Summary of Key Findings
The “mid-term report” for the top ten cities in terms of GDP growth in the first half of this year has been released nationwide: Shanghai, Beijing, Shenzhen, Chongqing, and the other nine cities have maintained their rankings. Except for Chongqing, all have surpassed the national average growth rate of 4.7%. Guangzhou and Shenzhen tied for first place with a growth rate of 5.8%; Guangzhou’s recovery is due to the rebound in its industrial sector, particularly in the new energy vehicle industry, while Shenzhen’s strong performance is driven by a combination of AI technology and foreign trade. The growth rates in Chengdu and Chongqing were slightly slower (5.0% and 4.2%, respectively), mainly due to the challenges associated with the transformation of their automotive industries (a rapid decline in traditional fuel vehicles and the slow adoption of new energy technologies) and the slowdown in the service sector. Essentially, it is the difference in industrial structures that determines a city’s competitiveness—cities that are transitioning quickly between old and new growth drivers (such as Guangzhou and Shenzhen) are leading, while those in the midst of transformation (such as Chengdu and Chongqing) are facing temporary difficulties.
I. The Leading Power of Guangzhou and Shenzhen
The outstanding performance of Guangzhou and Shenzhen in the first half of this year can be attributed to different factors:
- Guangzhou: The city has made a comeback from a downturn, driven by its industrial sector. After several years of weak performance, especially in the automotive industry, Guangzhou’s industrial growth accelerated significantly this year, with a 6.6% increase. Among its three key industries, automobile manufacturing grew by 9.1%, and electronics by 11.2%. The new energy vehicle sector played a crucial role, with production increasing by 53.2%, which in turn boosted the growth of related industries such as batteries (53.9%) and intelligent vehicle equipment (40.6%).
- Shenzhen: Shenzhen’s rapid industrial growth (8.7%) is largely due to its investment in AI technology. The construction of AI infrastructure, which requires components like chips, cooling systems, and stable power supply, has led to strong growth in related industries (such as computers and general equipment) with rates exceeding 12%. Its foreign trade performance was even more impressive, with total imports and exports increasing by 33% (compared to the national average of 16.9%), especially imports, which rose by nearly 60%, and exports of high-tech products by 26.4%.
II. The Challenges Faced by Chengdu and Chongqing
The slower growth rates in Chengdu and Chongqing are linked to issues with the transition between old and new industries and the service sector:
- Chongqing: The city’s automotive industry is struggling with a transition period. Last year, it was still the leading producer of vehicles in China, but this year its automobile production decreased by 9%—fuel vehicle production fell by 17.7%, while new energy vehicle production only increased by 4%. This has significantly impacted GDP growth, which dropped from 5.7% last year to 4.1%.
- Chengdu: The slowdown in the service sector and the decline in the automotive industry are major factors contributing to Chengdu’s weaker economic performance. The growth rate of the tertiary industry (services) decreased from 5.7% in the first quarter to 4.9%. The automotive industry, in particular, suffered a significant setback, with production declining by 21.3%, making it the only key sector to show negative growth among the top ten.
III. The Fundamental Reason for the Growth Gap: Industrial Structure
The difference in growth rates between cities lies in the speed of transitioning from old to new growth drivers:
- Guangzhou and Shenzhen: These cities have already begun the transition, with Guangzhou shifting from fuel vehicles to new energy technologies and Shenzhen focusing on AI and high-end manufacturing. Their new industries are providing strong support for economic growth.
- Chengdu and Chongqing: These cities are still in the process of transformation. While their new industries (such as Chongqing’s integrated circuits and Chengdu’s specialized equipment) are growing, they are not yet large enough to compensate for the decline in traditional industries. The key to success lies in quickly shifting the economic focus from old growth drivers (fuel vehicles and traditional manufacturing) to new ones (new energy, AI, and high-end manufacturing).
IV. The Overall Performance of the Top Ten Cities
The overall pattern among the top ten cities is clear:
- Stable Rankings: Shanghai and Beijing remain in the top two positions, with Shenzhen in third place and Chongqing in fourth. The order of the other cities (including Suzhou and Chengdu) has not changed.
- Outperforming the National Average: Except for Chongqing (4.2%), all nine cities have grown faster than the national average of 4.7%, indicating greater economic resilience among these leading cities.
- Chongqing’s Weakness: Its lower growth rate is mainly due to issues in its industrial and automotive sectors. The future success of this city will depend on how quickly it can accelerate its transformation.
Conclusion
City competition is like changing lanes in a race—the old lanes (fuel vehicles) are reaching their limits, while the new lanes (AI and new energy) represent the future. Those cities that can switch to the new lanes first will have a significant advantage in the ongoing economic competition.