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Michael Lin lores
Michael Lin
Research Analyst, Regional Economics Research
Human Capital and Regional Economics
Michael Cheng-Yi Lin is a research analyst at the Milken Institute. His current research focuses on human capital as well as community, urban, and regional planning and development.
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Perry Wong lores
Perry Wong
Managing Director, Research
Asia and California and China and Energy and Human Capital and Regional Economics and Technology
Perry Wong is managing director of research at the Milken Institute. Wong is an expert on regional economics, development and econometric forecasting and specializes in analyzing the structure, industry mix, development and public policies of a regional economy.
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Lee Joe
Joe Lee
Research Analyst, Regional Economics Research
Joe Lee is a research analyst with the Milken Institute on the regional economics team.  He specializes in labor economics with a focus in human capital and economic development. 
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China’s Emerging Regional Clusters: Growth Challenges for Smaller Cities 

By: Michael Lin and Perry Wong and Joe Lee
September 11, 2017
   
   

Together, urbanization and the expansion and emergence of regional clusters play a vital role in driving China’s contemporary economic development. In addition to the well-known Yangtze River Economic Belt and the Pearl River Delta Economic Zone, the rise of the Chengdu-Chongqing Cluster and the Jing-Jin-Ji Metropolis have become the new growth engines for China’s economy. Each of these clusters has several anchor cities leading the growth of the surrounding cities and facilitating regional development. Nonetheless, how do the developmental trajectories of the two younger clusters differ from the forerunners? How can smaller and less-developed cities in the two young clusters grow?    

The recent rise of the Chengdu-Chongqing Cluster can be traced back to the “Go West” movement in the early 2000s. The primary goal of this initiative is to use the two cities as anchors to drive the economic development of western China. Since the late 2000s, both Chengdu and Chongqing been cultivating their electronics industries and have attracted many tech giants such as Dell, Foxconn, and IBM to this region. Given their strategic locations in the “One Belt, One Road” initiative, their talent pool, and local government support, both Chengdu (No. 1) and Chongqing (No. 2) had phenomenal economic performance in recent years captured by the Milken Institute’s Best-Performing Cities (BPC) China 2017 ranking.

The formation of the Jing-Jin-Ji Metropolis with a new addition of Xiongan New Area serves as one of the growth engines for China’s next-generation of economic development. The development of the Metropolis also helps alleviate overcrowding, traffic congestion, air pollution, and water shortages in Beijing and Tianjin by dispersing some of their administrative and economic functions to the Hebei Province. This decentralization not only moves both Beijing and Tianjin toward a more eco-friendly future but also helps the less-developed Hebei Province to prosper. Once the region is fully developed, over 130 million people are expected to live there. A key to this region’s future success is the interconnectedness of the transportation infrastructure, notably inter-city high-speed rail. The improvement in transportation networks will shorten commute times among cities in the region and allow these cities to have more coordinated development. 

Although the future of both the Chengdu-Chongqing Cluster and the Jing-Jin-Ji Metropolis looks promising, the less-developed cities in these regional clusters attaining the level of prosperity smaller cities have achieved in the Yangtze River Economic Belt and the Pearl River Delta Economic Zone may prove to be challenging. The map below shows the distribution of the per-capita regional gross product in 2015 and the wealth discrepancy between the two older clusters and the younger ones. Smaller cities in the two older “super” clusters have more favorable topology, better accessibility and connectivity to affluent global markets, and a richer talent pool. This is not the case for smaller cities in the two younger clusters. To advance their development, less-developed cities in younger clusters need to better identify and leverage their strengths and resources, and continue to improve their transportation infrastructure, deepen their talent pools, and adopt industrial policies that are attractive and flexible.