Following the high-profile meeting on May 25, economic stabilization policies have been rolled out more swiftly across the country, and market confidence has risen significantly—the Shanghai Composite Index has returned to the 3,200-point level, while the ChiNext Index has risen by more than 10%.

The rebound has arrived as expected, and the effects of these policies are gradually becoming apparent.

However, whether it be tax and fee cuts or infrastructure investment, any measure to boost the economy requires funding.

Where will the funds come from?

Recently, the General Office of the State Council issued the "Opinions on Further Mobilizing Existing Assets to Expand Effective Investment," emphasizing the need to generate incremental funds from existing assets to achieve a virtuous cycle of investment.

▲ According to preliminary estimates by professional institutions, the value of existing assets that can be revitalized in China currently exceeds 100 trillion yuan.

At this critical juncture for stabilizing the economy, how should local governments and industrial parks interpret this document? And how should they participate in this trillion-yuan market?

It Starts with Capital, Thrives on Operations

In recent years, the transition to the era of existing assets has become a consensus across all industries.

Therefore, revitalizing existing assets is not a new topic, but market reactions have often been more hype than action. This is because, compared to new development, revitalizing existing assets is more challenging and has a longer return cycle.

The "Opinions" outline three key focus areas:

1. Prioritize revitalizing infrastructure project assets with substantial existing stock, current profitability, or significant growth potential, including transportation, water conservancy, clean energy, affordable rental housing, municipal utilities (water, electricity, gas, and heating), ecological conservation, industrial parks, warehousing and logistics, tourism, and new infrastructure.

2. Coordinate the revitalization of existing assets with projects that organically combine revitalization with renovation and expansion, including the relocation of industrial enterprises from urban areas to industrial parks and the renovation of comprehensive transportation hubs.

3. Orderly revitalization of project assets that have been idle for a long time but possess significant development and utilization value, including old factory buildings, cultural and sports venues, and idle land, as well as non-core assets operated by state-owned enterprises such as hotels, restaurants, and sanatoriums.

Now that the targets have been identified, how should these assets be revitalized?

The "Opinions" specifically mention various revitalization methods, including REITs, PPPs, asset transfers, asset consolidation, and mergers and acquisitions.

It is clear that the support of capital markets is key.

Take REITs (Real Estate Investment Trusts) as an example: suppose a state-owned enterprise invests 1 billion yuan to build an industrial park that generates 50 million yuan in annual rental income, requiring 20 years to recoup the investment.

If a company identifies a promising project but lacks sufficient capital—and cannot easily take on debt to mitigate credit risks—it is left with no choice but to watch from the sidelines.

In such cases, the SOE can partner with professional institutions to package the industrial park into a fund and offer it to the public. Anyone can subscribe to the fund, thereby indirectly holding a stake in the industrial park and sharing in its future growth. This fund is a REIT.

This approach significantly shortens the investment return cycle, allowing recovered funds to be reinvested in new projects as quickly as possible—though the trade-off is relinquishing a portion of the industrial park’s ownership and profit rights.

It’s a win-win-win situation—that’s the magic of the capital market.

However, whether packaging existing assets into REITs for issuance or partnering with private capital for development, the prerequisite is to convince investors that these are high-quality assets—not worthless burdens.

The value of prime locations in first- and second-tier cities is self-evident, but the value of existing assets in third- and fourth-tier cities is a matter of opinion; it’s not something people will believe in just because it’s been repackaged.

Therefore, the practical implementation of revitalizing existing assets must involve effective operations to activate and enhance their value.

For example, a hotel operated by a state-owned enterprise might only command 500 yuan per night. By bringing in a brand with extensive operational experience and implementing standardized management practices, the rate can be raised to 2,000 yuan per night.

However, industrial parks are difficult to operate under a fully standardized model.

Compared to commercial real estate with a single target audience and clear needs (such as the hotel in the example above), industrial parks are far more complex.

Industrial parks come in many forms—such as new materials parks, smart manufacturing parks, and innovation incubators—and their differing positioning makes it difficult to fully standardize operations.

More importantly, the key lies in how to establish the initial industrial positioning and deeply integrate that positioning with operations. Only then can the park continuously attract high-quality enterprises to move in, thereby increasing rental rates while ensuring that the yield meets investors’ expectations.

Recently, the first batch of nine publicly offered REITs have successively released their annual reports. Among them, three industrial park REITs—Bosera Shekou Industrial Park REIT, Dongwu Suyuan Industrial REIT, and Huaan Zhangjiang Everbright REIT—performed better than expected, delivering satisfactory results.

Note: CCB Zhongguancun REIT, which listed in December last year, has not yet disclosed its annual report.

It is evident that the attractive returns—which outperformed the broader market—stem from high occupancy rates exceeding 85% and stable rental income, the result of long-term, highly efficient operations and high-quality services.

Therefore, relying on capital measures to revitalize existing assets is merely a stopgap solution. The actual appreciation value of existing assets and the expected returns on capital must be created through sustained operations.

"Revitalization" is the starting point of the policy, and capital is the means to mobilize all parties. Ultimately, the goal is not only to "unlock" capital from existing assets but also to ensure these assets "thrive" vibrantly.

The challenge of “revitalization” requires professional operators to provide the solution.

With 13 years of deep expertise in the investment promotion industry, having provided site selection and investment consulting services to over 710,000 enterprises, and successfully delivered more than 6,200 projects, Guichuan Industrial (Group) has achieved remarkable results as an industrial innovation ecosystem operator, developing and operating industrial real estate in Shanghai, Tianjin, and Dezhou.

▲ Guchuan High-Tech · Shanghai Fengxian Project

Today, Guichuan Industrial (Group) is closely aligning with national policy directions and will collaborate with industrial parks on full-lifecycle management, encompassing financial services, construction management, investment promotion management, and asset management.

The combined efforts of professional operators and capital will undoubtedly become the driving force behind “revitalizing existing assets.”

Drawing on the “Zhangjiang Experience”

Looking back at these industrial park REITs, although the Zhangjiang Everbright Park is small in scale, it generates the highest rental and management fee income and is the only park maintaining a 100% occupancy rate.

Many believe its impressive performance is only to be expected.

Backed by Zhangjiang Hi-Tech Park—a national-level hub for science and education built with the full support of the Shanghai municipal government—and further bolstered by the Shanghai Free Trade Zone and the Pudong New Area’s comprehensive policy package, its unparalleled advantages leave others in the dust.

However, Zhangjiang Hi-Tech Park has not had a smooth ride.

How it has forged ahead despite the pressure of being overtaken by Suzhou, and how it has promptly corrected course and made rapid adjustments, is well worth noting.

Crossing the River by Feeling the Stones

In 1990, Shanghai established the Pudong New Area.

In 1992, the Zhangjiang Hi-Tech Park was established, standing alongside Lujiazui, Jinqiao, and Waigaoqiao as one of the four key development zones in Pudong.

Roche Pharmaceuticals, which has since been widely publicized, was the first multinational corporation to set up operations in Zhangjiang Hi-Tech Park. What many people don’t realize is that at the time, Roche was producing nothing more than effervescent vitamin C tablets in Zhangjiang.

What was produced didn’t matter; what mattered was the Roche brand. With this benchmark in place, more and more foreign-funded enterprises could be attracted.

At the time, the concept of industrial planning was still underdeveloped. Zhangjiang Hi-Tech Park initially covered more than ten sectors before gradually narrowing its focus to biopharmaceuticals, microelectronics and information technology, and opto-mechatronics.

It wasn’t until around 1996 that biopharmaceuticals were designated as a priority.

In 1999, Shanghai officially proposed the “Focus on Zhangjiang” strategy—choosing a targeted breakthrough over a broad-based approach. The dominant industries in Zhangjiang High-Tech Park were readjusted to include integrated circuits, software, and biopharmaceuticals. Various research institutes and universities also began relocating to Zhangjiang during this period.

In 2006, following Beijing’s Zhongguancun “1+N” model, Shanghai expanded the Zhangjiang Park concept citywide, extending the park’s preferential policies to a broader area to drive the development of the entire city.

In 2019, the Zhangjiang Innovative Drug Industry Base was officially inaugurated, marking the beginning of its role as an industrialization hub for the commercialization of innovative drug R&D outcomes.

Thus, even a powerhouse like Zhangjiang went through a prolonged period of uncertainty. Without a clear industrial positioning or the strong influx of resources brought by the “Focus on Zhangjiang” strategy, it would not have achieved its current prosperity.

Learning from Experience to Drive Innovation

Zhangjiang High-Tech Park’s initial planning did not reserve sufficient development space, and issues such as the lack of integration between industry and urban areas and the imbalance between work and residential zones have persisted.

It wasn’t just living space; even the industrial space required for the biopharmaceutical sector was initially limited to the “Pharma Valley” in the central zone, which was very small. This directly led to a scarcity of various R&D laboratory support facilities.

Rents skyrocketed and suitable facilities became hard to come by. This “Zhangjiang fever” was not a positive development for companies, especially startups.

Furthermore, Zhangjiang once placed too much emphasis on attracting foreign giants, neglecting small and medium-sized enterprises in their growth phase. Several future star companies, after searching high and low for a home in Shanghai, ultimately chose Suzhou instead.

Subsequent IPOs and the launch of new drugs had nothing to do with Zhangjiang.

If even R&D labs are hard to come by, it’s even tougher for manufacturing companies; affected by various factors, they have no choice but to relocate.

Shanghai has recognized these issues and proposed the “Zhangjiang R&D + Shanghai Manufacturing” model, shifting its focus to “Shanghai Manufacturing.” In recent years, Zhangjiang has continuously improved its quality and expanded its area, and the accelerated launch of the Zhangjiang Innovative Drug Industry Base represents a correction of past practices.

Mobilizing the entire city’s resources to achieve new heights in industrial development requires both the resolve to “focus” and the courage to “correct mistakes promptly and adjust swiftly.”

A keen market response and flexible institutional mechanisms are the strengths of private enterprises. Whether it involves developing new projects or revitalizing existing ones, the government must work in concert with enterprises.

Urban Investment Platforms Face a Transformation Opportunity

Faced with downward economic pressure, infrastructure investment has once again been prioritized as a key policy countermeasure. However, accelerating infrastructure investment will inevitably lead to increased fiscal spending.

Against the backdrop of capacity reduction, deleveraging, and urbanization, local governments face high debt ratios and significant pressure to balance fiscal revenues and expenditures. Broad-based, “flood-like” stimulus is no longer realistic; instead, targeted measures and “precision irrigation” are the only viable approach.

Revitalizing existing assets has thus become an effective pathway to expand investment.

The "Opinions" encourage the revitalization of existing assets through market-oriented approaches, which not only helps broaden investment channels for the public but also holds greater practical significance for the long-term development of industrial parks:

First, market-oriented approaches will compel urban investment companies to transform and accelerate the transition of their business models.

Financing models such as REITs and PPPs can effectively address the challenges of long development cycles and high capital intensity in industrial parks, thereby facilitating the participation of social capital in park construction.

More importantly, by separating “heavy” from “light” assets within industrial parks, local urban investment platforms can be compelled to shift from the initial “development and construction” phase to the subsequent “operation and service” phase, thereby returning to the fundamental purpose of industrial development.

Second, it revitalizes heavy assets, shortens the investment payback period, and integrates the industrial park’s full-lifecycle development model with investment and financing mechanisms.

Experts have pointed out that the healthy development of infrastructure REITs can create a capital flow cycle of “investment—operation—REIT issuance—reinvestment,” significantly shortening the payback period for industrial parks.

This not only helps industrial park developers reduce debt ratios, optimize asset structures, and enhance reinvestment capabilities, but also enables state-owned enterprises—represented by urban investment platforms—to better leverage the advantages of the national system, providing robust support and high-quality services for technological innovation.

Third, this is expected to serve as an opportunity for the transformation of industrial park asset management.

Some urban investment platforms are expected to upgrade from developers to operators, thereby securing long-term returns; this represents a transformative opportunity for industrial park asset management, driven by the policy momentum aimed at revitalizing existing assets.

At this critical juncture for stabilizing the economy, trillions of yuan in existing assets are riding the wave of opportunity.

For state-owned enterprises, strong policy support and financing capabilities are their greatest advantages; however, they often lack experience at the operational level, and the flexibility of their institutional mechanisms falls far short of that of private enterprises.

The path outlined in the "Opinions" is "state-owned enterprises taking the lead, with private enterprises participating." State-owned enterprises leverage their resource advantages to build the stage, inviting private enterprises to join them in performing, thereby boosting liquidity and achieving win-win cooperation.

Note: This article does not constitute any investment advice. Investing involves risks; proceed with caution.