IPOs are popping up in droves in China’s county towns, and the trend is taking off.

A group of PhDs returned to rural Henan to start businesses, and they’ve become a sensation.

"The County Party Committee Compound," a drama rooted in the stories of grassroots officials and residents in county towns, has also become a hit...

Once upon a time, the "conversion of counties into districts" and the "war for talent" driven by urban polarization left county towns in a passive state of development. But starting last year, the landscape of county town development has undergone a dramatic shift.

Many say that 2022 was a defining moment for county-level development.

However, China’s new round of urbanization strategy is quietly shifting, and the development of the county-level economy has only just begun.

In fact, over the next 30 years, China’s development will be driven by its county-level cities.

More Businesses

County towns are growing stronger

This past April, one county welcomed its 59th listed company, continuing its march toward the 60-mark—Jiangyin.

A county-level city covering less than 1,000 square kilometers has, with one ten-thousandth of the nation’s land and one-thousandth of its population, generated one-two-hundredth of the country’s GDP and one percent of its listed companies.

Behind this powerful economic vitality lies the support of the private sector.

Everyone is familiar with the renowned “Southern Jiangsu Model,” where township enterprises emerged in the 1980s and became a crucial foundation for today’s development. The operational mechanism established at that time—“government guidance, enterprise autonomy, market-driven operations, and policy support”—has persisted to this day.

However, Jiangyin is merely a microcosm of the rapid development of county-level economies.

China’s county-level cities are now producing IPOs in droves.

Daye, a county-level city in Hubei, has produced a lithium battery unicorn—Rongtong High-Tech; Del Technology, a new materials unicorn from Shanghang County in Fujian, is moving toward an IPO; and Tianshan Electronics from Lingshan County in Guangxi listed on the ChiNext board in November 2022...

It is evident that the companies emerging from these county towns are all hard-tech firms, standing in stark contrast to the internet-focused first-tier cities.

Although there remains a significant gap between county-level and major city-based IPO companies, county-level cities have already made a breakthrough.

Talent is returning:

A group of PhDs returned to rural Henan to start a business; within seven years, the carbon-ceramic materials developed by their company were successfully applied to the Beijing Winter Olympics torch. An increasing number of talents are returning to county towns to start businesses, and “small-town problem solvers” are transforming into “small-town entrepreneurs.”

Capital is flowing down:

VC/PE (venture capital) has already expanded into county towns; local governments are successively establishing investment funds, with some well-funded regions reaching as high as 10 billion yuan.

These trends all point to an industrial transformation taking place in many county towns.

Times have changed

Opportunities have arrived

As land, labor, and resources in major cities become increasingly scarce, the advantages of surrounding county towns in absorbing industrial relocation are gradually coming to the fore. The inevitable outcome of industry supporting agriculture and cities aiding rural areas is gradually taking shape.

While this is an inevitable trend in economic development, what matters even more is the proactive efforts of the county-level governments themselves.

New materials, new energy, smart manufacturing—why are these hard technology industries able to thrive in small county towns?

We must mention one city: Longyan.

Have you heard of the “Longyan Phenomenon”? Simply put, it refers to how, in the era of internet entrepreneurship, the mountainous city of Longyan gave rise to a large number of internet tycoons, including Zhang Yiming (founder of ByteDance) and Wang Xing (founder of Meituan).

Today, Longyan has once again gained prominence due to its new materials industry, and Shanghang County—home to Shangwender Technology—is part of Longyan.

Shanghang County is rich in mineral resources, particularly non-ferrous and precious metals, making it a natural “incubator” for the development of the new materials industry.

But since these natural resources have existed for so long, why has Shanghang’s new materials industry only recently begun to take off?

A remark by the head of a new materials company reveals the truth: “In the past two years, the growth of industries such as new energy vehicles and wind power has created new opportunities for sectors like rare earth permanent magnet materials.”

Indeed, times have changed, and the direction of industrial development has shifted, bringing more opportunities to counties rich in resources.

Hard tech companies often choose to locate near raw materials to establish large-scale production bases. Land, labor, and natural resources have all become key factors in corporate site selection.

Now, to secure high-quality projects, more county-level governments are offering increasingly favorable conditions.

When attracting investment, most county-level governments can offer flexible policies and even customized services to businesses.

In addition to the advantages of production resources, the "digitalization" trend is also fueling the development of county towns, driving the shift of employment opportunities to these areas.

An increasing number of companies, such as WeChat and JD.com, are outsourcing their customer service operations, creating a large number of job opportunities for young people in small towns. Roles such as AI trainers and drone flight instructors are attracting more young people to return to their hometowns to pursue careers.

Similarly, the expansion of digital services is driving the upgrading of traditional industries in county towns.

In the past, the coal industry was a typical labor-intensive sector that relied on large numbers of workers and drivers; working conditions were hazardous, and recruitment difficulties were the norm.

Today, however, with the help of the digital economy, autonomous driving and remote real-time control have become possible, and digital connectivity has solved the labor shortage.

Digital penetration enables products from county towns to reach ordinary households in major cities, while also bringing a fresh influx of young, dynamic talent to these counties.

Currently, China has more than 1,800 counties. Aside from the top 100 counties, the potential of the vast majority of county-level areas has yet to be fully realized. If another 200 or 300 counties were to develop, the overall scale of the county-level economy would become even more robust.

A Vast Arena

Hold Great Potential

"100-billion-yuan counties" are the "pioneers" among China’s county-level areas. They share a common advantage: most are located on the outskirts of major cities, giving them distinct locational advantages.

Compared to other county towns and cities, they are better positioned to attract industries and projects spilling over from central cities.

For these counties, development can proceed according to market principles; the government’s role is to formulate reasonable plans and guide the investment of social capital, without excessive intervention.

However, such counties are, after all, in the minority; development for most counties is by no means easy.

A senior executive at a new energy company has been involved in the company’s investment and construction projects in both “new first-tier” cities and county towns.

County towns offer land advantages; they provided 1,500 mu of land free of charge—a scale of land that would be virtually impossible to obtain in some major cities.

However, in terms of capital and urban infrastructure, they fall short of new first-tier cities.

The company received a total of 1.6 billion yuan in financial support in the new first-tier cities, whereas the county could provide very little funding.

Furthermore, when the company began planning and constructing its facility in the county town, it discovered that the factory’s electricity consumption was nearly equivalent to the entire county’s total consumption. Even after the government built a new substation, it was insufficient, so the company ultimately spent 5 million yuan out of its own pocket to construct another substation.

This demonstrates that the most critical challenges in attracting investment to county towns lie primarily in fiscal support and infrastructure development.

With local finances already strained, how can we optimize county-level administrative divisions, reduce waste of administrative resources, and mitigate or avoid debt risks?

Supporting infrastructure and industrial chains are also critical considerations.

A lack of resources, a weak industrial foundation, and remote locations are the current realities for many county towns. Today, the development of the digital economy has relatively mitigated the disadvantages of these locations.

If local governments can clarify their strategies and leverage unique strengths as selling points, they can still attract investment and talent.

Even without unique strengths, there are still comparative advantages. The entry points for county-level development are not limited to a single approach.

In Conclusion

In fact, the concept of “Winning in County Towns Over the Next 30 Years” is not limited to the development of county towns alone.

Only when central cities—the “locomotives”—have sufficient momentum can the development of county towns across the country move along the fast track. As a crucial link connecting rural areas, rural revitalization also requires the strong support of county towns.

Therefore, it is not that county towns need the opportunities of the times, but rather that the times need county towns to shoulder this heavy responsibility.