Je Is}s\@n <2 eller CE Clea) Ter’ nego Pee) Inside the growth engine A guide to China’s regions, provinces and cities Se end eeu an We Ce Ren eS Cuan enone Ren Una ee Ra provinces and municipalities and 21 big cities. MO Cee eae on Se Spain or Canada by 2020, CNPP nL De O CG CCS nee Re oer CC Vas Cee RS ROC oer cur hau Rn aC cL acres Cusnine ont ne HSBC <> December 2010 The emperor is far away “The sky is high and the emperor is far away” is an old Chinese saying that refers to how much local officials ean achieve themselves with litle supervision from above. It is an adage that is very relevant to ‘China's dynamic expansion today as much ofthe country’s growth is being driven by local initiatives and developments, rather than by Beijing ‘Chinese reforms have empowered local governments with unprecedented economic authority following @ process of economic decentralisation that began in 1979, Indeed local officials in China’s provinces and cities have occasionally reduced the effectiveness of Beijing’s policies, as shown by the capital’s recent difficulties in cracking down on property speculation. This brings to mind a modern rendering ofthe old saying, namely that “there are policies above and counter-measures below.” ‘To ty and capture the scale of this local dynamism, we have put together 244 page guide, covering 31 provinces, municipalities and autonomous regions and 21 major cities. For each, we give key economic, financial and demographic daa, list their strengths and challenges, and provide a five-year outlook, ‘This “bottom up” perspective on Chins, rather than the usual “Yop down" one, has thrown up some extraordinary statistics, > By 2020, China will have six provinces with an annual GDP of more than USDI trillion, equal to six countries the size of Russia (or Spain or Canada). > With 47% of the population now living in cities, ight Chinese cities have a population of more than 10m, and 93 have more than Sm. By comparison, in the US only New York City has a population of ‘more than Sm. > Beijing, China's Washington DC, is also China's Silicon Valley. Its Zhongguancun area saw 23 high- tech IPOs in 2008, against ust one for Silicon Valley, There have been another 35 IPOs so far in 2010. > Kunshan, one of ,000 county-level cities, produces more than half of the world’s notebook PCS, oF 85m units and yet IT manufacturing is not even ils top-ranked industry. » Suzhou, one of 280 prefecture-level cities, has a per capita GDP which is 70% and 46% higher than [Beijing and Shanghai, respectively. > Jiangsu, a province litle known to outsiders, is poised to overtake the much better-known southern province of Guangdong to become China’s largest provincial economy as early as 2012, >The 1.5m inhabitants of Erdos, city rich in natural resources inthe otherwise poor western part of the country, will have a higher GDP per capita than Hong Kong in three years time.