Even the Bank of Toytown is being squeezed in China’s crackdown on debt. Last month, the National Development and Reform Commission announced plans to “rein in the booming theme-park industry.”
A document released by the NDRC, which is a macroeconomic management agency under the Chinese State Council, outlined plans to curb “local debt risks,” “aimless construction” and “copycatting.”
Top of the hit list will be “mega theme parks.”
“The NDRC has for the first time defined ‘mega theme parks’ – those with an area of at least 330 acres and an investment of US$794 million,” Caixin, a media group based in Beijing, stated. “Any project of that size requires the go-ahead of the powerful ministry-level NDRC. Others need only to approach provincial-level authorities.”
The move is part of Beijing’s broader clampdown on spiraling debt in the corporate and government sectors.
So far, state-owned enterprises, ‘zombie companies,’ which simply exist on drip-feed subsidies, local governments and spawling conglomerates have been targeted.
Still, this latest shift in policy has left many in the industry scratching their heads.
Less than 18 months ago, the NDRC appeared to encourage development in the entertainment sector by promoting “Chinese culture.”
The entertainment industry has mushroomed in China and is poised to overtake the United States as the world’s largest theme-park market by 2020, the global engineering consultancy AECOM confirmed.
“In the development of theme parks we’ve seen unclear concepts, blind construction, imitations and plagiarism, low-standard duplication and other issues,” the NDRC outlined in a document.
A manic building spree is at the root of the problem.
The entertainment industry has mushroomed in China and is poised to overtake the United States as the world’s largest theme-park market by 2020, the global engineering consultancy AECOM confirmed.
While data is scarce, there are roughly 2,000 theme complexes dotted across the country with major players, such as Universal Studios, Six Flags, Wanda Group and Happy Valley, planning new projects in the country.
Those at risk of the NDRC directive are likely to be developments rolled out in smaller cities. But there could be other casualties along the way.
Last year, the theme park sector grew by 27% compared to 2016, with revenue of $6.27 billion, according to Mintel, the global market research company, in a report.
Yet the industry has not escaped Beijing’s purge on debt.
“Culling the industry by shutting down projects doomed to fail offers the potential of delivering more market share to solid projects, strengthening parks from Disney, Universal, Fantawild, Chimelong, and other players with the money and expertise to deliver successful developments in the Chinese market,” Robert Niles, the editor of Theme Park Insider, wrote.
Maybe, the Bank of Toytown is safe after all.
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