The Chinese economic boom has been one of the world’s great stories for the past two decades. Fuelled by the emergence of coastal industrial powerhouses such as Shanghai and Guangzhou, China has succeeded in taking over 400 million people out of poverty. While some European companies have rsuccessfuly ridden the economic wave, a multitude of others have left with their tales between their legs.
So where to next? The Economist Inteligence Unit (EIU) believes that 2007 saw the beginning of a trend that will define China’s next generation – the rise of its inland cities. Beginning with the recession, when China’s industrial powerhouses in the east took a hit on exports, central China has outpaced their eastern neighbours. Recent EIU figures from the third quarter of 2010 show an astonishing growth in central China of 18.9%, compared with 15.6 %. in the East.
To identify the cities that investors and obervers need to keep an eye on, the EIU took a close look at China’s 287 prefecture-level cities and forecast their future populations and future growth. The results are China’s top 20 fastest-growing cities. Of these 6 in particular: Chongqing, Hefei, Anshan, Maanshan, Pingdingshan, Shenyang pose unique potential and make up the snappily entitled CHAMPS. A neat graphic compares the current and predicated disposable income, population growth and real GDP for these six cities against established western cities such as London, Rome and New York. The results speak for themselves.
The EIU also tracked China’s future megacities. For example, in 2020 Zhengzhou, capital of the Henan province will have a bigger population than Sweden Hong Kong or Israel. These cities will attract relatively more upper-income earners and their economies of scale will drive productivity in the services sector.
What opportunties will this growth bring? The EIU identifies some industries who stand to gain. Least surprising is the large scale markets that the CHAMPS are developing around products such as mobile phones, video cameras, cars and refrigerators. In addition however they are also becoming champions in sectors such as logistics, healthcare and education where larger coastal cities are struggling.
Ultimately the size and variety of the CHAMPS markets means that knowledge of local of environments is crucial to any European company looking to seize the opportunities that await. Thus while the economic picture in China still holds massive potential, it is more complex and nuanced than ever before.