We are already more than halfway through 2019—what changes have occurred in the urban economic landscape?

Recently, economic data for the first half of the year has been released by provinces and major cities across the country. Some cities have rebounded strongly, others are gradually stabilizing, some are undergoing adjustments, and still others are moving toward joining the trillion-yuan GDP club.

Which cities stand out the most? Which ones fell short of expectations?

Tier-1 Cities Pull Far Ahead

Rise of Central and Western Provincial Capitals: Jinan Enters the Top 20

Here is the GDP and growth rate data for major cities in the first half of 2019:

Looking at the economic indicators for various cities in the first half of this year, three phenomena are worth noting:

First, Beijing, Shanghai, Guangzhou, and Shenzhen are far ahead, widening the gap with second-tier cities. The reason these four cities are classified as first-tier cities lies not only in their geographical advantages, industrial strengths, and urban influence, but more importantly in their overwhelming lead in total economic output.

In the first half of 2019, this lead continued to expand. Not to mention Beijing and Shanghai, but looking at Guangzhou alone: in the first half of 2019, Guangzhou’s GDP reached 1,175.554 billion yuan, surpassing fifth-ranked Tianjin by 138.438 billion yuan. In the same period the previous year, Guangzhou’s GDP had only exceeded fifth-ranked Tianjin by 72.538 billion yuan, indicating that the gap continues to widen.

Second, following the merger with Laiwu, Jinan has entered the top 20. In early 2019, Jinan merged with Laiwu, marking the beginning of a new chapter in its rise up the rankings. In the first half of this year, the GDP of the new Jinan (including Laiwu) reached 479.17 billion yuan, ranking 18th.

As Jinan strives to become a strong provincial capital, expanding the city’s scale and increasing its economic output are clearly top priorities. In the first half of this year, Jinan’s nominal GDP growth rate reached 8.51%, with a real growth rate of 7% , placing it among the top performers among Shandong’s major cities. If this growth momentum can be sustained , breaking the 900 billion yuan mark this year and joining the trillion-yuan club next year will be highly likely.

Third, the rise of strong provincial capitals in central and western China. The rise of central and western regions is not merely a provincial phenomenon; it is even more pronounced in core cities. Chengdu, Wuhan, Changsha, and Zhengzhou have not only joined the trillion-yuan GDP club but also maintained real growth rates of around 8%, demonstrating strong development potential.

The rise of strong provincial capitals in central and western China is an inevitable outcome of the era of central cities, metropolitan areas, and urban clusters.

With industrial relocation from coastal regions and the return of the working population on one hand, and the strong emergence of the strategy for leading provincial capitals in the central and western regions on the other, these provincial capitals are entering their best period of development.

Growth Rate Rankings

Chengdu, Wuhan, and Changsha Lead; Suzhou and Chongqing Lag Behind

To assess a city’s economic development, one must look not only at total GDP but also at growth rates. When examining growth rates, it is essential to consider not only the official real growth figures released by local authorities but also the nominal growth rates calculated directly from absolute values.

Nominal growth rates measure GDP in absolute terms, while real GDP growth rates account for price changes. In an inflationary economy, nominal GDP growth generally exceeds real GDP growth, though the two should not diverge excessively.

In terms of real growth rates, among the top 25 cities by economic strength, the six cities with the fastest growth are: Chengdu (8.2%), Changsha (8.2%), Wuhan (8.1%), Hefei (8.1%), Nanjing (8.1%), and Quanzhou (8.0%).

In terms of nominal growth, the six fastest-growing cities among the top 25 are: Quanzhou (12.32%), Chengdu (12.1%), Zhengzhou (10.74%), Guangzhou (10.35%), Wuhan (10.3%), and Shenzhen (10.21%).

It is evident that there is some overlap between the two sets of data. Chengdu and Wuhan are far ahead in both nominal and real growth rates, indicating promising future development.

When using the national average growth rate of 6.3% as a benchmark, a few cities underperformed the market: Shanghai (5.9%), Tianjin (4.6%), Chongqing (6.2%), Suzhou (6.0%), and Yantai (5.4%).

In comparison, Chongqing and Tianjin have largely completed their efforts to eliminate inflated figures, and their economies are gradually stabilizing. However, Suzhou has experienced a significant slowdown. What is the reason behind this?

The key lies in the fact that Suzhou is one of China’s top three industrial cities, with a highly export-oriented economy that is particularly susceptible to the broader economic environment and international trade conditions.

Guangzhou continues to rebound

Leading First-Tier Cities in Nominal Growth

Guangzhou’s sustained economic rebound has drawn significant attention.

In the first half of this year, Guangzhou’s GDP reached 1,175.554 billion yuan, a year-on-year increase of 7.1%, up 0.9 percentage points from the same period last year.

In terms of nominal growth, Guangzhou reached an impressive 10.35%, surpassing Shenzhen to rank first among first-tier cities.

This achievement is primarily driven by accelerated fixed-asset investment. In the first half of this year, Guangzhou’s fixed-asset investment reached 303.363 billion yuan, a year-on-year increase of 24.8%, marking a six-year high. The city ranked first in the province in terms of both scale and growth rate.

Contrary to what many might imagine, Guangzhou’s investment surge was not solely driven by real estate stimulus. This achievement resulted from robust growth across infrastructure, industrial, and real estate investments.

The data shows that infrastructure investment grew by 34.6% year-on-year, industrial investment by 22.7%, and real estate investment by 26.1%, with all three exceeding 20% growth, reflecting strong development momentum.

Secondly, the momentum of Guangzhou’s new economy is exceptionally strong. While many still associate Guangzhou’s industries with its three traditional pillar sectors— automotive, petrochemicals, and electronics manufacturing —in recent years, the city has cultivated eight major emerging industries, including intelligent equipment, next-generation information technology, biopharmaceuticals, and rail transit. These sectors are becoming the new engines driving Guangzhou’s economic growth.

A few sets of data illustrate this clearly:

In the first half of this year, Guangzhou’s LCD panel output reached 45.5559 million units, an increase of 8.1%; output of tablet computers, integrated circuits, and electronic components grew by 3.8 times, 1.3 times, and 1.1 times, respectively; and output of smartphones and satellite navigation receivers increased by 17.0% and 15.2%, respectively.

Additionally, new energy vehicle production increased by 52.2%; among new materials products, lithium-ion battery production rose by 17.3%; and the output of medical instruments and equipment grew by 10.3%.

These new growth drivers will continue to propel Guangzhou’s economy toward sustained and robust growth.

Urban Landscape

Three Major Changes

Each economic cycle brings changes to the urban economic landscape.

From the era of heavy industry to that of manufacturing and processing, coastal cities replaced northeastern cities as the main players on the economic stage. From the era of foreign trade to the era of investment-driven growth, strong provincial capitals in central and western China became the most prominent players. From the traditional economy to new growth drivers, Guangdong and Jiangsu—which have adapted the fastest—continue to thrive, while Shandong, Tianjin, and Chongqing face adjustments.

These are shifts in the urban economic landscape driven by broader economic trends. In the short term, changes in the international landscape and industrial structure will also significantly impact the economic landscape of cities.

First, the automotive industry has entered a downturn, and major automotive cities have been universally affected. Since 2018, total automobile production and sales have been on a steady decline. All seven of China’s top automobile-producing cities— Shanghai, Guangzhou, Changchun, Chongqing, Liuzhou, Wuhan, and Beijing—have been impacted.

Of course, given the vast differences in market competitiveness across vehicle segments and varying degrees of reliance on the automotive industry among different cities, the extent of this impact also varies significantly.

Second, ongoing international trade disputes have inevitably dragged down cities reliant on foreign trade. According to the latest data released by China Customs Magazine, the top ten cities in China for foreign trade are: Shenzhen, Shanghai, Dongguan, Suzhou, Zhuhai, Xiamen, Guangzhou, Ningbo, Tianjin, and Beijing.

These cities are susceptible to fluctuations in the international landscape, but the nature of their dominant industries varies, leading to differing impacts.

Third, the more developed a city’s new economic drivers are, the stronger its resilience to economic cycles. In other words, cities with more prominent high-tech industries, more developed new economy sectors, and faster transformation of traditional industries can sustain higher economic growth rates under the new economic normal.

In this regard, Guangdong, Jiangsu, and Zhejiang are representative at the provincial level, while Shenzhen and Hangzhou stand out at the prefecture-level city level.

In summary, as central cities or provincial capitals, the development trends of these economically strong cities can be viewed as barometers of regional economic development.

It will become clear in the future which cities are growing and which are shrinking, which are advancing and which are retreating, and which can maintain their vitality. (Article reprinted from the WeChat official account "Guomin Jinglue," authored by Kaifeng Jun)