China Integrated City Index 2024: Second-tier cities emerge as pillar of Chinese economy

Editor's note: Cloud River Urban Research Institute recently released China Integrated City Index based on a comprehensive evaluation of 297 prefecture-level and above cities across China. This annual evaluation assesses Chinese cities across three major dimensions — economy, society, and environment. Now in its ninth consecutive year, China Integrated City Index analyzes the achievements and challenges of China's urban development and offers future prospects. This article, the third in the series, gives a full picture of the rankings while delves into the development of second-tier cities. 

China's leading cities rival nations in GDP

China Integrated City Index 2024 uses the sum of three major categories — economy, society, and environment — with a total deviation value of 300 as the benchmark. Cities achieving a deviation value above 200 are defined as first-tier cities. The index sees Beijing, Shanghai, Shenzhen, and Guangzhou continue to cement their positions as first-tier cities.

The 11 emerging first-tier cities with deviation values between 175 and 200 are Hangzhou, Chengdu, Chongqing, Nanjing, Wuhan, Suzhou, Tianjin, Xi'an, Xiamen, Ningbo, and Changsha.

Sixty-eight second-tier cities score a deviation value between 150 and 175, and 214 third-tier cities below 150. The top 20 list is dominated by second-tier cities, including Qingdao, Dongguan, Fuzhou, Zhengzhou, Wuxi, Jinan, Hefei, Foshan, Zhuhai, Kunming, Shenyang, Haikou, Guiyang, Dalian, Quanzhou, Nanchang, Wenzhou, Nanning, Sanya, and Changzhou. This shows the pivotal role of second-tier cities in China's economic landscape.

In 2024, Shanghai's GDP ranked 22nd globally among countries and regions, just behind Poland, while other Chinese metropolises eclipsed developed European nations: Beijing moved to 23rd ahead of Belgium, Shenzhen rose to 32nd above Norway, and Guangzhou secured 36th place over Denmark.

China’s second-tier cities also possess massive economic clout, with the GDP of frontrunner Qingdao matching Hungary (56th) and the lower-ranked Ordos exceeding that of Côte d'Ivoire (78th).

Zhou Muzhi, head of Cloud River Urban Research Institute, commented, "Chinese cities are well on their way to make the top 20 global rankings. Chinese cities have becom major global players, demonstrating growing influence across a wide spectrum including the economy, trade, corporate strength, science and technology, culture, and arts."

Second-tier cities home to manufacturing powerhouses

A dive into the 68 second-tier cities reveals a vast disparity, highlighting their unique development paths. The gap is starkly illustrated by per capita GDP figures: Ordos, the highest, is three times the national average, while Guilin, the lowest, is half the national average — a six-fold difference between them. This dramatic range, evident across economic, social, and environmental metrics, demonstrates that each city excels in distinct areas and defies simple categorization.

The distribution of second-tier cities, mapped across the 19 urban clusters outlined in the 13th Five-Year Plan, reveals a significant coastal concentration. Of these 68 cities, 49 are situated within coastal urban agglomerations. Fifteen of them are located in the Yangtze River Delta, 13 in the coastal regions of Guangdong, Fujian, and Zhejiang, seven in the Pearl River Delta, seven in Beibu Gulf, five in the Shandong Peninsula, four in the middle reaches of the Yangtze River, two in the Central Plains, two in Harbin-Changchun region, two in central and southern Liaoning, two in central Guizhou, one in the Beijing-Tianjin-Hebei region, one in central Yunnan, one in the Hohhot-Baotou-Ordos-Yulin region, one in the Lanzhou-Xining region, one in central Shanxi, and one in the northern slopes of Tianshan Mountains. 

The majority of China's permanent residents live in third-tier cities. Four first-tier cities account for 5.9% nationally, 11 emerging first-tier cities 11%, 68 second-tier cities 27.9%, and 214 third-tier cities 49.3%. 

China's most populous cities are Chongqing, Shanghai, and Beijing. Among second-tier cities, Zhengzhou, Shijiazhuang, and Dongguan rank 10th, 13th, and 16th, respectively.

China's GDP is heavily concentrated in its lower-tier cities, as second- and third-tier cities drive the majority of the national economy (32.5% and 34.4%, respectively). First-tier cities account for 12.7%, and emerging first-tier cities for 16.1%. While Shanghai, Beijing, and Shenzhen are the top three overall economies, second-tier high-performers such as Qingdao (13th), Wuxi (14th), and Zhengzhou (16th) demonstrate strong regional growth.

Second-tier cities drive the bulk of China's export activity, generating 36.3% of the national total, more than any other tier. First-tier cities account for 23.3% of the national total, emerging first-tier cities 24.1%, and third-tier cities 11.6%. The top three cities in China by export volume are Shenzhen, Shanghai, and Suzhou. Notably, second-tier cities Dongguan (fifth) and Jinhua (sixth) both rank within the national top 10 for exports, with Wuxi coming in 11th.

An analysis of the national manufacturing workforce reveals that second-tier cities employ the largest share of workers, accounting for 36.4% of the total. Third-tier cities follow closely with 31.1%. Emerging first-tier cities represent 14.7% of the workforce, while first-tier cities account for only 7.7%. Nationally, the top three cities for manufacturing employment are Dongguan, Shenzhen, and Suzhou. Second-tier cities hold a strong presence in the top 10, occupying four spots. Dongguan leads all second-tier cities in employment figures, with Foshan (fifth), Wuxi (eighth), and Wenzhou (10th) also making the national top 10 list.

Zhou pointed out that China's 68 second-tier cities are economically balanced, contributing roughly 30% of both the national population and GDP. These cities exhibit notable manufacturing prowess, employing almost 40% of the national manufacturing workforce and contributing nearly 40% of the country's export volume. The fact that over 70% of these cities are situated in coastal regions underscores this industrial strength. The cohort also remains diverse, including culturally focused cities like Lhasa, Guilin, and Huangshan, and resource-based cities like Ordos.

High-market-value enterprises concentrate in first-tier cities

Second-tier cities are primary hubs for companies in China, hosting 33.9% of all listings across the four main boards. First-tier cities follow closely at 31.3%. While Beijing, Shanghai, and Shenzhen remain the top three cities nationally, second-tier cities show strong performance: Wuxi is the leading second-tier city at ninth; Jiaxing and Shaoxing also rank within the top 15.

First-tier cities overwhelmingly dominate the list of China's top 100 companies by market value, hosting 67% of these firms. Second-tier cities account for 15% of the total, followed by emerging first-tier cities with 12%, and third-tier cities with 6%. Beijing, Shenzhen, and Shanghai remain the top three cities overall. Among the second-tier cities, Foshan leads the tier and ranks sixth, while several others, including Wuxi, Qingdao, and Hefei, tie for eighth place.

A review of the market value of China's top 100 companies reveals a strong concentration in first-tier cities, which collectively account for a dominant 74.9% of the total value. Second-tier cities represent 13.8%, followed by emerging first-tier cities with 8%, and third-tier cities with 3.3%. The three cities housing the highest total market value in China are Beijing, Shenzhen, and Shanghai. Among second-tier cities, Zunyi, Ningde, and Foshan perform well, ranking fifth, sixth, and seventh, respectively.

First-tier cities host the majority of China's unicorn companies, accounting for 58.9% of the total. Beijing, Shanghai, and Shenzhen. Emerging first-tier cities account for 22.2%, third-tier cities 3.8%. While second-tier cities account for 15.2% of the total, several show significant performance. Specifically, Qingdao, Hefei, and Wuxi all share the 10th national ranking. 

Look at a breakdown of the total valuation of China's unicorn companies by city tier: First-tier cities account for 65.6%, emerging first-tier cities 18.4%, second-tier cities 13.3%, and third-tier cities 2.7%. The top three cities in China by total value of unicorn companies are Beijing, Shanghai, and Shenzhen. Among second-tier cities, Dongguan, Wuxi, and Changzhou rank sixth, seventh, and 10th, respectively.

Zhou observed a significant imbalance: Although second-tier cities host a substantial one-third of China's total main-board listed companies, their share of high-value enterprises is much smaller. They account for only just over 13% of both the total market value of the national top 100 companies and the total value of all unicorn companies. This contrasts sharply with first-tier cities, which command roughly three-quarters and two-thirds of those respective high-value indicators nationally, highlighting a high concentration of highly valued companies in China's major urban centers.

Massive R&D investment drives manufacturing growth in second-tier cities

First-tier cities drive the majority of China's innovation output measured by PCT applications, accounting for 52.7% of the national total. Emerging first-tier cities contribute 17.2%, second-tier cities 22.9%, and third-tier cities 3.8%. Shenzhen, Beijing, and Shanghai are the top three cities overall. Notably, second-tier cities perform strongly in national rankings, with two manufacturing hubs — Dongguan (fourth) and Ningde (seventh) — breaking into the top 10. Foshan is also a significant contributor, ranking 11th.

China's leading research footprint, as measured by the Nature Index Global Top 500, is expanding beyond traditional first-tier cities. Emerging first-tier cities now host the largest share of institutions with 36.2%, followed by second-tier cities with 32.6% and third-tier cities with 2.9%. The top three cities are Beijing, Nanjing, and Shanghai. The second tier shows strong performance, as Hefei (seventh) and Qingdao (ninth) both secure top 10 national spots, and Jinan ranks 11th.

An analysis of Highly Cited Researchers (those whose papers rank in the top 1% by citations) reveals that first-tier cities are the leading hubs, accounting for 52.9% nationally. Emerging first-tier cities follow with 32.1%, while second-tier cities represent 13.5%, and third-tier cities just 1.5%. Nationally, the top three cities by concentration of these elite researchers are Beijing, Shanghai, and Nanjing. Among second-tier cities, Hefei performs best at ninth, while Harbin and Dalian rank 14th and 15th, respectively.

Second-tier cities are the leading employers in China's scientific research and technical services sector, accounting for 31.4% of the workforce. First-tier cities hold a smaller share at 19.6%, while emerging first-tier and third-tier cities account for 22.5% and 19.5%, respectively. Beijing, Shanghai, and Shenzhen are the top three cities. Several second-tier cities fare well: Zhengzhou ranks eighth, while Jinan and Qingdao also rank within the top 20.

According to Zhou, second-tier cities possess significant R&D infrastructure — hosting one-third of the national scientific personnel and top research institutions — but their innovation efficiency is lower, producing only around 20% of PCT applications and 10% of Highly Cited Researchers. He argued that this substantial, broad R&D investment, although less efficient than first-tier and emerging first-tier cities, is the key support for the robust manufacturing sectors within these cities.

Ming Xiaodong, a former official at the National Development and Reform Commission and Chinese Embassy in Japan, praised the index for its data-driven clarity in outlining China's urban development logic. 

He said that China's major cities wield global economic influence, with first-tier, emerging first-tier, and second-tier cities have GDPs that rival a single nation globally. Second-tier cities serve as the manufacturing backbone, characterized by coastal agglomeration. 

He noted the high concentration of finance, innovation, and human resources in first-tier cities. He, however, stressed that the extensive R&D investment within second tier cities helps to fill their gap compared to first-tier cities in cultivating high-value-added, high-growth enterprises, functionally supporting manufacturing development and enabling them to grow into critical engines of the Chinese economy.