China's property woes and U.S. sanctions have hit some cities hard

BEIJING — China's spot struggles and U.S. sanctions person importantly affected immoderate of its cities, adjacent arsenic others payment from Beijing's tech push, Milken Institute's champion performing cities China scale showed Tuesday.

Since 2015, the scale has studied China's large- and mid-sized cities for their economical vibrancy and maturation prospects. The latest mentation mostly compares information for 2023 with that of 2021. Last year, the institute did not people a study owed to a reassessment of its methodology.

Hangzhou, superior of the eastbound Zhejiang state and location to Alibaba and different tech companies, ranked archetypal successful this year's rankings.

While different cities, specified arsenic Zhuhai, erstwhile a "rising star," dropped successful the rankings owed to the slump successful existent estate.

The city, successful the confederate state of Guangdong adjacent Hong Kong, fell 32 places from the erstwhile scale published successful 2022 to 157th place. Suddenly nary 1 bought houses.

"Builders didn't person overmuch wealth to implicit their projects," Perry Wong, managing manager of probe astatine the institute, told reporters successful Mandarin, translated by CNBC.

Property and related sectors erstwhile accounted for much than a 4th of China's gross home product. But successful 2020, Chinese authorities started cracking down connected existent property developers' precocious reliance connected debt.

Wong added that existent property dragged down maturation for respective of the main cities successful that region, but for Dongguan. The metropolis of factories, location to Huawei's sprawling European-style campus, was alternatively deed by U.S. sanctions. Dongguan dropped 15 places successful the Milken scale rankings to 199th place.

The scale looked astatine a radical of 33 ample cities and a radical of 217 tiny cities, past ranked them separately. While the adjacent metropolis of Shenzhen went up successful rankings, the metropolis landed successful 9th place, down Beijing. A bulk of the Chinese companies initially blacklisted by the U.S. were based successful Shenzhen oregon Beijing, Wong pointed retired successful an interrogation with CNBC.

"Zhuhai is an highly bully spot to bash work jobs, to bash adjacent accumulation jobs, high-end accumulation jobs successful biotech," helium said. "So [excluding the existent property impact] it should person a beauteous promising future."

Another metropolis affected by the geopolitical resistance connected exports is Zhengzhou, superior of the Henan state and location to iPhone shaper Foxconn. Zhengzhou fell to 22nd place, down from 3rd.

Historically, Wong pointed out, having power of Zhengzhou, Hefei, and Wuhan person been captious to ensuring power of the country.

From an economical perspective, Hefei, successful the Anhui province, and Wuhan, successful Central China's Hubei province, fared amended successful the latest index.

Wuhan surged by astir 30 places to second, portion Hefei remained among the apical ten. Wong attributed this to Wuhan's efforts to support factories moving during the pandemic, allowing the metropolis to rebound quickly, portion a assemblage successful Hefei received nonstop authorities enactment for technological development.

As for Hangzhou's success, the institute's probe pointed to the city's maturation arsenic a hub for e-commerce, manufacturing and finance.

But asked connected CNBC's "Squawk Box Asia" if Hangzhou's occurrence could beryllium replicated, Wong said it would beryllium difficult, partially owed to the outperformance of the section spot assemblage that's accrued surviving costs.

Correction: This communicative has been updated to bespeak that determination are 33 ample cities and 217 smaller cities successful the index.