As China formulates its 15th Five-Year Plan at a pivotal moment, with a strong focus on the domestic cycle of production, distribution, and consumption, interregional competition is becoming increasingly inevitable. Consequently, understanding the fluctuations, shifts, and trends across different cities and regions has become crucial for the country’s strategic planning and development.
rom the current development trends and prospects of the country, Jiangsu, Zhejiang, and Shenzhen are positioned as the first tier of China’s future economy. These regions, which were originally located on the southeastern coast, also have a pioneering spirit in terms of reform and opening up. The private economy here is large, vibrant, and robust, the official teams are well-organized, and the overall quality is relatively high. During the economic downturn in China, these regions showed remarkable resilience, adopted strategies of going global to expand markets, adjusted product structures, and strengthened innovation. As a result, their regional economies have been relatively stable in the face of the same difficulties. Despite a large economic base, their economic growth rates for 2024 still show a solid performance, with a projected range of 5% - 6.5%. Notably, Shenzhen is the only city among the four first-tier cities, in the same category as Beijing, Shanghai, and Guangzhou, to maintain a 5.8% economic growth rate in 2024.
Moreover, this region’s tech industry is flourishing, with excellent performance. As a result, it is well-positioned to attract more national policy resources. For instance, companies like Unitree Robotics, DJI drones, BYD's electric vehicles, Tencent’s WeChat, DeepSeek AI, ZTE, Alibaba, and Ant Group are part of this thriving ecosystem. These tech firms dominate policy hotspots, attracting a large pool of young talent. Under the current policy direction, their influence on the future economic growth of this region is substantial, which will greatly stimulate development during the 15th Five-Year Plan time frame.
Guangzhou is worth mentioning here as well. As a first-tier city, its economic relationship with Hong Kong has been closely underestimated in the past, leading to blind optimism about its economic prospects. In reality, Guangzhou's economic growth in 2024 is only 3%, ranking at the bottom among the four first-tier cities. The gap is quite large, showing a mutual drag on the economic growth of Guangzhou and Hong Kong. If Guangzhou fails to deliver satisfactory results in consumption in the future, its outlook during the period of the 15th Five-Year Plan is not exactly optimistic.
The second tier of China’s economy in the future is its western region, with Chengdu and Chongqing as major cities. Both cities have a balanced economic structure with a stable mix of manufacturing and service industries. In terms of both employment and GDP, the service sector shows a slightly stronger performance, indicating the potential for future consumption growth. Moreover, this region is one of the few areas in China experiencing population inflows and growth, which creates favorable conditions for stimulating future consumption. However, whether the authorities of the western region recognize its population and human resource advantages as key nodes for future economic development and market expansion remains to be seen.
The downside of this region is that the quality of the workforce is not as high as in the southeastern coastal regions. Additionally, major manufacturing industries here are more susceptible to geopolitical influences, and the tech industry’s environment and capabilities lag behind the first-tier cities. Furthermore, the scale and tasks of urban renewal in this region are immense. There are existing issues with urban space planning, and restructuring spatial layouts requires significant investment. All these, naturally, pose certain difficulties. Hence, the second-tier western region has a much larger gap compared to the first tier, and its prospects during the 15th Five-Year Plan are somewhat uncertain.
Shanghai holds an extremely important position in China's overall economic landscape, but the economic situation in Shanghai is not looking good. While Shanghai has some successful cases in attracting investment, these success stories, compared to its economic scale, are insufficient to support the city's future economic growth. Foreign capital continues to flow out of Shanghai, and for a long time, the focus of the economy has been on real estate, which has resulted in high living costs, hindering the inflow of people, as well as consumption and employment. The "Shanghai characteristics" of the administrative team are also quite evident, i.e., high levels of education but low capability. The attractiveness of Shanghai to private enterprises has also declined, with many prominent entrepreneurs experiencing failures here, the most famous being Jack Ma. Shanghai's economic growth rate has been highly unstable: in 2020, the GDP growth rate was 1.7%, in 2021, the rebound during the pandemic was 8.1%, in 2022 it was -0.2%, in 2023 it returned to normal at 5.0%, and in 2024, it slipped again to 4.7%.
Generally speaking, as a top-tier megacity, Shanghai should have significant room for urban renewal, which could drive economic growth. However, urban renewal in Shanghai has not followed a healthy track. Instead, it continues to engage in traditional real estate development under the guise of urban renewal. Currently, it seems that during the 15th Five-Year Plan, Shanghai does not have much better alternatives. The only solution might be to increase its participation in the intense internal competition, using the city's advantageous resources to aggressively attract enterprises from other regions.
Beijing's economic situation is equally unfavorable. The issue with Beijing is that, due to huge investments in infrastructure in the past, the current maintenance and operational costs of it are rather high. In addition, Beijing's strategic tasks are much heavier than those of other Chinese cities. The construction of Xiong'an New Area and the Beijing-Tianjin-Hebei integration have placed Beijing in a prolonged period of structural adjustment and instability, preventing it from concentrating its energy on broader economic planning. This, in turn, reduces Beijing's economic radiating influence, dragging down the economic growth of the northern region.
During the 15th Five-Year Plan period, the key issue will be whether the development of Beijing's sub-centers and suburban areas can be independently operated and effectively planned. If Beijing's economy can show vitality, the city can still play its role as an economic engine, driving the development of the northern region of the country. In fact, Beijing’s relationship with northern China’s economy becomes clearer during economic downturns. When the economy is booming, Beijing's economy is often perceived to have little impact on surrounding areas, but during a downturn, it is clear that nothing works without Beijing.
By evaluating the previous periods of China's economic growth, one can generally see that the economic development axis during the 15th Five-Year Plan takes on a T-shaped distribution, with the southeastern coastal regions forming a line from Beijing to Shanghai, Jiangsu and Zhejiang, and Shenzhen. From east to west along the Yangtze River, a line is formed from Shanghai to Chengdu, together forming a horizontal T-shaped development pattern. In this T-shaped development pattern, Shanghai’s position is crucial but also fraught with problems. If Shanghai cannot overcome its difficulties and continues to decline during the time frame of the 15th Five-Year Plan, the impact will certainly be nationwide, potentially dragging the entire economy into a fragmented, non-systemic state.
Final analysis conclusion:
From these analyses, the key themes for the 15th Five-Year Plan and future development for China are actually quite simple. In the context of emphasizing domestic circulation, the main focus should be on population, consumption, and technology. These three aspects are essentially three major topics. If these three are well handled, China can ride the policy wave to move forward; otherwise, the country will gradually decline and fall behind. Whether China can successfully navigate these three major areas during the 15th Five-Year Plan is directly related to the goal of achieving basic modernization by 2035. To achieve this, the key lies in whether China can face its problems, flaws, and weaknesses, address key structural points in economic development, and allocate policy resources accordingly.
