The latest Milken Institute’s best performing cities China index highlighted Hangzhou as the top-ranking city due to its status as the capital of the eastern Zhejiang province, home to tech giants like Alibaba. Hangzhou’s success can be attributed to its growth as a hub for e-commerce, manufacturing, and finance. However, the sustainability of this success may be challenging, especially with the local property sector outperforming and increasing living costs.
Once considered a “rising star,” Zhuhai experienced a significant drop in the rankings due to the slump in the real estate sector. This city, located in the southern province of Guangdong near Hong Kong, fell 32 places to 157th place in the index. Builders faced financial constraints, leading to a decrease in completed projects and a decline in house sales.
Known as the city of factories and home to Huawei’s sprawling European-style campus, Dongguan suffered from U.S. sanctions, causing a drop of 15 places in the Milken index rankings to 199th place. The crackdown on real estate developers’ debt reliance also impacted Dongguan’s economic growth, highlighting the interconnectedness of global geopolitical issues on local economies.
While many Chinese cities faced economic challenges, Shenzhen bucked the trend by moving up in the rankings to the 9th place, just behind Beijing. Despite being home to several companies blacklisted by the U.S., Shenzhen demonstrated resilience and potential for growth. The city’s focus on high-end production jobs in sectors like biotech could drive its promising future.
Cities like Zhengzhou, known for being the home of iPhone manufacturer Foxconn, suffered a decline in rankings due to geopolitical tensions affecting exports. Meanwhile, the cities of Hefei and Wuhan saw improvements in their rankings, attributed to government support for technological development and efforts to maintain operational factories during the pandemic. The strategic significance of these cities in China’s economic landscape cannot be understated.
The interplay between China’s property struggles and U.S. sanctions has had a profound impact on its cities, highlighting the complexities of economic growth and development. While some cities have weathered the challenges and even thrived, others have faced setbacks that require strategic interventions for recovery. Understanding the unique dynamics of each city and harnessing their strengths could pave the way for sustained growth in the face of adversity.