Over the past two years, two major developments have unfolded on China’s economic stage:

1. The demographic dividend has peaked

2. The reshaping of supply and demand in the real estate market

The impact of these changes extends far beyond our conventional understanding of economic growth and fiscal operations; they will also reshuffle the competitive landscape among cities, creating an entirely new situation.

Act Three of the “Drama of the Century”

Since the launch of reform and opening-up, China’s regional economic development has unfolded like a “century-long drama” that has been playing out for over 40 years.

From within, we can observe three distinct phases:

In 1978, the curtain rose on Phase 1.0: China became part of the global industrial chain, foreign investment poured in like a tidal wave, and the southeastern coastal regions transformed into export processing bases.

The “stars” of this era were foreign capital, technology, and orders, with factories in coastal regions becoming the focus of global attention. Special Economic Zones such as Shenzhen, Zhuhai, and Xiamen, as well as star cities like Dongguan, Foshan, Wenzhou, Suzhou, and Wuxi, emerged as leaders.

With the arrival of comprehensive housing, healthcare, and education reforms in 1998, the narrative of Phase 2.0 gradually unfolded.

Although foreign investment remained highly attractive, the engine driving China’s economic growth had quietly shifted to “urbanization + real estate + major infrastructure projects.” Land-based fiscal revenue and local government debt took center stage.

You will find that Phase 2.0 differs significantly from Phase 1.0:

In Phase 2.0, factors such as land, approvals, and local government debt are primarily allocated by local governments, whereas in Phase 1.0, external capital, technology, and orders—which have a greater impact on regional economic development—were more market-oriented and international in nature.

In Phase 1.0, the focus was primarily on emerging special economic zones and coastal cities. In Phase 2.0, however, because these factors require more administrative approvals, municipalities directly under the central government, provincial capitals, and cities with independent planning status hold a relative advantage. Cities with lower administrative ranks have relatively weaker development momentum in Phase 2.0.

A turning point capable of altering the course of history emerged in 2021: the introduction of the “three red lines” for real estate financing and the collapse of Evergrande.

On July 24, 2023, the Politburo meeting set the tone: the supply-demand dynamics of China’s real estate market have undergone significant changes. What we are witnessing is the end of the 2.0 phase of regional economic development.

Listed Companies: The Main Battleground of Urban Competition

Today, regional economic development has entered Phase 3.0.

This is known as the “era of stock issuance”:

The reform of the IPO registration system has opened up channels for direct financing. The driving force behind regional economic development is undergoing another transformation—“technological innovation + the real economy + capital markets” will gradually replace “real estate + urbanization + large-scale infrastructure” to become the new engine.

In Phase 3.0, the most critical factor of production is no longer land and approvals, but technological innovation. The monetization model has consequently taken on a new form: the opportunity for listing.

In the 2.0 phase, the most critical factors of production were primarily allocated by local governments, leading to the decline of “non-core cities.”

However, in Phase 3.0, local governments must act as wise shepherds, promoting the market-based allocation of production factors through further administrative streamlining and decentralization, allowing “thousand-mile horses” to return to the grasslands.

Under the new rules, technological innovation, patents, private enterprises, foreign-invested enterprises, and listed companies are key drivers of regional economic development. Central and state-owned enterprises with core competitiveness and innovation capabilities should not be overlooked either.

Therefore, opportunities are emerging for cities with strong technological innovation capabilities and vibrant private sectors!

Even ordinary prefecture-level cities have the potential to stage a comeback.

The future is here—who will take the lead?

From the end of 2017 to the end of 2021, the 30 cities with the fastest-growing total mainland capital inflows are as follows:

Among the top 10, five “non-three-category cities” (i.e., cities that are neither municipalities directly under the central government, provincial capitals, nor cities with independent planning status)—Dongguan, Shaoxing, Taizhou, Jiaxing, and Jinhua—accounted for half of the list.

If the scope is expanded to the top 20, the “non-three-category cities” also include Wenzhou, Zhuhai, Foshan, Suzhou, Xuzhou, Weifang, and Wuxi, with their share rising to 60%.

Just when you thought that was all, the city rankings of A-share listed companies will surprise you even more:

"Non-three-category cities" such as Suzhou, Wuxi, Shaoxing, Taizhou, and Changzhou not only made the list but also ranked among the top 20!

The greater the number of listed companies and the larger their market capitalization, the higher the vitality and potential of a city’s economic development. Although municipalities directly under the central government and provincial capitals such as Tianjin and Chongqing also appear on the list, their number of listed companies is fewer than that of Wuxi, and is only comparable to Taizhou and Changzhou.

Looking back at these three stages, it is clear that a city’s fate is firmly in the hands of its production factors and those who control them.

As we transition from Stage 2.0 to Stage 3.0, only cities that successfully transform will continue to lead the way and have a bright future.

So, how do we measure a city’s future?

We can refer to comprehensive indicators such as achievements in scientific and technological innovation (exemplified by the number of invention patents, R&D personnel and funding, and the proportion of R&D funding relative to GDP), the number of listed companies (represented by market capitalization), and the number of private enterprises.

Looking around, the star cities along the southeastern coast are nurturing hopes of a resurgence. At the same time, some inland cities with slow transformation, including several high-level provincial capitals, have already begun to show signs of fatigue.

Standing at this crossroads, we seem to glimpse a more ideal blueprint for regional economic development.

This blueprint is not drawn solely by municipalities directly under the central government, provincial capitals, or cities with independent planning status, but is jointly sketched by every city that possesses forward-thinking, continuous innovation, and the exploration of new development paths.

As a service provider for regional economic development, Guchuan United is not only a witness to urban transformation but also an active participant.

Immersed in the process and actively engaged, we provide tailored investment promotion solutions—including industry research, commissioned investment promotion, training, and digital investment promotion—to local governments and industrial parks. Leveraging over 1 million project leads from our industrial big data center, we empower regional economic development.

A new era has arrived, and we look forward to seeing the unique brilliance of every city.