China’s property struggles and U.S. sanctions have had a significant impact on some of its cities, while others have benefited from Beijing’s tech push, according to the Milken Institute’s best performing cities China index. The index, which has been studying China’s large- and mid-sized cities since 2015, assesses their economic vibrancy and growth prospects. Hangzhou, the capital of Zhejiang province and home to tech giants like Alibaba, ranked first in the latest rankings, while cities like Zhuhai saw a drop in their rankings due to the real estate slump.
The real estate sector, which once accounted for more than a quarter of China’s GDP, faced challenges in recent years as Chinese authorities clamped down on developers’ high debt levels. This crackdown led to a decline in real estate investment and affected cities like Zhuhai, which saw a significant drop in its ranking. Builders faced financial constraints, leading to a slowdown in housing sales and incomplete projects.
In addition to the struggles of the real estate sector, some Chinese cities, like Dongguan, were also impacted by U.S. sanctions. Dongguan, known as the city of factories and home to Huawei’s campus, dropped in the index rankings due to the sanctions. The geopolitical tensions affected export-oriented cities like Zhengzhou, which is home to iPhone manufacturer Foxconn. These cities saw a decline in their rankings as a result of the sanctions and trade tensions between the U.S. and China.
Despite the challenges faced by some cities, others like Hangzhou, Shenzhen, and Wuhan have shown resilience and growth. Hangzhou’s success as a hub for e-commerce, manufacturing, and finance has been attributed to its proactive approach to economic development. However, replicating Hangzhou’s success may be difficult, as the local property sector’s outperformance has led to higher living costs. Cities like Shenzhen and Beijing have also seen growth, although they have faced challenges due to U.S. sanctions on Chinese companies.
China’s property struggles and U.S. sanctions have had a mixed impact on its cities, with some facing challenges while others have thrived. The real estate sector’s slowdown and the geopolitical tensions have influenced the rankings of various cities in the Milken Institute index. Moving forward, Chinese cities will need to navigate these challenges and capitalize on their strengths to drive growth and economic development.