China’s cities are rapidly becoming more competitive. Here's why

China's cities are more competitive than in any other region of the world, according to a new report from consultants AT Kearney.

The number of Chinese cities included in the 2018 Global Cities Index has soared from seven in 2008 to 27 this year. These are cities that will be able to attract leading companies and talent, as well as foreign direct investment.

While the growing number of cities is impressive, the increase in the scores of Chinese cities is even more notable.

The index measures five key aspects: business activity, human capital, information exchange, cultural experience and political engagement.

The Chinese cities originally included in the index have experienced greater score growth than all other regions except Africa over the past decade of the Global Cities Index.

In the Outlook Index, which predicts the cities that will fare best in the future, China’s improved score has outpaced all other regions over the past four years.

If the rest of the world’s cities are to maintain their ability to compete, they would do well to work out how China is making such rapid progress.

People power

The evolution of China’s cities, according to the report, reflects an intentional effort by authorities to improve competitiveness. A raft of new initiatives have focused on increasing the ease of doing business and attracting more investment and attention from global companies.

The result is that China’s mega-cities have been increasingly successful in attracting multinationals. Google, for example, already has offices in Shanghai and Beijing and plans to open a further office in Shenzhen.

At the same time, home-grown tech giants such as Tencent, Alibaba and Baidu have also flourished.

In addition, China has made sure to invest in its human capital, boosting its workforce through education programmes and fostering a climate of entrepreneurship. Factors such as air pollution, the public transport system and cultural experiences are all relevant to a city’s workforce.

“The effect of all these initiatives is synergistic - cities prioritize becoming more livable, enjoyable places, the government makes it easier to do business and the education system ensures that the talent pool is ready and able to contribute,” the report says.

A holistic view

One way of ensuring that this multi-pronged development takes place is by empowering municipalities so that local initiatives are supported by central government.

In Shenzhen, for example, a project to make all the city’s buses electric was subsidized by federal government.

The key takeaway for other cities, the report’s authors say, is that change can’t happen in a vacuum - but business, government and social policy need to work together at a national, regional and local level.

Chinese cities in the top 25 of the Global Cities Index include Beijing and Shanghai, while new entrants to the index include Changsha, Foshan, Ningbo, Tangshan, Wuxi and Yantai.

Despite the rise of these cities, New York, London, Paris and Tokyo are still holding on to their top spots.

And when it comes to looking at whole countries rather than just cities, Switzerland is in top position, closely followed by the US, according to the World Economic Forum’s global competitiveness report.

China appears in 27th place in the Forum report. Hong Kong SAR and Taiwan, China - which are measured separately - take 6th and 15th place respectively.

One thing is certain, no country or city can afford to sit back and relax. Maintaining a competitive edge needs constant work and attention, especially given the innovation advances of major emerging markets such as China, India and Indonesia.