign to stop the real estate sector from overheating and protect arable land was launched in February last year by the Ministry of Land and Resources (MLR), the National Development and Reform Commission, the Ministry of Construction and the Ministry of Supervision.

Over-development of industrial zones may lead to financial risks since many are built depending on bank loans, according to Shu Kexin, vice director-general of the MLR's Department of Land Use and Management. More importantly, many development zones either under construction or in the pipeline hold no attractions for investors.

Shu estimated that 200 million yuan (US$24 million) is needed to develop 1 square kilometer of an industrial zone. This means that more than 600 billion yuan (US$73 billion) will be needed to develop around 10 percent of the planned areas.

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

In late 1984, the central government approved the first group of development zones in 14 coastal cities to provide preferential policies for foreign investors. Their success has led many local governments to attempt to repeat the experience on their home turf.

Responding to worries that correction of the land market will curb the interest of foreign investors, an unnamed ministry official said that a decrease in the number of development zones will not have a lasting negative impact on investment. Potential investors consider the overall environment to be more important, and with the nation's land market stabilizing, international investment should rise.

The People’s Daily reported that some analysts forecast actual real foreign investment to increase a moderate 10 percent from last year.

The nation's rapid economic growth has created development potential for foreign investors, but government departments should develop specific preferential policies to attract capital, insiders say. The land management system should be reformed and a long-term land utilization system should be formulated.

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

(China Daily August 24, 2004)

Development Zone Being Overhauled
Development Zones Hit by Land Shortages
Illegal Land Development Zones Cut
Achievements of National Development Zones Reviewed
Circular Puts Stop to Misuse of Farmland
Development Zones Sharpen Competitiveness
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