China’s property struggles and U.S. sanctions have had a significant impact on various cities in the country, as revealed by the Milken Institute’s best performing cities China index. Hangzhou, the capital of the eastern Zhejiang province, emerged as the top-ranked city in this year’s index thanks to its thriving tech industry, including giants like Alibaba. While Hangzhou shines, other cities like Zhuhai have suffered setbacks, with the real estate market slump causing it to drop significantly in the rankings.
Once considered a “rising star,” Zhuhai, located in the southern province of Guangdong, plummeted 32 places in the index to 157th place. Perry Wong, managing director of research at the Milken Institute, highlighted the impact of the real estate downturn on cities like Zhuhai. The lack of house buyers and financial constraints on builders have contributed to the city’s decline in economic performance.
Sanctions and Challenges for Dongguan
Dongguan, known as a city of factories and home to Huawei’s campus, faced challenges of a different nature. U.S. sanctions dealt a blow to Dongguan’s ranking, causing it to drop 15 places in the index to 199th place. Despite its industrial strength, the city grappled with the repercussions of geopolitical tensions, impacting its economic outlook.
Resilience and Growth in Shenzhen and Beijing
While some cities struggled, others like Shenzhen showcased resilience and growth. Rising in the rankings to 9th place, Shenzhen demonstrated its economic strength, although many Chinese companies blacklisted by the U.S. were based in this city. Beijing, another city that performed well, ranked ahead of Shenzhen, highlighting the diverse economic landscape in China.
Despite the challenges faced by cities like Zhuhai, there are opportunities for growth and diversification. Wong emphasized Zhuhai’s potential for service and high-end production jobs in biotech, indicating a promising future beyond the real estate woes. By leveraging its strengths in other sectors, Zhuhai could overcome the current economic hurdles.
Geopolitical tensions and export challenges have affected cities like Zhengzhou, home to iPhone manufacturer Foxconn. The city’s fall in the rankings reflects the broader impact of external factors on local economies. Wong highlighted the importance of cities like Zhengzhou, Hefei, and Wuhan in China’s economic landscape, emphasizing the need for strategic control and resilience.
Success Stories in Wuhan and Hangzhou
Amidst the challenges, cities like Wuhan and Hangzhou have stood out for their success stories. Wuhan surged in the rankings, thanks to its efforts to maintain production during the pandemic, while a university in Hefei received government support for technological development. Hangzhou’s growth as a hub for e-commerce, manufacturing, and finance underscores the city’s potential for future success.
The interplay of property struggles and external pressures like sanctions has reshaped China’s city rankings, with some cities emerging stronger while others face setbacks. By adapting to changing economic conditions and leveraging their unique strengths, cities in China can navigate these challenges and build a sustainable future.