Summary of Key Points
By the end of 2025, Feng Zhonghua, a technologically savvy official, was appointed to lead Guangzhou. Facing challenges such as its GDP being surpassed by Chongqing (falling from fourth to fifth place), a plummeting automotive industry, and an widening gap with Shenzhen, he introduced a comprehensive transformation strategy known as the "Five Axes":
1. Developing a complete industrial chain covering chips, screens, intelligent devices, and related technologies;
2. Collaborating on computing and power solutions for differentiated competition;
3. Engaging in full-scale investment promotion throughout the year;
4. Utilizing local markets to develop domestic core technologies;
5. Seizing the opportunity in embodied intelligent robotics.
He also promoted regional cooperation among Guangzhou, Dongguan, Shenzhen, and Hong Kong, aiming to transform the city from a traditional commercial hub into a leading smart manufacturing center. Although initial progress has been made (such as the approval of a 40,000-petaflop supercomputer center and several projects worth tens of billions), the transformation still faces significant risks, including difficulties in project implementation, high dependence on central state-owned enterprises, and a slow recovery for the automotive sector. The entire process is expected to take 3-5 years.
I. Guangzhou's Urgent Need for Transformation
Guangzhou's predicament is not a minor issue but represents a systemic crisis in its economic model:
1. Decline in GDP ranking: With a GDP of 3.2 trillion yuan in 2025, it fell to fifth place behind Chongqing (3.37 trillion yuan), and its growth rate was only 4%—the lowest among the top ten cities. Despite Chongqing's larger territory and population, this ranking has undermined the city's confidence and attractiveness for investment.
2. Widening gap with Shenzhen: Shenzhen's GDP in 2025 was 3.87 trillion yuan, 669.2 billion yuan more than Guangzhou's. Shenzhen's growth is driven by emerging industries like new energy and AI, while Guangzhou relies on the declining automotive sector and traditional commerce.
3. Falling automotive industry: The automotive industry is a vital pillar for Guangzhou, accounting for one-quarter of its industrial output. In 2024, its value added decreased by 18.2%, and this trend continued in 2025. Local companies like GAC Honda and Toyota (which produce fuel-powered vehicles) are struggling, while GAC Aion (a domestic new energy vehicle manufacturer) is experiencing slow growth. Moreover, the industry's reliance on external components (such as batteries and chips) has made its supply chain vulnerable.
In short, Guangzhou is losing its traditional economic strengths while yet to establish new, sustainable ones.
II. Feng Zhonghua's "Five Axes" Strategy: More Than Just Investment Promotion
Feng Zhonghua, with a background in housing and urban development and experience from the Hainan Free Trade Zone, approaches transformation as a coordinated set of measures:
1. Chips, Screens, Intelligent Devices, and Technologies: Creating a new industrial chain by integrating chip production, screen manufacturing, intelligent devices, and AI technologies. For example, he brought in South Korean company STI to produce power semiconductor materials and expanded the production capacity of YueXin Semiconductor.
2. Computing and Power Collaboration: Leveraging Guangzhou's advantage in electricity supply (the Southern Power Grid headquarters) to develop advanced computing capabilities using green energy at lower costs, attracting AI companies.
3. Full-Scale Investment Promotion: The mayor and other officials personally attended meetings with potential investors, aiming for 10 projects worth tens of billions and 100 projects worth one billion each. Feng Zhonghua met with over 13 companies in 2026, including central state-owned enterprises like the Southern Power Grid and ABB, as well as private giants like JD.com and Xpeng Motors.
4. Using Local Markets to Develop Core Technologies: Guangzhou's manufacturing base and government services are being used to promote domestic technology development, such as by collaborating with China Electronics on chip and operating system production.
5. Embraced Intelligent Robotics: Seizing the potential of robotics, which is the next major AI application area. The establishment of the JD RoboBase in Huangpu aims to attract robot manufacturers and make Guangzhou a hub for the development and market launch of these technologies.
III. Regional Cooperation
Guangzhou recognizes that it cannot succeed on its own and needs to collaborate with neighboring cities:
1. Guangzhou-Dongguan: Enhancing the automotive industry chain by having Guangzhou focus on vehicle design and branding, while Dongguan specializes in high-quality electronic components.
2. Guangzhou-Shenzhen: Focusing on differentiated competition, where Guangzhou applies AI technologies to industrial and medical applications, rather than competing head-on with Shenzhen's research efforts.
3. Guangzhou-Hong Kong: Utilizing Hong Kong's international resources for scientific research and tourism development.
4. Guangzhou-Guiyang: Sharing digital economy models, as Guiyang has big data capabilities while Guangzhou has practical application experience.
IV. The Critical Task of Revitalizing the Automotive Industry
The automotive industry is crucial for Guangzhou's economy:
1. Current Challenges: The joint ventures with foreign companies (like GAC Honda and Toyota) are struggling with electrification, and domestic brands like GAC Aion are facing competition from new players. The industry's supply chain is vulnerable due to a reliance on external components.
2. Recovery Strategies: Guangzhou is taking multiple approaches, including collaborating with Huawei on AI-based vehicle systems, promoting local chip and semiconductor production, and exploring new areas like robotics.
V. Progress and Challenges: A Mixed Bag of Achievements and Concerns
Positive Developments:
- High interest from investors, with deals signed with companies like STI (12.4 billion yuan) and SKP (a commercial project worth tens of billions).
- Infrastructure progress, such as the approval of a 40,000-petaflop supercomputer center.
- Numerous policy initiatives in AI and integrated circuits.
Challenges:
- Many potential projects may not materialize.
- Heavy reliance on central state-owned enterprises, which limits private sector innovation.
- Limited attractiveness for talent, with many young professionals preferring to move to cities like Shenzhen and Hangzhou.
- The automotive industry is still struggling to recover from its decline.
Conclusion
Transformation is a long-term process, not a short sprint. Feng Zhonghua's strategies target Guangzhou's weaknesses, but true success requires turning investment momentum into tangible industrial strength and fostering innovation. Whether Guangzhou can make this transformation in the next three years will be a key indicator of its place among China's top cities.