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Published May 17, 2017

The 2017 Chinese Cities Index Is Out!

By maxxelli

Maxxelli has released its third China International City Index (CICI), providing information about the degree of internationalization of China’s emerging second-tier cities. This year’s report includes 27 cities, in comparison to the first report in 2015, which only included six cities (Chengdu, Chongqing, Dalian, Xi’an, Wuhan, and Changsha).

 

The CICI report

In order to quantify and compare the level of internationalization of second-tier cities in China, Maxxelli has developed the China International City Index. Maxxelli integrated 44 indicators in the CICI divided into seven categories: Global Economic Strength, International Commerce, Education, International Community, Infrastructural Connectivity, Government and Political Engagement, and Culture and Tourism. The CICI covers 25 "tier two cities" as well as Guangzhou and Shenzhen, which are widely recognized as first-tier cities. Guangzhou and Shenzhen were included in the city sample as benchmarks to demonstrate that first- and second-tier cities show different levels of internationalization.

Based on their geographical locations the cities covered in the CICI are categorized in four categories: North, South, Greater Shanghai, and Central/Southwest.

North: Changchun, Dalian, Harbin, Jinan, Qingdao, Shenyang, Shijiazhuang, Tianjin, Urumqi, Zhengzhou

South: Fuzhou, Guangzhou, Kunming, Shenzhen, Xiamen

Greater Shanghai: Changzhou, Hangzhou, Nanjing, Ningbo, Suzhou, Wuxi

Central/ Southwest: Changsha, Chengdu, Chongqing, Hefei, Wuhan, Xi’an

The report allows comparisons between different regions in China, as well as between individual cities. Cities’ strengths and weaknesses in terms of internationalization are analyzed, but also recommendations on what cities can do in order to become more internationalized are presented.

 

Overall China

 

Since China’s opening up to the world, its economy did not only develop at an unprecedented rate, it has also evolved into a major economic player. Boasting a nominal GDP exceeding USD 11 trillion, China is the world’s second largest economy and is one of the BRICS (Brazil, Russia, India, China and South Africa) countries, which is a group of emerging major economies. However, after China has experienced double-digit GDP growth rates for several years in a row, its year-on-year GDP growth is constantly decreasing since 2010. In 2016, China’s GDP grew with 6.7%, which is the lowest growth rate in 25 years. Furthermore, China is one of the world’s top destinations for Foreign Direct Investment. FDI inflow to China rose by 4.1% in 2016, totaling USD 118 billion. Particularly China’s emerging second-tier cities show investment opportunities for foreign companies. In order to attract more foreign investment, the Chinese government is currently revising the regulations to enter the Chinese market, including extensive policies, as well as financial and legal reforms.

 

Second-tier cities

Cities in the first-tier are highly international, with both Beijing and Shanghai labelled top-twenty global cities. But in recent decades, the country has witnessed the rise of the second-tier of emerging market cities, that are playing an important role in the country’s economic growth, and are gaining an increasingly prominent position on the global stage. Maxxelli believes a large population and a strong economy equate to a high regional GDP are commonly used indicators to identify second-tier cities in China, but are not sufficient to identify second-tier cities. Thus, Maxxeli is also taking a city’s Internationalization into account when defining second-tier cities. This means, Maxxelli defines cities as second-tier cities, if they show a large population, a strong economy and are internationalized.

 

Internationalization

If cities show a higher degree of internationalization, they hold greater appeal for foreign companies due to their increased market potential, accessibility, livability and growth prospects. China’s first-tier cities are highly international with both Beijing and Shanghai being regarded as top-twenty global cities. However, second-tier cities are currently becoming more and more international. In its CICI Maxxelli measures a city’s degree of internationalization based on seven categories: Global Economic Strength, International Commerce, Education, International Community, Infrastructural Connectivity, Government and Political Engagement, and Culture and Tourism. These seven categories are elaborated on in detail in the methodology section at the end of this report.

 

Full report here.