How Much Do You Rely on Your Capital City?

Capital cities in China are usually considered the centers of the provinces they are in. Thus it could gather the best resources in the whole province. As a result， the proportion of the capital city’s economic volume usually takes a big part of the province.

However， the situations in different provinces are different from each other. Generally speaking， the provinces in West China are more dependent on their capital cities than the coastal provinces.

Western Provinces More Dependent on Capital Cities

If one city’s economic volume takes one quarter of the province’s total volume， this city is of great importance for the province’s economy. If the economic volume of a city takes more than 30% of the whole province’s total volume， it means the province is highly dependent on this city.

The data about the 27 provinces and autonomous regions shows that there are 15 provinces with the capital city’s economic volume accounting for one quarter of the whole provinces’ level and ten provinces with over 30% of its economic volume gathered in the capital cities.

Among them， Yinchuan of Ningxia and Xining of Qinghai respectively take 51.6% of the economic volume of each province.

Jilin and Heilongjiang， two northeastern provinces of China， are also highly dependent on their capital cities. Changchun of Jilin took 41.2% of this province’s GDP while Harbin of Heilongjiang accounted for 38.34%. Wuhan of Hubei and Chengdu of Sichuan are also the “pillar capital cities” as Wuhan takes 35.95% of the GDP of Hubei while Chengdu takes 35.4% of Sichuan’s economic volume.

Why are these provinces so dependent on their capital cities？ That’s because these capital cities have higher administrative levels and are more appealing to industries， enterprises， investors and talents of surrounding places. Many large industrial projects are located there.

Wuhan and Chengdu are respectively the central cities of Central and West China. They have the access to the resources of education， healthcare and transportation. Therefore， they are the magnets for economic resources.

In addition， Kunming， Lanzhou， Changsha and Guiyang， which are capitals of Yunnan， Gansu， Hunan and Guizhou， also take leading places in the economy of these provinces.

Hu Xiaodeng， director of Guizhou Provincial Academy of Social Sciences， says that the capital cities in Central and West China are usually the monopole core cities and various public resources， including the one of education， traffic and healthcare of the entire provinces are gathered in this province.

“This is closely related to the position of market in these places，” says Peng Peng， Vice President of Guangdong Institute of Comprehensive Reform. The capital cities usually have greater administrative power. In the less market-oriented provinces of Central and West China， the administrative power has a huge influence， rendering the infrastructure and various resources of other cities weak and unreliable.

Certainly， not all central and western provinces are highly dependent on their capital cities. Zhengzhou， Henan and Taiyuan， Shanxi could only take 20% of the economic volume of each province. Henan is the most populated province in China and governs 18 prefecture-level cities. Therefore， its capital city takes a comparatively smaller portion of the GDP. Another exception is Inner Mongolia. Its capital city Hohhot only takes 16.1% of the entire GDP of this autonomous region. In addition， Hohhot is only the third largest economic power in Inner Mongolia and is far behind Erdos and Baotou， the top two cities in Inner Mongolia.

Coastal Area： No Higher than 1/4

In comparison， the coastal provinces are much less dependent on their capital cities. Guangzhou， in spite of its being the third largest economy in China， only takes 24.79% of Guangdong’s GDP. Hangzhou takes 32.1% of Zhejiang’s economic volume while Fuzhou， 20.59% of Fujian.

As Peng Peng analyzes， the coastal provinces are more market-oriented in terms of economic development than the inland area. Local governments of different cities are more eager to develop their economy. In addition， coastal areas have better development in the urban agglomeration. With higher urban intensity and better infrastructure， many non-capital cities in coastal areas have ports， airports and high-speed railways， which provide them with good development conditions.

For example， in Fujian， the Xiamen Airport’s passenger throughout 2013 was twice as high as the one of Fuzhou Airport. The airport in Qingdao is 80% busier than the one in Jinan. The airport in Dalian also accommodates more planes and passengers than the Shenyang Airport.

In the economic development， coastal provinces usually have “twin stars”， such as Guangzhou and Shenzhen for Guangdong， Fuzhou and Xiamen for Fujian， Jinan and Qingdao for Shandong， Shenyang and Dalian for Liaoning.

Jiangsu and Shandong， which are the second and third largest economies in China， happened to be the least dependent on their capital cities. Nanjing and Jinan only take 13.63% and 9.86% of the GDP of each province. That’s because the provinces have a lot of prefecture-level cities and there are more developed cities there.

For example， Suzhou and Wuxin are the long-term champion and runner-up of Jiangsu in terms of the GDP. Nanjing， the capital city of Jiangsu， only ranked No. 3 in the past. It did not surpass Wuxi until the third quarter of 2014 but was still far behind Suzhou.

Also， there is a long way to go for Jinan to get rid of its title as “No. 3 city in terms of GDP” in Shandong. Last year， among the 17 prefecture-level cities in Shandong， the economic volume of Jinan only equals 65% of Qingdao’s economy and is 40 billion yuan less than Yantai. Its GDP only takes 9.87% of the entire province’s GDP， making it the only capital city in China whose economic volume takes less than 10% of province’s figure.

Growing Dependence on Capital Cities

However， no matter in coastal or inland areas， there is a general trend that the provinces are more and more dependent on the provinces in terms of economy.

For example， Guiyang saw the GDP of 174.198 billion yuan in the first three quarters of 2014， up 13.9% year on year. The growth rate is respectively 6.5 percent and 3.2 percent higher than the average growth rate of China and Guizhou Province. The figure takes 28.2% of the entire province， 2.2 percent higher than a year before.

Another instance is Changsha， Hunan. In 2010， Changsha took 28.5% of Hunan’s GDP. In the first three quarters of 2014， the proportion was increased to 30.72%. Hefei， Anhui accounted for 22.4% of the GDP of the entire province in 2010 and now the figure is 23.44%.

The increasing dependence on capital cities is that the industrial transfer into inland areas has been picking up its speed since the 2008 financial crisis. During the industrial transfer， the capital cities are the major choices of many big enterprises. For example， when Foxconn began its investment in inland areas， the capital cities， like Taiyuan， Wuhan， Chengdu and Guizhou， are its primary targets.

Peng Peng says that in inland provinces only capital cities have big international cities while the other cities could only host small or no airports. “Large enterprises will not go to the remote cities that are several hours’ drive from the capital city. Anyway， if a non-capital city is connected in the high-speed railway， it will gain momentum of development too.”

On the other hand， when the foreign trade stumbled these years， the Chinese economy is more dependent on the investment and internal demand. In the four-trillion stimulus package after 2008， the infrastructure has absorbed a lot of funds， which are mostly thrown into the capital cities.

Lin Jiang， Dean of the Department of Finance and Tax of Sun Yat-sen University， says that the regional economic development is now more related to local governments’ capability of integrating resources. The capital cities are better at integrating the resources of land， technologies and so on. It is no wonder they are developing faster in these years.