How Chongqing's GDP surpassed Guangzhou's to become China's fourth largest city

After more than 30 years, Chongqing surpassed Guangzhou for the first time in 2022 to become China's fourth largest city in terms of GDP. Notwithstanding the pandemic, drought and power cuts in the second half of 2022, the annual GDP of the "Mountain City" (Chongqing) not only outperformed that of the "City of the Goat" (Guangzhou) by 29 billion RMB (roughly US$4.2 billion), its year-on-year growth was also 1.6 percentage points higher. 　　

Academics from both regions pointed out that Chongqing benefits from a second-mover advantage, and has been gradually narrowing the gap with Guangzhou in terms of industrialisation and openness. Hence, its GDP is expected to steadily outpace its rivals for years to come.

They also predicted that the traditional first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen have already become history and the new line-up will see Guangzhou replaced by Chongqing.

The latest ranking of China's top ten cities by GDP was released this month, with Shanghai, Beijing and Shenzhen maintaining their top three spots. In 2021, Shanghai and Beijing had already joined the "four-trillion RMB GDP club", while Shenzhen's GDP had exceeded three trillion RMB for the second consecutive year.

Guangzhou, which ranked fourth in 2021 with a GDP of 33.8 billion RMB ahead of Chongqing, was overtaken by Chongqing in 2022 and fell to fifth place.

Data from the statistical departments of both regions showed that Chongqing saw a 2.6% year-on-year GDP growth in 2022 to reach 2.91 trillion RMB, lagging behind the country's growth rate by a mere 0.4 percentage points. On the other hand, Guangzhou recorded a 1% year-on-year GDP growth to reach 2.88 trillion RMB in the same period, lagging behind Chongqing for both economic indicators.

As an old industrial base in western China, Chongqing had once ranked third in terms of GDP in 1990. However, it was overtaken by Guangzhou the next year and even fell to seventh place in 2003 - its lowest ranking since reform and opening up - after being surpassed by Tianjin and Suzhou. It was not until 2017 that it rose up to become China's fifth largest city in terms of GDP.

Following the outbreak of Covid-19, Chongqing's GDP in the first half of 2020 was nearly 24.2 billion RMB higher than that of Guangzhou, but it was unable to overtake Guangzhou in terms of annual GDP.

Two years later, the two regions pitted against each other to place as China's fourth largest city by GDP. Chongqing's GDP and year-on-year growth rate in the first half of 2022 again surpassed Guangzhou's by 7.8 billion RMB and 3 percentage points respectively. Eventually, Chongqing successfully broke through the dominant positions of Beijing, Shanghai, Shenzhen and Guangzhou, which had consistently been China's top four cities in terms of GDP since 1999.

Professor Qiu Dongyang, dean of Chongqing University of Technology's School of Economics and Finance, told Lianhe Zaobao that the pandemic was the most critical factor in the "tug of war" between the economic outputs of Chongqing and Guangzhou last year. Chongqing was largely impacted by the pandemic in the second half of the year, but its impact on Guangzhou persisted throughout the year.

Peng Peng, executive chair at the Guangdong Society of Reform, told Zaobao that Guangzhou's exports had been affected by the suspension of the China Import and Export Fair (Canton Fair) last year due to the pandemic. At the same time, Chongqing's industrial upgrading had also been more successful than Guangzhou's in recent years. As a result, the combination of several fortuitous factors helped Chongqing overtake Guangzhou in terms of GDP last year.

Peng also pointed out that Chongqing has a second-mover advantage and is bolstered by "decisive factors" such as the size of its demography and land area. Thus, he believes that "it is only a matter of time before Chongqing grows faster and surpasses Guangzhou". As one of China's four municipalities, Chongqing is 11 times the size of Guangzhou and has 1.7 times the resident population.

However, Qiu thinks that population and land size are not the determining factors in Chongqing taking the economic lead. Japan's economy was ahead of China's for many years, and Chongqing's overall development is still slightly behind Guangzhou's.

Nonetheless, he noted that over the years Chongqing has narrowed the gap with Guangzhou in industrial infrastructure, modernisation, urbanisation, talents and opening up. In recent years, Chongqing has performed better than Guangzhou at seizing opportunities in optimising its industrial structure, especially in new energy vehicles, and taking advantage of its wide land area.

Qiu added that the main urban areas in Chongqing and Guangzhou are currently relatively saturated in terms of development. But since the 18 districts, counties, cities and towns in the northeast and southeast of Chongqing, as well as the Chengdu-Chongqing Economic Circle, are still developing, there is a lot of momentum for future growth that can boost economic depth and resilience. Urbanisation in Chongqing is currently at about 71%, still a distance from the 87% in Guangzhou.

Following the almost complete relaxation of China's Covid-19 controls, Chongqing and Guangzhou have both put out strong signals of going all out for the economy, adding to the suspense in the competition to be China's fourth largest economic city.

In line with Chongqing party secretary Yuan Jiajun's call for building a "new Chongqing", the municipality's mayor Hu Henghua set the economic growth target at above 6% in the latest work report on 13 January. The aim is for Chongqing to become a first-tier city by the 30th anniversary of its direct administration in 2027, with its GDP and per capita GDP crossing 4 trillion RMB and 120,000 RMB respectively.

Guangdong province boasts the top GDP in China, and during Chinese New Year on 28 January, it held a high-profile conference on pursuing high-quality development. Furthermore, Guangzhou party secretary Lin Keqing gave guidance that Guangzhou's GDP should surpass 3 trillion RMB this year, with growth of above 6%.

Peng said that the biggest advantage of Guangzhou's economy is that it moves ahead of the curve. Its market economy is well developed and more competitive, the market rules have a more effective role, and it has a favourable industry structure.

However, he noted that the rising industries in Guangzhou's economy are not of a large enough scale, with few leading companies, and its private companies are not strong enough. He said, "Apart from the automobile industry being the sole outstanding sector, support sectors and the new industries and sectors are not large or strong enough... there is not enough spirit of reform, and reform measures are not firm, which adds to the city's flaws."

Main economic indicators, 2022

Peng stressed that if Guangzhou wants to regain its position as the city with the fourth highest GDP in China, it needs a major breakthrough in overall industrial upgrading, including "explosive growth in rising industries and more Fortune 500 companies", but added that it will be a difficult endeavour for now.

Qiu assessed that Chongqing's upper-hand is in driving economic growth with a high volume of investments, and improving transport and logistics through infrastructure, as well as implementing more national policies.

He noted that Chongqing currently integrates both the Chengdu-Chongqing Economic Circle and the New Western Land-Sea Corridor, and can be a handhold to drive the dual circulation policy, to be an important part of China's development amid global geopolitical movements and continued economic friction.

However, Qiu also noted that after years of experimentation, Chongqing's economy still lacks vibrancy. There is still no sustainable development ecosystem, and there is room for improvement in creating a pro-business environment and attracting tech talents. Chongqing's per capita GDP last year was about 90,663 RMB - compared with Guangzhou's of over 160,000 RMB - there is still a large gap in terms of economic quality.

This article was first published in Lianhe Zaobao as "时隔30多年 超越广州重庆跃升中国经济第四城".

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