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County-level Cities Nourishing Economic Growth, Say Experts

SMM Morning Review - 2010/9/19 Nickel Market

SHANGHAI, Sep. 19 -- County-level cities accounted for 56.31 percent of China's gross domestic product last year, and will continue to remain as an important economic engine, experts said on Friday.
County-level cities, especially those located in the Yangtze River Delta, have made remarkable achievements in economic development during the past decade, according to Zhou Jiangong, editor-in-chief of Forbes China, the Chinese edition of Forbes.
&quot;In 2009, 56.31 percent of the nation's GDP came from county-level cities, and the GDP of Changshu, Jiangsu province, was equivalent to that of Hainan province,&quot; Zhou said.
&quot;County-level cities will further solidify its role as the main driver of China's economy,&quot; said Lu Ting, China economist at Bank of America-Merrill Lynch.
According to Lu, many people believe metropolises contribute most to the national economy, but the truth is contrary to the traditional mindset. In developed countries, such as the United States, computer giants such as Apple and IBM are located in the bay area, about an hour's drive away from downtown San Francisco.
&quot;This is because smaller cities can grant more advantages for entrepreneurship, and smaller cities also mean lower costs. I think such a trend will happen in China,&quot; said Lu.
Actually, many small private companies get nurtured in county-level cites before developing into powerful enterprises. &quot;In this sense, small- and medium-sized cities have become the nation's incubator of private enterprises,&quot; said Zhou.
&quot;Over the past 20 years, China's economy saw a rapid growth rate. But this trend will be replaced by a more balanced growth model in the next decade or two, and county-level cities will lead the transformation from labor-intensive products to technology-oriented and brand-oriented manufacturing,&quot; said Ha Jiming, chief economist at China International Capital Corp.
Dwindling demand in the overseas markets has pushed Chinese enterprises to cultivate domestic market and manufacture more value-added products. This is a healthy change, said Ha.
At present China's urbanization rate is relatively low at above 40 percent. The small- and medium-sized cities will play a key role in raising the urbanization rate to 60 percent over the next decade, Ha said.
Forbes China also announced the ranking of the nation's top 25 county-level cities on Friday. The top 10 include Kunshan and Changshu of Jiangsu province's and Yiwu of Zhejiang province.
&quot;Our ranking is based on 132 shortlists each with GDP of above 36 billion yuan ($5.35 billion) in 2009,&quot; said Liu Ruiming, executive editor-in-chief of Forbes China.
Eight criteria include talent, city size, consumption abilities, logistics, passenger flow, business cost, economic vitality and innovation ability were taking into consideration, which is similar to investors' concerns when they make investment decisions, said Liu.
The top 25 county-level cities are mainly located along the eastern coastal regions, or Jiangsu and Zhejiang provinces in particular. Eight out of the top 25 cities are in Jiangsu, and the top five cities are all from the province. Seven cities each from Zhejiang and Shandong provinces are ranked among the top 25, and two cities from Fujian - Jinjiang and Nan'an - and Zengcheng of Guangdong province are also on the list. 
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