The institute's research provides a data-based ranking of 266 Chinese cities at the prefecture level and above. The index rankings are divided into two categories: the largest-cities group includes 34 first- and second-tier cities; the small and medium-sized group includes 232 third-tier cities. The two groups are separately ranked based on actual economic performance, rather than projected success.

The Best-Performing Cities China index has nine components, taking into account both short term (one year) and middle term (five years) measurements. To better measure future growth, the index weighs jobs and income growth, gross regional product (GRP), foreign direct investment (FDI), and the strength of high value-added industries in each city. This approach yields a more detailed assessment and sheds light on the factors behind the cities' growth.

Chengdu surpasses Shanghai, Beijing and Shenzhen to be the strong No. 1 among first- and second-tier cities with its outstanding and unrivaled performance: the capital of Sichuan Province secured Top 10 positions in seven of the index’s nine components. Advantages such as human capital, central government support, established industries in high-end aerospace and aircraft design and a more recently developed electronics manufacturing sector are driving Chengdu's recent success in economic growth. Except for Chongqing, most of the top ten first- and second-tier cities in economic performance are part of the urban clusters of the Yangtze River Delta, the Pearl River Delta, and the Jing-Jin-Tang. The Institute concludes that the future will largely depend on the development of urban clusters and small and medium-sized cities. As a result, inland China still possesses great potential for growth.

As for the ranking of third-tier cities, Jiangsu Province surpasses Zhejiang and Guangdong provinces to dominate in the Top 10, with Suzhou at No. 1. Seven of the Top 10 best-performing third-tier cities are in this coastal province and all are part of the Yangtze River Delta economic zone. They have all benefited from Shanghai’s proximity, as well as an influx of talent and technologies. The remaining three cities in the Top 10 third-tier cities (Qingyang, Ji’an, and Yichang) are inland but serve as transition points between west and coastal China. The majority of the Top 10 cities in this group fared well in the index components for recent job and wage growth. This indicates that their lower business costs, larger market potential and strategic locations together explain their recent economic success.

“Our data-driven analysis reveals that Chinese cities with the most dynamic economics share some important factors,” says Perry Wong, Managing Director, Research, at the Milken Institute and co-author of the report. “Among them are diversified industries, a focus on high-tech, improved transportation networks, continued efforts to develop infrastructure and the talent pool, and the ability to attract foreign investment.”

To download the full report, including an interactive table of all 266 cities, click here. 

Source: Milken Institute