China12: A New Era for Chinese Cities

HONG KONG, 18 April 2018 – This week sees the release of the latest research report on Chinese cities by JLL(NYSE:JLL). The study, China12: China's Cities Go Global, examines a dozen mainland cities and their transformation into major hubs of innovation and global interaction. The report is the fifth instalment of the Chinese Cities series, in which JLL has charted the rise and development of China's key urban centres in research publications spanning over a decade.

"For our latest report in this series we chose to focus on what we see as China's future global cities" says KK Fung, Managing Director of JLL Greater China. "The China12 are at the forefront of the transition to an innovation economy and are home to a growing breed of energetic tech-savvy businesses that will spearhead the next wave of China's globalisation. By combining international experience with in-depth knowledge of local markets, JLL is able to give a unique perspective on China's twelve leading cities and their competitive position in the global marketplace."

Future Proofing

The report centres around how the twelve cities compare against each other, before proceeding to look at where they fit in to the global picture. JLL carried out this comparison using not only traditional metrics such as size, wealth, growth, and connectivity, but also what are outlined as 'future proofing' metrics. These represent the factors which will be important for Chinese cities in the next stage of their development, and fall into nine categories such as Talent, Innovation, Livability, and Real Estate Transparency.

As Joe Zhou, Head of Research, JLL China points out, "China's economic landscape is changing fast. The innovation economy has taken hold, and a new wave of domestic corporates are reshaping China's business ecosystem. For China's cities and real estate markets, JLL sees the focus shifting toward 'future-proofing', which measures a city's readiness to embrace change and develop in line with newly emerging trends."

Global Contenders

Perhaps unsurprisingly, Beijing and Shanghai stand out from the pack when both traditional and future-proofing factors are considered. Their sheer size allows them to dominate many of the rankings, further aided by their high concentration of wealth. While Beijing leads the way in areas such as innovation, education and 'next generation' corporations, Shanghai boasts high scores in liveability, environment, and integration within the surrounding region.

Beijing and Shanghai's diversified strengths and developed economies set them on course to join the elite group of most powerful and globally-connected 'Big Seven' cities within the next five years. Matched only by Los Angeles in this ambition, JLL's report points out that this transition can be accelerated through improvements in environment, market transparency and talent pool depth.

Enterprisers

Shenzhen and Guangzhou are classified as 'Enterprisers', similar in many aspects to dynamic global cities like Taipei, Kuala Lumpur, and Bangalore, where innovation now thrives. These two Chinese cities are strong in areas such as quality of life, connectivity, and their talent pools, but while Guangzhou boasts good scores in traditional metrics, Shenzhen's development of successful and innovative corporates has now pulled the city ahead on several 'future-proofing' metrics.

The report highlights Shenzhen, often referred to as 'China's Silicon Valley', as a key city to watch within the China12. "Shenzhen is carving out its own position as a magnet for China's top talent, with dynamic entrepreneurial workplaces and concentrations of innovative domestic corporates", says Jeremy Kelly, Director in Global Research, JLL. "On many 'future-proofing' metrics, it is catching up with Shanghai and Beijing."

Powerhouses

The remaining eight cities are what can be considered China's powerhouses, with their strong connections to global manufacturing and industry. Hangzhou, Nanjing, Suzhou and Wuhan's future-proofing stands out in this group. Their enhanced connectivity and rapidly developing business ecosystems are creating a truly global mega-cluster of innovation which links up with Shanghai along the Yangtze River corridor.

As Joe Zhou points out, "Hangzhou is particularly strong judged on both traditional metrics such as its growth rate and wealth, as well as 'future proofing' metrics such as market transparency and capacity for innovation. Its role as host of the 2016 G20 summit and home to tech firms such as Alibaba also give it relatively high global visibility among the 'Powerhouse' group"

Completing the twelve, Tianjin, Chengdu, Chongqing and Xi'an are highly dynamic economies and impressive engines of growth. While they score well on traditional metrics, JLL's research emphasises that they must adapt as China moves up the value-chain, by cultivating and retaining talent, battling pollution and supporting 'next generation' companies.

No matter where they rank within this elite group, the China12 represent a major urban force in the 21st century. As Jeremy Kelly sums up, "The China12 are home to a growing group of highly dynamic and ambitious 'next generation' firms that will drive the next wave of globalisation, and these cities are at the cutting edge of new technologies that will change the way we live and work in cities, not just within China but across the globe."