Jiaolong, the completely private city in China where a company governs and manages taxes

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At first glance, Jiaolong looks like just another town in Sichuan province, in the heart of China. It has a cinema, an aquarium, an ice rink and throughout its 4.3 km2 are distributed 100,000 people. Its demographic density is quite high, true; but nothing exceptional. What makes Jiaolong really peculiar, what makes it a case study, is his, her nature.

jiaolong is a fully privatized city. In the fullest sense of the word: it arose from a concession agreement signed between the local government and a private company, Jiaolong Co, which has promoted the development of the city, its services and public infrastructure.

Like public authorities in most conventional cities, the company undertakes a series of key responsibilities in the development of the municipality. And he does it by virtue of a pact with the government that involves points as sensitive as the taxes and utilities.

The most curious thing: this bubble with libertarian touches is, neither more nor less, than in the Chinese Republic.

An urban boom in just 20 years

Jiaolong’s genesis dates back to just two decades ago, to the early years of the 20th century. Around 2003, the Jiaolong Co firm, directed by Yujiao Huang, set about an area of ​​about 4.3 square kilometers dedicated basically to farmland and through which some farmers’ houses were distributed. There were no factories, no buildings, nothing remotely reminiscent of a city.

the usual in urban development in China is that it be the public and local authority that is in charge of planning, acquiring the land, developing the fundamental infrastructure, facilitating the establishment of developers and companies and guaranteeing basic public services in the field of security , health or education. To do so, it has the tools reserved for it by law.

In the case of Jiaolong the process was different.

What the corporation wanted to create was an industrial park and to acquire the land it leased it to farmers. The company also reached a series of agreements with the public authorities of Shuangliu —in sichuanwhere the Jiaolong field is framed—on which its responsibilities and the special role it holds have been largely based since then.

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The corporation leased the land to farmers and committed to investing in various public infrastructures—such as a water treatment plant or roads—and built buildings, factories, and commercial spaces. What was initially planned as an industrial park grew so much that it became something totally different: a small city.

From being a farming space, it was transformed into a residential area with 100,000 people and an annual production valued at $7 billion. Generate 100 million in taxes.

Thanks to the framework agreement signed in 2003, Jiaolong Co assumes the planning rights and coordination and it has in its power, for example, to undertake its own urban design as long as it adjusts to the basic schemes marked out from Shuangliu. In its peculiar relationship with the authorities, the firm also assumes a series of unusual rights and duties.

For example, in 2003 Jiaolong Co signed a contract committing to invest 1 billion yuan in three periods, attract more than 400 companies, provide tax revenue exceeding 300 million yuan, and achieve a GDP of 6 billion.

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In its deployment of investments, the corporation must also build water treatment plants, pipelines, roads, a power plant and a system for energy supply, underground wiring… Commitments of draft, but that combines with the planning right if abides by the guidelines set by the Shungaliu County Master Plan.

In return—and this is perhaps the most peculiar point in Jiaolong’s case—the Shuanhliu government, which still has the power to collect taxes, transfers 25% of the tax revenue it receives to him. The government is committed to offering some quality servicesassist in security, taxation and protection of the environment and in dealing with other populations.

“The contract specifies that Jiaolong must meet investment and development goals and build infrastructure. In exchange, it gets planning rights, tax sharing, and coordination services from the government,” explains Professor Quian Lu, from the Faculty of Economics, Beijing Central University of Finance and Economics, to china talk.

The distribution of services and how they are provided in the population is somewhat more complex. Within Jiaolong, most are transferred to the corporation, which includes investments and certain basic public benefits. That does not mean that there are still others that are in the hands of the government, such as the subway or powers with coercive capacity, such as police stations.

“The government is still the city-wide provider of public goods, providing the subway and also controlling political power and coercive facilities. But within Jiaolong Park, most public services are transferred to Jiaolong Co, including investment in basic infrastructure and public services such as schooling, the organization of commercial and residential areas and the protection of the environment”, notes China Talk.

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Is Jiaolong a unique case? As China Talk details, “some local governments in China are letting private companies develop new cities and provide public services.” And they point out: the scheme of urbanizations promoted by the private sector is “increasingly common”. In those cases, such as those involving the firm China Fortune Development (CFLD)the corporations are in charge of the coordination and development of the urbanizations.

In the case of Jiaolong, it goes one step further and opts for a totally privatized model, for private cities. The phenomenon is still little studied, but it is already beginning to attract the interest of researchers. Jiaolong would be “one of the main success storiesof the new model.

Cover Image | David Emrich

At first glance, Jiaolong looks like just another town in Sichuan province, in the heart of China. It has a…

At first glance, Jiaolong looks like just another town in Sichuan province, in the heart of China. It has a…

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