Behind China’s fastest-growing large metropolis: Aviation, tourism and a possible housing bubble


Robotic arms spray paint a automotive physique shell on the BYD Vehicle Firm Restricted Xi’an plant on December 25, 2019 in Xi’an, Shaanxi Province of China.

Yuan Jingzhi | Visible China Group | Getty Photographs

BEIJING — The Chinese language metropolis of Xi’an stays a brilliant spot of progress in a rustic still recovering from the shock of the coronavirus pandemic.

Xi’an is greatest recognized to many for its Terracotta Warriors — a military of clay sculptures from historical instances. Positioned in central China nicely over 800 miles from the east coast metropolis of Shanghai, Xi’an is without doubt one of the final main city areas earlier than the poorer areas of the west.

Town’s GDP grew 4.5% within the first three quarters of the 12 months, the quickest of all main Chinese language cities, in accordance with Wind Info. Beijing metropolis grew 0.1%, whereas Shanghai contracted 0.3% throughout the first 9 months of the 12 months, the information confirmed. Nationwide GDP is about for roughly 2% progress this 12 months.

Xi’an’s speedy growth displays how native governments are attempting to spice up progress, whereas revealing questions on sustainability.


Excessive-value manufacturing in industries comparable to aviation and prescribed drugs in addition to the event of transportation infrastructure have contributed considerably to Xi’an’s progress, mentioned Perry Wong, managing director of analysis on the Milken Institute.

Within the institute’s rating this 12 months of China’s “Finest-Performing Cities” launched on Dec. 17, Xi’an rose to fourth place, up from sixth place final 12 months and ninth place in 2018.

Excessive ranges of overseas direct funding are one other issue behind Xi’an’s progress, Wong mentioned.

Within the first three quarters of the 12 months, Xi’an mentioned it utilized $6.58 billion in overseas capital, a 7.2% rise from a 12 months in the past. That is a sooner improve than the two.5% improve to $103.26 billion in overseas capital used nationwide, in accordance with official knowledge.

Samsung has invested more than $10 billion in Xi’an, the place the corporate’s semiconductor unit has services for analysis and manufacturing. The South Korean firm is reportedly stepping up its funding and sent hundreds of more engineers to the city earlier this 12 months, in accordance with The Korea Herald.

A few of the Chinese language high-tech corporations situated in Xi’an embody plane components producer Chenxi Aviation, AVIC XAC — a industrial plane producer tied to state-owned protection and aerospace conglomerate AVIC — and Western Superconductor, which producers titanium merchandise and researches purposes in aerospace, medical and different industries.


Serving to these high-tech corporations appeal to expertise, and the town to construct its wealth, are authorities insurance policies that make it straightforward for college graduates to settle in Xi’an and purchase a house. Folks in China are tied to their hometown by means of the hukou system, which makes it laborious for migrants to the most important cities like Beijing to purchase residences or ship their kids to native faculties.

Stress-free hukou restrictions is a method in a progress race amongst China’s up-and-coming city areas, so-called “new first-tier cities,” mentioned Yimin Zhao, an assistant professor within the city planning and administration division at Renmin College. “They’re competing with one another to draw not solely capital, not solely high-tech, but in addition expertise.”

In China’s growth system, a inhabitants improve permits the native authorities to increase the town limits, get extra land allotted for building and make cash from property offers, Zhao mentioned.

Reflecting excessive demand — and certain hypothesis — Xi’an’s home costs soared a cumulative 46% within the three years by means of 2019, in accordance with the Sweetome Hurun Global Price Index. The annual report by rental trip residence operator Sweetome and wealth tracker Hurun Report discovered that Xi’an retained the third spot globally final 12 months by worth improve, up 19.7%.

The beneficial properties have continued this 12 months, albeit at a slower tempo.

Costs for newly constructed industrial housing in Xi’an rose 7.1% in November from a 12 months in the past, in accordance with the Nationwide Bureau of Statistics. That is among the many 10 quickest paces for 70 massive and medium-sized cities.

Town’s inflow of patrons and high-rise developments has attracted too many speculators, inflicting an unsustainable worth bubble, whereas creating site visitors and issues of safety for an excessively crowded metropolis, mentioned Yuan Guoqian, president of Xi’an Xiaoyuan Know-how. The corporate’s analysis advocates that cities pursue extra sustainable growth by means of two or three-story townhouses.

Yuan mentioned the concept is starting to search out some traction, and {that a} mission within the Weinan area on the northeastern outskirts of Xi’an has almost accomplished section one, because of help from native authorities. “They perceive nobody desires this sort of high-density dwelling,” he mentioned, in accordance with a CNBC translation of his Mandarin-language remarks.

Development challenges

Xi’an’s recognition amongst vacationers — a promoting level for builders — has additionally been a draw back within the wake of the coronavirus pandemic.

Town remained one of many 10 hottest vacationer locations in China this 12 months, in accordance with reserving web site

However since June, new enterprise registrations in Xi’an have plunged roughly 40% from a 12 months in the past, whereas different main inland Chinese language cities of Chengdu and Chongqing have seen will increase of 15% and seven%, respectively. That is in accordance with Chinese language enterprise database Qichacha.

“This 12 months, the financial system is not pretty much as good as prior years, so there is a restrict (on shopper spending),” mentioned Mao Wei, normal supervisor of the Zhonghua County tourism space that is below growth about an hour’s drive from Xi’an. That is in accordance with a CNBC translation of his Mandarin-language remarks.

He mentioned the variety of guests has begun to choose up since April. However he does not anticipate a lot return on the years-long mission till folks start to remain extra at its inns, and extra residential and industrial components are accomplished.

Talking broadly concerning the tourism trade, Mao mentioned, “General 2020 is not so good as 2019 as a result of everybody misplaced cash within the first quarter.”