The Milken Institute’s best performing cities China Index for 2023 has shown significant fluctuations in rankings for Chinese cities. Hangzhou, the capital of Zhejiang province, has emerged as the top-ranked city thanks to its status as a tech hub, hosting companies like Alibaba. On the other hand, Zhuhai, a once-promising city in Guangdong province, has experienced a steep decline in rankings, dropping to 157th place due to a slump in the real estate market.
Dongguan, known as the city of factories and home to Huawei’s European-style campus, has been hit hard by U.S. sanctions, causing it to slide down 15 places in the rankings to 199th place. This highlights the challenges faced by Chinese cities that are heavily reliant on exports and foreign investments.
China’s crackdown on real estate developers’ debt dependence has had a noticeable impact on the economy, with the property sector once contributing over a quarter of the country’s GDP. Perry Wong, the managing director of research at the Milken Institute, noted that several cities in the region, except for Dongguan, have seen a decline in growth due to the real estate slowdown.
The geopolitical tensions between China and the U.S. have also affected cities like Shenzhen, known for being home to many blacklisted Chinese companies. The city has seen a rise in rankings but still lags behind Beijing. Similarly, Zhengzhou, the capital of Henan province and a major manufacturing hub, has dropped in the rankings due to external factors like U.S. sanctions.
Despite the challenges faced by some cities, others like Wuhan and Hefei have shown resilience and growth in the latest index. Wuhan, in particular, has surged by nearly 30 places, thanks to its efforts to maintain factory operations during the pandemic. Hefei, on the other hand, has received government support for technological development, securing its place among the top ten cities in the index.
The economic landscape of Chinese cities is evolving rapidly, with various factors like property struggles, U.S. sanctions, and geopolitical tensions shaping their growth prospects. While some cities have managed to adapt and thrive despite these challenges, others continue to face difficulties in maintaining their economic vibrancy. It will be interesting to see how these cities navigate the changing dynamics and position themselves for future success in an increasingly competitive global environment.
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