Insights

Since 2015, an index has evaluated the economic vibrancy of China's large- and mid-sized cities, with Hangzhou emerging as the top city in the latest rankings. This city, known for its tech companies like Alibaba, has benefited from its growth as a hub for e-commerce, manufacturing, and finance. In contrast, cities like Zhuhai have seen significant declines due to a slump in real estate, dropping 32 places to 157th. The downturn in property markets has led to a halt in home purchases and financial struggles for builders, impacting overall economic growth in several regions. The Chinese government began tightening regulations on real estate developers' debt reliance in 2020, which has contributed to the current property crisis. This crackdown has adversely affected cities that were previously thriving, such as Dongguan and Zhengzhou, the latter being home to Foxconn. While some cities like Shenzhen have improved their rankings, others have suffered, highlighting the uneven impact of these economic challenges. Wuhan and Hefei have shown resilience, with Wuhan rising nearly 30 places to second in the index, thanks to its efforts to maintain factory operations during the pandemic. Hefei also benefited from government support for technological development, keeping it among the top ten cities. The contrasting fortunes of these cities illustrate the varying responses to economic pressures and the importance of strategic government interventions. Overall, the property crisis and geopolitical tensions have reshaped the economic landscape in China, with cities like Hangzhou continuing to thrive while others struggle to adapt. The situation underscores the need for sustainable economic practices and diversification to mitigate future risks.