The biggest Disneyland in the world is expected to open in Shanghai, China in 2015, writes CLIFFORD COONAN

RIGHT NOW it’s a piece of farmland not far from Shanghai’s new international airport in Pudong, but in six years’ time it will be full of children checking out Mickey Mouse in what is going to be the biggest Disneyland in the world.

For over a decade, the Walt Disney Company has been in talks with Chinese officials about building a large Disneyland theme park, a hotel and shopping outlets near China’s financial capital, and the central government in Beijing has just given the project the go-ahead.

Disney is excited.

“China is one of the most dynamic, exciting and important countries in the world, and this approval marks a very significant milestone for the Walt Disney Company in mainland China,” said Disney’s president and chief executive Robert A Iger.

Approval from the central government allows Disney and its Shanghai partners to move forward toward a final agreement to build and operate the park in China’s biggest city and financial capital, and begin preliminary development work.

The project is expected to be open by 2015 and will be located on the east bank of the Huangpu River, bordering Chuansha town in the 1,210 square kilometre Pudong New Area. Much of this part of Shanghai has been transformed from marsh and farmland into a complete new city.

Disney is banking on a revenue boost from the Shanghai facility as profits at the Burbank, California-based company’s theme parks tumbled 19 per cent in the third quarter, with sales at the unit declining 9 per cent.

While no figure was given in the statement, officials in Pudong have said investment in the theme park could reach tens of billions of euro, while other reports reckon a more modest €2.35 billion.

The project will most likely take the form of a joint venture between the Shanghai government and the Walt Disney Company, with Disney handling the investment management of the project. For now, the local government has confirmed that talks will move on to the construction of the park, but have given few details away.

“Currently, the Chinese and US sides of the project are in deep discussions on concrete details of co-operation and will work together to build a world-class Disney park in Shanghai’s Pudong New Area,” was how the Shanghai government put it.

The mayor had said in January that agreement on most points had been reached, and so the announcement was widely expected, but approval from China’s cabinet, the State Council, was always going to be crucial. There was even speculation for a while that the park might locate in Beijing, although Disney scotched that rumour early on.

There had been talk that the city authorities would wait until US president Barack Obama’s visit in November to announce that the central government had given the go-ahead.

Shares in Shanghai real estate, building materials and logistics companies had a great week after Shanghai mayor Han Zheng flagged a news conference about the project.

The development plan could yet cause a row with local residents currently living in the areas set aside for the Disney project.

According to Chinese media, the construction plan includes resettlement of thousands of local residents in a four million square metre area in Pudong, covering the villages of Zhaohang, Jinjia and Qigan in Chuansha town.

"We haven't received any formal notice from the district government on the Disney theme park issue, but we've been gathering information of more than 4,000 residents in the village in recent weeks," an official at Zhaohang Village Committee told the China Daily.

Resettlement has been a tricky political issue for the central government and for local authorities. Many residents complained vocally when their houses were knocked down to make way for Olympic development around the Beijing Games last year, and Shanghai residents have also demonstrated against plans to extend the Pudong magnetic rail line across their land.

Local media reckons that relocation costs could reach nearly €600 million.

Another thorny question is what this means for Disney’s other park in the region, the Disneyland on Hong Kong’s Lantau Island. This park is majority owned by the Hong Kong government and operated by Disney and has attracted 17 million visitors since its opening.

Hong Kong Disneyland is expanding to build up attendance ahead of the opening of the Shanghai park.

Andrew Kam, managing director of Hong Kong Disneyland, said in July that it would spend €300 million to upgrade the Lantau park, adding rides such as “Toy Story Land” and “Grizzly Trail”.

Shanghai Disneyland is set to be eight times the size of the park in Hong Kong, and presents a huge threat to the Disneyland in the former Crown colony. “If there is no expansion, the attraction of the theme park will fall over time,” was how government economist Helen Chan put it at the time.

The upgrade includes 30 new attractions and three new theme areas, and will increase the total area of Hong Kong Disneyland by 23 per cent over five years. To fund the upgrade, the Hong Kong government converted part of its loan to the project into equity, leaving it with a 52 per cent share.

Disney, which had revenues of €26 billion in its most recent fiscal year, has a long association with China. Its first animation screened in China in the 1930s and the company has over 600 employees in China, with offices in Beijing, Shanghai and Guangzhou.