Across The Border | Why the cities you’ve never heard of are poised to lead China’s economic growth
Population growth and rising incomes in the mainland’s lower tier cities mean sectors like education, property and outbound tourism are ripe for growth
China’s big, tier-one cities, with their swelling ranks of wealthy middle class residents, have been at the forefront of the country’s economic growth in recent decades.
But that may not be the case for much longer, according to some analysts, who see the country’s smaller, less well-known cities as the potential new growth engines.
“Lower tier cities are going to be a new bright spot for China’s next economic boom,” said Lin Caiyi, chief economist at Guotai Junan Securities. “As market saturation accelerates in first-tier cities, some industries would have a second chance to gain profit by moving or expanding in smaller cities.”
While it’s still the case that the mainland’s 100 million middle-class citizens contribute significantly to the economy, residents of lower-tier cities have seen their incomes, and hence their purchasing power, rise steadily too. That should make them attractive for investors or companies hungry for new opportunities.
First tier cities are becoming pretty much depressing these days, with some of the big companies cutting their budgets
“For years I have been persuading people to focus more on China’s second and third-tier cities,” said Shaun Rein, managing director of China Market Research Group. He said people in lower-tier cities are more optimistic about their future and therefore more willing to spend money than their counterparts living in big cities.