July 28 (Bloomberg) -- Beijing unveiled plans for a new financial district, the largest real estate project since the Olympic Games, to be funded by 60 billion yuan ($8.78 billion) of loans from lenders including China Development Bank Corp.

China Development agreed to give Lize Holdings Co. a 10.9 billion yuan credit line to develop a 5.25 square kilometer area about 8 kilometers (5 miles) from central Beijing’s Tiananmen Square, state-controlled Lize said in a statement. Industrial & Commercial Bank of China Ltd., Agricultural Bank of China and China Construction Bank Co. will provide a further 8 billion yuan each, according to agreements signed today.

“The development will provide a new impetus for growth” in the city after the government spent an estimated $70 billion to host the 2008 Summer Olympics, Beijing Executive Vice Mayor Ji Lin said at a press conference. “It builds on the foundation laid by Beijing’s Olympic construction to turn the city into a world-class financial center.”

Beijing, China’s political capital, is vying with Shanghai and Hong Kong for investment by financial companies and has moved factories further away from the city center to combat pollution. The city accounted for 3 percent of China’s gross domestic product in 2008, compared with 4.5 percent for Shanghai, according to the nation’s statistics bureau.

Economic growth in Beijing slowed to 7.8 percent in the first half from 9 percent in 2008. China announced a 4 trillion yuan fiscal package last year designed to keep the economy growing, with the state pledging money for power stations, waterways, roads and other public infrastructure projects.

Mixed Development

“Most financial institutions and companies tend to maintain their head offices or at least a significant part of their staff here, which creates room for building a financial center,” Liu Jieyi, vice president of Beijing Zhongtian Real Estate Co., said in a phone interview today. City officials have been trying for “many years” to develop the area south of Changan avenue and got “a boost of confidence” from the Olympics, he said.

The new financial district is south of Finance Street in western Beijing, where the central bank, bank regulator and securities supervisor are located. The head offices of ICBC, Agricultural Bank and Bank of China are in the vicinity.

Malls, Parks

The development will comprise office towers, shopping malls, luxury condominiums complete with 177 hectares (437.4 acres) of parks and a green belt next to a waterway, according to Lize, a holding company set up by Beijing’s government to manage the project. The area can be accessed by four subway lines and will be near Beijing’s second airport, which is scheduled to start construction next year.

Services industries accounted for 73.2 percent of Beijing’s gross domestic product in 2008, China’s state-owned Xinhua News Agency reported in January, citing Zhang Gong, chief of the Beijing Municipal Development and Reform Commission.

Lize aims to attract financial services companies, hedge funds, venture capital firms and media companies, said You Guangbin, chief of Beijing’s Fengtai district. The Beijing government has pledged tax breaks and fiscal incentives to attract tenants to the area, Lize said in its statement.

Xinhua ‘08, a unit of Xinhua News Agency, has agreed to relocate its head office to Lize, You said. Lize will sell shares to the public at some point to fund operations, he said.

Huaxia Bank Co., Industrial Bank Co., China Citic Bank, Minsheng Banking Corp., Bank of Beijing Co. and Bank of Communications Co. are also lending to the project.

--Eugene Tang, Nerys Avery. Editors: Philip Lagerkranser, Will McSheehy

To contact the Bloomberg news staff on this story: Eugene Tang in Beijing at eugenetang@bloomberg.net

Last Updated: July 28, 2009 06:09 EDT