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China's Fastest-changing Cities
Update: 11/6/2008 9:57:00 AM Source: Forbes

Beijing rounds out the top five thanks to significant market growth and a recent building boom. (STR/AFP/Getty Images)


Ten years ago, the Minnan Hotel dominated the skyline in Xiamen, a special economic zone on the Taiwan Strait. At about 165 meters tall - about the size of the skyscrapers that abut New York's Central Park - it was a conspicuous outlier in a developing city.

Now, it's beginning to look like a tree in a forest, as buildings just as tall have popped up across the waterfront and in the city center.

But development in Xiamen hasn't been nearly as rapid as in Shenzhen or Guangzhou, two cities on the Pearl River Delta. With dynamic economies based on industry, service, shipping and logistics, they are the fastest-changing Chinese cities by our measures.

Hong Kong, Shanghai and Beijing round out the top five. They're followed by Dalian and Nanjing, two cities that have emerged as factory-based growth centers, but are also turning into vibrant markets for consumer goods.

Behind the Numbers

These rankings are based on three measures of China's 20 most populous cities.

To gauge recent change, we looked at economic growth using indexed data from the Chinese Academy of Social Sciences, a state research agency. Smaller industrial boomtowns like Hefei and Suzhou scored particularly well by this measure.

We also examined the growth of each city as a market, which symbolizes the changing of cities from industrial centers to service-driven economies. For this measure, we looked at data from teh academy as an indicator of where growth and change would continue. With global growth slowing, Chinese cities are going to become more reliant on domestic spending.

"In the global slowdown, China's domestic market is the key linchpin," says Yuwa Hedrick-Wong, economic adviser for MasterCard Worldwide. "There's a lot of government spending right now on social welfare programs to try and unlock households' savings."

Finally, we looked at the most obvious and aesthetic indicator of change in China: the cities' skylines. The government that didn't officially use the word "urbanization" until the late '90s and that was founded on Mao's agrarian principles now rules a country more than 50 percent urban in its population distribution. Skyscrapers and cranes may be the best marker of globalization's effect on China. Using data from Emporis, a global builder based in Germany, we ranked each city by the aggregate height of its skyline.

What the Future Holds

If industrialized expansion was the tale of the last 10 years, consolidation will be the story of the next decade.

Shenzhen, once a fishing village, has been competing for logistics, financial and technology services with Hong Kong ever since the 1997 handover of the former British colony. Shenzhen, which borders Hong Kong to its north, has grown at an annual clip of 18 percent since 1997, according to the Asia Development Bank.

Shenzhen was the mainland Chinese rival to Hong Kong before the handover, but has only recently decided to move toward economic cooperation, instead of competition, with the special administrative region. That means ceding financial services to Hong Kong and enhancing logistical and shipping services in Shenzhen, says Yan Xiopei, vice-mayor of Shenzhen.

"We want to connect Shenzhen and Hong Kong," says Xiaopei. "We will make endeavors for building Shenzhen and Hong Kong into a world-class metropolis."

Not far from Shenzhen, a massive railway and port expansion development across the Pearl River Delta, slated for completion in 2010, will connect the east- and west-bank factory facilities, which manufacture everything from Apple electronics to Wal-Mart products, to the deep-water shipping ports on the east side of the delta.

"Factories on the western bank have always been at a disadvantage, because they don't have access to the deep-water ports on the east bank," said Andrew Ness, executive director of C.B. Richard Ellis, an international commercial real estate firm. "The railway will change that."

Even more obvious in the next decade will be the economic integration of small villages and cities into major metropolises in parts of the Yangtze River Delta outside of Shanghai and in the periphery of the Beijing-Tianjin corridor in the north. Of course, keep in mind that China's idea of a small village can have a population close to 1 million.

Communities with 500,000 to 800,000 people "aren't even considered cities, but small townships," said Fan Gong, director of the National Economic Research Institute in China. "We will see several regions grab together on the river areas and form large metropolitan areas."

In Pictures: China's fastest-changing cities
According to Gong, the government is abandoning past policies like the urban registration system, which kept farmers in the country, and is instead encouraging urbanization. Gong estimates that by 2050, 75 percent of China's population will live in cities.

The rapidly changing nation may no longer be recognizable to Mao, though his successor Deng Xiaoping might have enjoy the 92 cities with 1 million-plus people.

Editor: canton fair

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