A display produced by BOE Technology Group Co. Ltd. at the China International Fair for Trade in Services in Beijing on September 5, 2023 (XINHUA)

The Anhui Provincial Bureau of Statistics announced in early March that Hefei's permanent resident population had reached 10.002 million in 2024, surpassing the 10-million mark for the first time. This achievement positions Hefei as the fourth most populated city in the Yangtze River Delta region, following Shanghai, Suzhou in Jiangsu Province, and Hangzhou in Zhejiang Province.

The Yangtze River Delta region is a vital economic engine of China, encompassing Shanghai and the provinces of Jiangsu, Zhejiang and Anhui. Despite occupying less than 4 percent of China's land area, the region contributes approximately a quarter of the nation's GDP.

Hefei's economic stature was once considerably weaker compared with other provincial capitals within the region. In 2014, the city's permanent resident population stood at 7.696 million.

However, through consistent investment in scientific and technological innovation, Hefei has successfully cultivated several industrial clusters valued above 100 billion yuan ($14 billion), including sectors like new-energy vehicles (NEVs), photovoltaic energy storage and high-end equipment manufacturing. As a result, the city's GDP surged from 515.8 billion yuan ($71 billion) in 2014 to 1.35 trillion yuan ($186 billion) last year, with the permanent resident population growing by 2.306 million from 2014 to 2024.

NEVs are vehicles completely or mainly driven by new energy sources, including battery electric vehicles, plug-in hybrid vehicles and fuel-cell vehicles.

Secret to success 

In China, "permanent resident population" refers to individuals who have resided continuously in a specific administrative region for more than six months. In urban development evaluations, a GDP exceeding 1 trillion yuan ($138 billion) and a population exceeding 10 million are considered key quantitative benchmarks for attaining top-tier city status.

Prior to Hefei, 17 cities in China had a permanent resident population exceeding 10 million, including Beijing, Shanghai, Guangzhou in Guangdong Province and the southern tech hub of Shenzhen. With the exceptions of Shijiazhuang in Hebei Province and Linyi in Shandong Province, all of these cities have also surpassed the 1-trillion-yuan mark in GDP, underscoring the strong correlation between population growth and economic strength.

Hefei's economic trajectory was once unremarkable among provincial capitals. In 2000, its GDP was 48.75 billion yuan ($6.7 billion), a figure that paled in comparison with other provincial capitals nationwide. The city's transformation features three milestones. In 2008, the Hefei Municipal Government made a strategic investment of $5.2 billion to attract BOE Technology Group Co. Ltd. (BOE) and establish China's first sixth-generation thin-film transistor liquid crystal display production line in the city. This pivotal investment broke China's reliance on imports for flat panels. BOE's presence subsequently attracted a cluster of up- and downstream companies to Hefei, forming a comprehensive industrial chain and propelling the development of the city's display industry.

In 2016, ChangXin Memory Technologies Inc., a leading Chinese chipmaker, was established in Hefei to focus on semiconductor development. This marked the beginning of a memory chip cluster that has since taken root in the city.

Hefei's proactive approach to fostering innovation extends beyond the semiconductor industry. In 2020, when domestic NEV manufacturer NIO was on the brink of bankruptcy, the Hefei Municipal Government provided crucial financial support, enabling NIO to establish its China headquarters and production base in the city. This commitment attracted further investment, with BYD investing 15 billion yuan ($2 billion) in 2021 to build a new NEV production base in Hefei.

As of 2024, Hefei's NEV production had exceeded 1.35 million units, an impressive year-on-year increase of 81 percent.

Jia Ruoxiang, Director of the Comprehensive Research Office of the Institute of Spatial Planning and Regional Economy at the National Development and Reform Commission, explained to China Newsweek magazine that Hefei's ability to attract a large influx of people stems from its diverse and high-quality industrial foundation. "Hefei's distinctive and advantageous industries, including chips, displays, automobiles and intelligent manufacturing, are constantly upgrading, continuously creating high-quality employment opportunities," he stated. "People are the most active production factor, and the flow of people largely reflects a region's industrial development status and business environment."

Supporting this growth is a highly educated workforce. According to Hefei Release, the official Weibo (China's X-like social media platform) and Weixin (a super app also known as WeChat) accounts of the Information Office of the Hefei Municipal Government, Hefei had over 27,000 people with a university education per 100,000 residents in 2023, approximately 1.8 times the national average. Furthermore, the number of research and development personnel per 10,000 employed people exceeded 180, roughly double the national average.

In addition to Hefei's rapid economic growth and the development of emerging industries, a plan to further promote the Yangtze River Delta city cluster, approved by the State Council, the country's highest state administrative organ, in May 2016, has pointedly contributed to the city's population growth. This plan designated Hefei, alongside Nanjing in Jiangsu and Hangzhou, as a "sub-center city" within the Yangtze River Delta.

Zeng Gang, Dean of the Institute of Urban Development at East China Normal University, told China Newsweek that Hefei has capitalized on the opportunities presented by the plan by proactively attracting businesses transferred from core cities in the Yangtze River Delta region, such as Shanghai and Suzhou. This strategic move has effectively promoted the upgrading of Hefei's local industrial structure, attracting people to work in the city. According to Hefei Release, migrants comprised 201,000, or 91.8 percent, of Hefei's newly added population in 2023.

New-energy cars roll off the production line at car manufacturer BYD's production base in Hefei, Anhui Province, on June 30, 2022 (XINHUA)

The trials at hand 

Despite Hefei's remarkable economic achievements, the city faces several challenges. Zeng noted that while Hefei has experienced rapid growth in recent years, the economic strength of other cities within Anhui remains relatively weak. "This makes it difficult for most other cities in the province to provide strong support for Hefei's industrial development, which affects the improvement of Anhui's overall industrial competitiveness and the balanced development of the regional economy," he said.

Economic data underscore this disparity among cities in the province. In 2024, Hefei's GDP reached 1.35 trillion yuan ($186 million), while Wuhu, Anhui's second largest economy, had a GDP of 512 billion yuan ($71 billion). Hefei's GDP is more than twice that of Wuhu, and the gap with other cities in the province is even more pronounced. The difference in GDP between Hefei and the cities that rank at the bottom of the province­—Tongling (133 billion yuan or $18 billion), Chizhou (118 billion yuan or $16 billion) and Huangshan (113 billion yuan or $15 billion)—exceeds tenfold.

Zeng further noted that compared with core cities in the Yangtze River Delta region, such as Shanghai, Hangzhou and Suzhou, Hefei's economic foundation and the stability of its industrial system still require further consolidation.

He added that Hefei's innovative development relies heavily on government investment. Should the government make misinformed investment decisions or experience disruptions in its capital chain, the impact on industrial development could be severe. To mitigate these risks, he recommended Hefei diversify its investment sources, encouraging private and social capital to participate in industrial investments. This approach would foster an investment model characterized by the joint participation of the government, enterprises and society at large.

Such diversification would inject greater funding and dynamism into industrial development, thereby enhancing its stability and long-term sustainability, according to Zeng.

Copyedited by Elsbeth van Paridon 

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