Tech-oriented cities in Southeast China lead the country in growth potential

• Hangzhou (Zhejiang) emerges top in the 2021 emerging city overall rankings, followed by other large cities on China’s east coast.

• Cities in south-eastern Guangdong, Jiangsu and Zhejiang provinces have the strongest economic growth potential and are best placed to benefit from China’s expected transition to a more technology-driven growth model during 2021-25.

• Shanghai remains China’s top-ranked consumer market, owing to its large retail sector and high concentration of wealth. Chongqing also ranks highly due to strong retail sales and tourism revenue growth, and a high ratio of young consumers.

• Hangzhou (Zhejiang), and Nanjing and Suzhou (both Jiangsu) will benefit from the central government’s expected innovation and productivity drive under the 14th Five Year Plan (2021-25), as they have attracted large inflows of skilled workers.

• Central government policy support to maintain the share of manufacturing as a share of GDP during the 14th FYP will benefit cities with strong manufacturing bases. Our index indicates that Guangdong remains competitive in terms of manufacturing costs, labour and facilities.

The Economist Intelligence Unit (The EIU) finds the tech hub of Hangzhou ranks the top in terms of growth potential in the next five years, followed by other large cities in eastern coastal China. In a special report, China’s emerging city rankings 2021: unpacking opportunities under the 14th five-year plan, The EIU forecasts that these cities will play an important role over the next five years in the national strategy of transition to a technology-driven growth model.

Apart from the eastern coastal cities, provincial capitals of certain inland provinces such as Hefei (Anhui), Wuhan (Hubei), Chengdu (Sichuan), Zhengzhou (Henan) also figure among the top 20 in the rankings, as these cities are attractive to migrant workers and businesses owing to their quality infrastructure and public services, as well as relatively low business and living costs.

With the government’s urbanisation strategy focusing increasingly on creating city clusters, metropolitan areas, and industrial clusters, we also advise firms to pay close attention to broader, multi-city urban geographies. Companies need to consider the markets surrounding their investment destinations when carrying out strategic planning, with success depending on close analysis of economic and demographic indicators, infrastructure connections, and spending patterns in the region.

YUE SU, PRINCIPAL ECONOMIST FOR CHINA, AT THE EIU

Zhuhai (Guangdong) and Jiaxing (Zhejiang) also perform well in the rankings as they benefit from the policy permitting small cities to relax their household registration (hukou) criteria. This flexibility will continue to attract skilled workers. The two cities will also gain from positive spill-over effects from nearby Guangdong cities of Shenzhen and Guangzhou (in the case of Zhuhai), and Hangzhou (in the case of Jiaxing). Compared with 2019, Hefei’s ranking registered the biggest improvement, as it is set to play an important role in the national drive for self-sufficiency in science and technology in the next five years.

Download the free summary report “China’s emerging city rankings 2021“