Nanjing in the lead

The capital of Jiangsu, Nanjing, 300 km west of Shanghai, has a dynamic economy. Its GDP per capita has even taken the number one position in China. The Trigger Trend Research Bureau describes the strengths and weaknesses of this former capital of China.

GDP per capita, first

After years of low profile, Nanjing has taken the lead in the growth of China’s major cities. In the first three quarters of this year, its GDP grew by 3.3% year-on-year. Only one other city exceeds 3% among the leading cities, Hangzhou, with 3.2%. In the first quarter, growth reached 1.6%; Nanjing is the only major city to post positive growth in this quarter. Thus, Jiangsu’s capital enters the club of the ten largest economic cities in the country at 9th place.
By 2019, it had already become the number one in terms of GDP per capita among the 31 provincial capitals with 165,700 yuan (= $25,350). Beijing and Shanghai remain behind with 164,200 and 155,700. The other significant capitals Guangzhou, Hangzhou, Wuhan, Changsha, and Chengdu, reached 156,400, 152,500, 145,500, 137,900, and 103,400.

CHINA southeast wuhan Shanghai Chengdu Hangzhou

GDP per capita growth: X 10

In 2000, GDP per capita reached only 16,400 yuan, which was only 68% of Canton (23,900) and 81% of that of Hangzhou (20,100). In 2010, it was only 75% of Canton and 92% of that of Hangzhou.
In 2019, however, it surpassed the last two, and although these two figures do not reflect the whole reality, they show the city’s rapid growth. In the previous two decades, its growth rate has been the fastest compared to Canton, Hangzhou, Chengdu, Wuhan, and Suzhou. 
The graph below shows the multiples of GDP in 2019 for the five cities and Suzhou compared to 2000 and 2010 :

In 2019, Nanjing’s GDP was 13.74 times higher than in 2000, with a much higher multiple than the others. From 2010 to 2019, it is significantly higher than that of Guangzhou, Hangzhou, and Suzhou, but lower than that of Chengdu and Wuhan, which benefited from massive industrial transfers.

GDP per capita and population structure

GDP per capita is not a comprehensive measure of a city’s development level, mainly due to China’s cyclical characteristics, development, and construction. The numerator of GDP per capita is total GDP, and the denominator is the resident population of a city. The resident population includes the elderly, children, and other unemployed people. The GDP per capita level depends mostly on the proportion of the labor force in the resident population. Since most industry workers are migrant workers, there are considerable differences between the types of cities in terms of the share of the labor force in the resident population. Migrant workers often work alone. Cities with a high proportion of industry and a large number of migrant workers will have a much higher labor force share than other cities because the elderly, children, and other unemployed people are few, the denominator is low, so GDP per capita will be significantly higher than in other cities with roughly comparable levels of development. For this reason, Shenzhen and Suzhou have a higher GDP per capita than any municipality and provincial capital, even Beijing, Shanghai, and Nanjing.
The ratio of primary, secondary, and tertiary sectors in Nanjing is 2.1/35.9/62.0. The manufacturing industry’s share is roughly comparable to that of other provincial capitals at similar levels of development. It does not have a massive number of workers, making it closer to other provincial capitals in GDP per capita. 

How could Nanking take the lead? 

 Compared to Canton, Wuhan, Chengdu, and Hangzhou, the city had fewer assets in the past.
Guangzhou, the regional center of South China, a natural transportation hub, a commercial hub, a benchmark for opening in the 1970s and 1980s, attracted leading foreign companies such as Procter & Gamble.
Wuhan and Chengdu are the leaders in Central and Southwest China, respectively. Wuhan is Hubei’s capital, with a population of 60 million, and Chengdu of Sichuan, with 90 million. The two provinces have only one high-level city and a densely populated hinterland. Both towns have become winners by absorbing migrant workers and handling the industrial transfer.
Hangzhou has many assets. Very active, it ranks fourth in the country for the number of companies. Zhejiang’s capital brings together traditional industries such as mechanical engineering and chemicals represented by Wanxiang, consumer brands such as Wahaha, Nongfu, and influential groups. Alibaba is the most famous. 

The assets of Nanking
Compared to these four cities, Nanking has no clear “label.” 
It is recognized as the “third city” of education, with very prestigious universities. They cover various fields such as arts, sciences, engineering, agriculture, and medicine; the completeness of its coverage of disciplines is strong. Jiangsu province is the first in the number of universities, see here. These institutions give the city great resources. 
At the junction of the Beijing-Shanghai and Beijing-Hangzhou railway lines and the Yangtze waterway, it is well-positioned for transportation. The capital is located almost at the northwestern top of the narrow Yangtze River Delta, which means that traffic from the Yangtze River Delta to the north and upriver must pass through this crucial node. 
The per capita consumption in 2019 was 72,100 yuan, much more than Wuhan (66,400) and Guangzhou (65,100), it ranks second among the top ten cities, and it is the only city in China with a per capita consumption of more than 70,000 yuan. 
Nanjing has emphasized scientific and technological innovation and on industry and services.
From 2014 to 2016, industrial investments in major cities have generally decreased due to the changing pattern of economic growth. Nanjing has become the city with the highest value of the industrial investment in Jiangsu and Zhejiang provinces since 2018. The growth rate of industrial investment became positive again from 2017, with year-on-year growth of 8.9% and 10.2% in 2018 and 2019, respectively. In 2019, industrial investment increased to 178.376 billion yuan +10.2%, maintaining a lead over Suzhou (119.92 billion) and Wuxi (153.176 billion). Those in high-tech manufacturing climbed 48.2% over the previous year. During the year, industrial robots, complete electronic computer machines, integrated circuits, and optoelectronic devices recorded growth rates of 8.9%, 13.5%, 36.5%, and 26.3%, respectively, showing Nanjing’s sudden advance in high-end manufacturing.
The distance to Shanghai (302 km) is a brake. Suzhou, 100 km away, benefits more from the industrial spin-offs of its large neighbor. Simultaneously, for the service sector, Nanking is too close; it has no choice but to develop a robust local economy.
The number of listed companies in Nanjing – 118 – is higher than in Chengdu – 110, Chongqing – 66 – and Wuhan – 75, but lower than in Suzhou 156 – and Hangzhou – 209. Among the 500 largest market capitalizations (China, Hong Kong, and the United States), eight are from Nanjing, four from Chengdu, and six from Wuhan. The eight listed companies’ total value is 586 billion, compared to 284 billion for Chengdu and 239 billion for Wuhan.
The 2020 Unicorn Ranking – unlisted companies worth more than one billion Chinese dollars – with eleven unicorns places it in 5th place in China, after Beijing, Shanghai, Hangzhou, and Shenzhen.

 High consumption, sustained industrial investment, and a relatively strong local economy are Nanjing’s competitive strengths among the provincial capitals, but what are the weaknesses?

Population growth lagging behind

It is easy to see that population growth has been slow not only in Nanjing but throughout Jiangsu Province. Apart from Suzhou and Wuxi, Nanjing, compared to comparable provincial capitals, lags in population growth. Between 2010 and 2019, it reaches 6.19% while Canton, Chengdu, Hangzhou, Wuhan, and Hefei show much higher figures, 20.51%, 18.3%, 19.07%, 14.58%, and 43.66%. Neighboring Hangzhou shows growth of 1.659 million inhabitants, more than three times that of Nanjing, 0.495, or 19.07% against 6.19%. From 2014 to 2019, the increase is less strong. It has decreased from 19.07% to 14.88% in Hangzhou, while it is almost halved in Nanjing, from 6.19% to 3.21%.
Nanjing is the least populated and smallest provincial capital in the South.

growth population in Nanjing Guangzhou Hangzhou

The ceiling and the pursuers

Both Jiangsu Province and Nanjing City are facing the threat of “上有天花板、后有追兵, The ceiling above and the chasers behind.”
This “ceiling” is due to Jiangsu’s lack of resources and weak national outreach, especially in the service sector. The attraction of talent is not up to the level of China’s vast cities. The “hunt” for pursuers is due to urbanization in the province and high labor costs. It is challenging to attract and retain workers. Regional competition remains strong ahead of Sichuan, Chongqing, Chengdu, and Anhui. Tianjin’s and Shandong’s once-brilliant economic performance has slowed in recent years in the face of such a phenomenon. Nanjing and Jiangsu must avoid such a trap.

Image and attractiveness

Another point lies in the inadequacies of the city’s image and marketing. It lacks a “presence” in recent years. Hangzhou, Chongqing, Chengdu, Xi’an, and even Changsha and Hefei have become very popular “cities” on social networks.

With its assets and strong local economy, the capital of Jiangsu is growing strongly. It must remain on its guard against being overtaken by its local competitors. The province’s advanced urbanization and relatively high labor costs make the city less attractive. Despite its strengths, it must strengthen its national influence and raise its attractiveness to avoid the slowdown of cities like Tianjin.

Source: 即将跻身全国十强的南京,一直被很多人低估了

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20 December 2020

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