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Diversifying wealth and opportunity – the rise of China’s inland cities

China’s inland provinces are becoming increasingly accessible to the global economy. Thanks to new air routes, their cities have become more accessible for business, trade, and tourism. For example, it is now possible to fly direct from Amsterdam to Hangzhou, from London to Chengdu, from San Francisco to Wuhan, and Frankfurt to Changsha.

This connectivity by air is set to continue as China’s inland cities are undergoing a process that McKinsey & Company calls ‘city transformation’. Defined by the World Economic Forum as cities with over 10 million inhabitants, China already possesses at least six megacities, most of which are on the coast. The problem, though, is that this concentration of prosperity has led to a severe geo-economic imbalance as workers have flocked from far and wide to metropolises like Beijing and Shanghai, resulting in an acute ‘brain drain’ in inland China. More than 163 million people have already moved to coastal cities, the most extreme impact being seen with the meteoric rise of Shenzhen, where the majority of inhabitants came from other parts of China.

The recent rise of second and third tier cities as commercial hubs, away from the coastal powerhouses, is a consequence of the Chinese government’s policies to redress this imbalance. Sichuan province’s capital Chengdu, in south west China, has seen growth on the back of recent manufacturing capability developments. Another example is Zhengzhou, the capital of Henan province, where plans are underway for a new airport and a high-tech manufacturing zone. Henan retains more than 50% of its population, many of whom are increasingly choosing to seek work in the province, and it is hoped that Zhengzhou’s resident population will increase to megacity levels of 15 million by 2020. 

Many ‘home provinces’ are experiencing a higher economic growth rate than most coastal provinces went through in the second decade of this century. Provincial megacity development has played a huge part, but the challenge remains to retain the most educated workers, who continue to gravitate towards the coast.

I am always impressed with the rate of change within China. In spite of the economic slowdown, the pace of change is staggering, and I have seen the opportunities this growth has provided to local economies first-hand. Across the country, the RSM presence in China includes 40 offices, with many of them situated in growing inland cities such as Chengdu, Urumqi, Tianjin, Changsha, Xining and Taiyuan. These new economic hubs have attracted substantial investment from Chinese and overseas companies, and this is continuing. I have no doubt that the development and success of the new megacities will continue to accelerate, and these changes will be crucial to the success of our clients as their businesses also grow. What's most exciting is the wealth of opportunities that these changes bring to us all.

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Author

Jean M Stephens
Chief Executive Officer

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