Xiongan, China. Source: VCG via Getty Images

China Southern Airlines Co. will invest 10 billion yuan ($1.5 billion) in Xiongan, the new city spearheaded by Chinese president Xi Jinping that aspires to be a model for China’s future urban development.

The airline operator will allocate 2.5 billion yuan in cash and 7.5 billion yuan in tangible assets to set up a subsidiary called China Southern Airline Xiongan Co. in the city, to provide flight services and sales…