Economic Profile of Beijing Financial District
Total Page:16
File Type:pdf, Size:1020Kb
Economic Profile of Beijing Financial District Shen, Fanbu and Yang, Jingning Beijing’s Financial Street (BFS), known as “Wall Street of China”, is a large-scale government-led financial district development in central area of Beijing, where almost all the highest financial decision-making and regulatory institutions in China are located, such as the central bank and China Banking Regulatory Commission. The planning and construction of the district started in 1993. Through more than 15 years of development, the Financial Street has become the financial center of China transformed from an old traditional residential district. Numbers give strong evidence on the drastic economic growth in BFS. According to the Bureau of Statistics of Xicheng District, it controlled 60% of national financial assets, over 90% national credit funds and 65% national insurance funds in 2005. Total assets managed by companies in the Financial Street reached 18 trillion RMB1 (about 2.6 trillion dollars). It is now the financial regulatory center, clearing center, financial information center, industry standard design center, financial wholesale business center, fund procurement center and financial intermediary service center of China. BFS’s tax revenue was 25% of Beijing in 2007. From 1995 to 2000, the growth rate of financial and insurance industry in Xicheng District was 18.2%, much higher than the 9.7% increase of GDP in that area. The GDP of financial and insurance industry in Xicheng District was 8.45 billion yuan, which was 43.33% of the overall GDP, while the area of BFS is merely 3.7% of the total area in Xicheng District. The economic contribution of BFS is significant to the whole country, Beijing Municipality and local community. GDP of Financial and Insurance Industry in BFS: 1995-2000 Source: The Bureau of Statistics of Xicheng District Financial and insurance industry is undoubtedly the major industry in BFS, while industrial diversity is also maintained. According to the Bureau of Statistics of Xicheng District, in the second quarter of 2007, 46% of the employees in Financial Street worked in Finance Industry, followed by Information Communication, Computer and Software Industry (15%). Financial Industry is the major source of business revenue in the area, accounting for 86% of the total in the second quarter of 2007. Source: The Bureau of Statistics of Xicheng District The transformation of urban space in BFS tells the story of economic growth from another angle. The Financial Street is a neighborhood-scale district. The original area of Financial Street was 1.18 square kilometers, with 600 meters from east to west, and 1700 meters from north to south. BFS is attracting more businesses to invest along with the maturation of the area, but there is no available land left in Financial Street for future development. To cope with this challenge, Xicheng District government proposed to expand the area of Financial Street from the 1 Financial Street Holding Co., Ltd. http://www.jrjkg.com/detail.aspx?xid=1&ttype=100000&table=&pid=010101 (accessed 1 20, 2009). original 1.18 square kilometers to 4.77 square kilometers, and also makes efforts to encourage non-financial companies to move out of the area in order to make room for other financial companies2, and the proposal was approved in 2007. Timeworn one-story traditional courtyard houses were transformed to high-rise office buildings, apartments and hotels; narrow streets were replaced by broad modern roads, large central park and fountain. The average FAR of current BFS is around 3.5, with an overall floor area of 3.3 million square meters. Physical elements in Financial Street are primarily high-rise office and apartment buildings, high-end hotels, restaurants and other living services. BFS's 18 buildings are anchored by a central park and connected by gardens, courtyards, and landscaped pathways, creating a walkable urban environment. Historical Landscape of BFS Current Landscape of BFS (Source: SOM.com) The local, municipal and state governments are major contributors to BFS’s birth and initial growth. The concept of “Financial Street” itself was brought forward by State Department in response to Beijing’s Master Plan in 1993, clearly addressing that Financial Street to be built as “national financial management center”. The entering of government departments and state-owned large enterprises into Financial Street in the early phase of the development should also be attributed to governments’ progressive roles. Moreover, Xicheng District government had spared a lot of efforts in replacing original residents. Policies like land price abatement, rental allowance, and tax abatement and exemption also played a significant part in attracting further investment. There have been some negative critiques against government-dominating, large scale planning and construction projects, though this type of projects is not rare in China. The first risk of these projects is the disjunction between excessive government supply and limited market demand during a short period of time. To deal with this, the government simultaneously controlled the supply and demand side of BFS, through guiding government departments, state-owned financial organizations and companies into the area. The establishment of Financial Street Construction and Development Company, Ltd was another important event in minimizing government failure. It took over the management of FBS from local government, and made the management of BFS more market-oriented. The company found out that the previous development led to the unitary industrial structure of the area and lack of living amenities and vital urban life. As a result, the goal of BFS was adapted to a financial district with diversified urban functions: business, residence, recreational activities, etc. It also devoted itself to building a world-standard financial district to attract more international players in financial industry and increasing its influence in the international arena. Another hotly debated topic is the lack of civil participation and historical consideration in downtown redevelopment. The success of BFS is based on the replacement of 12,000 local households, and maybe more in the future, and on the demolition of historical spatial context. 2 The Beijing News. The Beijing News Website. 1 9, 2008. http://www.thebeijingnews.com/news/beijing/2008/01- 09/[email protected] (accessed 1 20, 2008). .