China, like the United States or Europe, is a diverse land with different cultures and languages.
As someone who has traveled the country extensively, I have seen firsthand how unique one province can be from another.
Economically, China has developed spectacularly over the past half-century, and a middle class has emerged; however, this evolution has not occurred at the same rate across the country.
A company’s marketing campaign and popular products may differ from region to region, not merely due to culture but because of the economic level of the citizens.
Therefore, before entering the Chinese market, it may be a good idea to understand the layout of the country so your business can be familiar with its target market.
This article will address the following questions:
- What is China’s city tier system, and why should foreign companies be aware of it?
- How does this city tier system relate to China’s regions?
China’s City Tier System
China’s cities are often categorized by a tier system.
While there is no official list denoting which cities are which, it is generally understood that statistics regarding the following play a role:
- Development
- Economics
- Education
- Transportation systems
Tier 1 cities (T1) are regarded as the most developed cities while tier 3 cities (T3) are seen as less so. Depending on the source, some lists define cities as tier 4 (T4) level and lower.
One can generally assume that the higher-tier cities will exist in more developed provinces, especially on the coast where China’s economy has made the most from international trade.
Another easy-to-remember tip is that provincial capitals tend to be higher tiers compared to other cities in a given province.
Here’s a guide to how Chinese cities are ranked.
Note: There are disagreements elsewhere about what counts as a T1 city.
For example, other articles refer to a “Tier 1+” (Beijing, etc.) as just a “Tier 1,” and the next level down “Tier 1” (e.g., Changsha, Chengdu) as “New Tier 1.”
While GDP and development play a role in determining a city’s ranking in this tier system, it isn’t the only metric.
Let’s look at a map of China.
China’s Different Regions
China can be divided into 31 provinces, municipalities, and autonomous zones.
All of these can be further broken down into economic regions.
As you can see from the above map, there are four unique economic regions.
Six features differentiate each region from one another:
- History
- Geography
- Proximity to Other Countries
- Industry
- GDP
- Administrative Role
Understanding these six aspects of each region is essential for getting an idea of how China’s tier system works.
It would be too much to cover every province in China for this article, so instead, I will briefly explain some general characteristics of some of the country’s economic regions and then choose one province as an example to show how the tier system works.
Eastern China
Eastern China can also be called China’s coastal areas.
Being located next to the Pacific Ocean and the South China Sea, this region has profited from establishing ports to trade with other countries, most notably Hong Kong, Japan, South Korea, Taiwan, Southeast Asia, and any other country globally connected by sea.
Therefore, this region has benefited from more transportation investment to ensure the movement of people and goods, resulting in more people moving to these provinces to find work.
We can further break down this region of China into five distinct areas:
- Direct-administered Municipality: Shanghai, Beijing, and Tianjin
- The Southern Coast: Guangdong
- Fujian
- The Central Coast: Zhejiang and Jiangsu
- Shandong
- The Northern Coast: Hebei
Rather than cover every area, I will go over the first two using the six features I mentioned earlier. I believe these regions can be illustrative of how the tier system works in other places in eastern China.
Direct-administered Municipalities
In the above map, “S” stands for Shanghai, “T” for Tianjin, and “B” for Beijing.
These three cities are considered influential (and big) enough to be their own administrative regions.
At the time of China’s opening up to the world, they each had large economies and populations that called for them to be separate from the surrounding provinces.
Similar to Washington D.C. in the United States, Beijing also earned its independence due to its role as China’s capital.
These reasons are why all of these cities are T1 cities.
The Southern Coast
The next component of eastern China is the southern coast, which is comprised of many cities, each rated at a different tier.
The southern coast includes the province of Guangdong.
English speakers are probably most acquainted with this part of China because of the historical and commercial importance of Hong Kong in Asia. There are many Cantonese speakers (Canton is another name for Guangdong) globally, some of which were the first Chinese to arrive in North America.
One reason for the international presence of Cantonese speakers is Guangdong’s centuries-old role as a port and gate to China. As far back as the Middle Ages, traders from Iran and India used this part of the country to make deals.
Guangdong was also the province where European missionaries built some of their first schools in China. Eventually, Europe’s role in this region would also lead to Hong Kong coming under British colonial rule.
China opened up to the world again in the 1980s, and the city of Shenzhen became the country’s first special economic zone.
Being so near to the highly developed Hong Kong, Guangdong was seen as a perfect place to begin China’s economic reforms and, over the past four decades, a manufacturing hub for many of the world’s products.
Guangzhou, historically a port, has held a similar role.
The economic power and development Shenzhen and Guangzhou have achieved since the 1980s are why they both are T1 cities today.
Other cities near these two powerhouses have profited from foreign investment and development. Guangdong’s cities of Dongguan and Foshan are considered new T1 cities, a label often given to cities that have only recently entered the most prestigious rank.
Other cities in the province have benefited from China’s economic reforms but are not as developed or influential as Shenzhen or Guangzhou.
Huizhou, Zhongshan, and Zhuhai are examples of Guangdong’s T2 cities.
If we look at cities in Guangdong, we can see a correlation between tier and proximity to Hong Kong and Guangzhou.
All other cities that have developed to become T1 or T2 cities surround these two cities.
Cities further away from Guangzhou, Shenzhen, and Hong Kong are still rated T3 cities, like Jiangmen.
Lower-tier cities in the province tend to border—or be close to—poorer provinces, like Zhanjiang’s (T3) and Qingyuan’s (T4) proximity to Guangxi or Shaoguan’s (T4) proximity to Jiangsu.
Other culturally important cities may still have T3 status because of their distance from economically significant zones.
Chaozhou, for example, is well known across China for its unique cuisine, but its location in a mountainous area has made it harder to connect with Hong Kong, Shenzhen, and Guangzhou.
The description of Guangdong (China’s southern coast) is very similar to the provinces of eastern China.
In other provinces, we see a similar trend where cities closer to the ocean have benefited from global trade and are either T1 or T2 cities.
Cities closer to these metropolises also gradually get upgraded, whereas cities further from the coastlines or in more geographically remote regions tend to be lower-tier cities.
Ningbo, a first-tier city in Zheijiang, is an example of this. Despite not being a provincial city, it has one of the largest ports in the world and has become a business center in its own right.
However, the metrics used to understand city tiers are not exactly the same elsewhere.
Let’s look at a very different region of China.
Northeast China
English speakers may know northeast China as “Manchuria,” and this area gets its name from the Manchu people who historically lived in the region and came to rule China during the Qing Dynasty (1644–1912).
It’s worth mentioning that the term Manchuria comes from the Japanese, who controlled the region during WWII, and isn’t what the Chinese today refer to it as.
Given that eastern China’s successes were built on their proximity to the ocean, why was Liaoning province left out of this regional bloc and included in northeast China instead?
This is where location is crucial.
Liaoning is next to North Korea, and while South Korea is still not far away, Shandong province to the south is much closer and has profited from trade with the neighboring East Asian country more.
Tianjin and Beijing are similar to Liaoning in their location, but they are different in that Beijing has had a traditional role as China’s capital city, and Tianjin has a lot of vestige infrastructure from its colonial past.
The latter also acts as Beijing’s main port.
These economic, historical, and political reasons might be why they are both T1 cities and part of Eastern China.
The other two provinces of northeast China, Jilin and Heilongjiang, suffer from being close to North Korea, a closed-off and impoverished nation that doesn’t trade with many countries.
The region’s long winter may also have a role in differentiating it economically from the more southern provinces. Though Heilongjiang relies on agriculture, not all the land is arable.
This region is its own bloc for four reasons:
-
- Ethnic Minorities: As an outlier region with many parts ruled by tribal people like the Manchus, this part of China didn’t fully come under Chinese control until the 14th century. Even during that time, the local people still revolted against the Ming Dynasty’s newly established rule. It wasn’t until the late 19th century that the Han ethnic majority of China was encouraged to migrate to this area.
- Japanese Rule: This area came under the control of the Japanese Empire from 1932 until 1945. Japan was more industrialized than China, so this region became home to industry.
- Mao Era: After Japan returned the area to China in the late 1940s, the newly formed communist government inherited the infrastructure left behind. Northeast China’s already established industrialization became a model for other parts of the country.
- Reform Era: After China opened up, this part of China did not reap the same rewards as other regions closer to global shipping routes. The area remained more under state-owned enterprises (SOEs), and many of these SOEs also closed, and the population left for other parts of China that were receiving more investment, like the southern coast, Shanghai, and Tianjin I mentioned earlier.
Today, Heilongjiang has a larger retired population than the national average, and northeast China is considered China’s rust belt.
Despite the population decline in the area, there are revitalization movements to restore the area to its former prosperity.
How does this background information help us understand how China’s city tier system plays out in this region?
Although Liaoning’s capital Shenyang recently earned the title of a T1 city, the other two provinces’ capitals, Harbin and Changchun, are second-tier cities.
Only one other city in this region is even classified as a tier 1 city: Dalian in Liaoning.
Looking at the map, Dalian’s ranking here makes sense given its role as a shipping center.
Contrary to the rest of this region, Dalian has diversified its economy and is known for its universities and beaches. The city has even been ranked as one of the top 40 science cities in the world.
The lack of T1 and T2 cities in northeast China clearly shows how less developed and economically important it is within the country compared with eastern China provinces like Guangzhou.
History and geography play a part, most notably the legacy infrastructure cities had before China’s reform era and their proximity to trade with other countries. Nevertheless, there are still some other elements to keep in mind.
For this, let’s look at central China.
Central China
Central China is different from the other two areas I’ve covered for one main reason: This is the traditional heartland of China.
Many of China’s traditional capitals exist in Henan and Shaanxi, and this is why T1 city Xi’an has remained the capital of the latter.
Being landlocked, cities in this region also get their importance based on their access to rivers. As is true with many countries, the provincial capitals in central China are all built next to rivers.
For example, Zhengzhou and Wuhan are T1 cities.
Zhengzhou’s ranking as a T1 city makes a lot of sense. Not only does it exist on the Yellow River, one of China’s two most important rivers, but it also has become a central hub for trains, and many manufacturing jobs have moved there in recent years.
Its location in Henan, the province with the most ancient capitals (Kaifeng and Luoyang), also plays a role.
Residing where the Yangtze, China’s other most important river, meets the Han River, Wuhan is a first-tier city for similar reasons. The Yangtze allows the city’s industries easy access to Shanghai.
Likewise, Hunan capital Changsha’s connection to Wuhan and the Yangtze River has played a role in it being a T1 city as well, and its connection by river to other cities should not be overlooked either.
Not all rivers are equal, however.
For example, Nanchang is still rated a T2 city despite also being connected to Wuhan.
Although this capital has also been a fast-growing city in recent decades, the province of Jiangxi is not as industrialized as the nearby provinces, and the city is not connected to as many rivers as Wuhan or Changsha.
We can see a similar pattern with Taiyuan in Shanxi province.
Although it is the capital, it is also a T2 city. It lies on the Fen River, but this river’s access to the Yellow River is a lot more cumbersome compared to Zhengzhou or Xi’an. The province’s focus on coal mining in recent decades makes it less developed than other areas of China.
What else can we learn about lower-tier cities from looking at Central China? Let’s take a closer look at Henan.
Henan
In Henan province, we can again see that geography plays a part. Zhengzhou may be a Tier 1 city, or “New Tier 1,” but there are no other first or second-tier cities in the entire province.
For example, the neighboring Luoyang and Kaifeng are T3 and T4 cities, respectively, so Zhenghou’s status as a first-tier does not rub off on those nearby (as we saw with cities close to Hong Kong). This reveals that the tier system also considers a province’s location within China as a whole.
Zhengzhou may be labeled “the heart of the Chinese railway network” because of Henan’s centrality within the country, but its distance from the ocean has still prevented it from becoming as developed as other provinces.
Still, we may ask why Nanyang, Luoyang, Xuchang, and Shangqiu are T3 cities while Kaifeng, Anyang, and Hebi are rated lower, despite all being “prefecture-level cities.”
Hebi belongs to the smallest prefecture in the province, and the ancient dynasty capital of Anyang is the home of a massive archaeological site. Therefore, factories or other economic activities could interfere with the ancient ruins.
Still, this does not differentiate Luoyang and Kaifeng, both of which also have buildings of historical importance. The answer may be found in how Kaifeng and Anyang were only capitals of one dynasty each while Luoyang was the capital of many.
This is why the latter is also regarded as one of China’s four great ancient capitals along with Beijing, Nanjing, and Xi’an (all first-tier cities).
Summary
Hopefully, this overview gives your business some idea of how China’s city-tier system works and a quick way of understanding a city’s economic standing within modern China.
Nevertheless, things are always changing.
Some cities in central China have been upgraded to T1 in the last five years, which may reveal the country’s government plans for future economic development.
China’s coasts have played a key role in the country’s economy since the 1980s, but new trends are beginning to occur in places like Zhengzhou and Wuhan too.
I was not able to discuss western China today, but the same six elements apply:
- history,
- GDP,
- geography,
- proximity to other countries,
- industry, and
- administrative status.
This is evident in how Chongqing is its administrative region (along with Tianjin, Beijing, and Shanghai) and is classified as a “New Tier 1 city” (like Wuhan, Changsha, etc.)
Sichuan’s Chengdu, like other capitals in geographically and economically important provinces, is also rated a New Tier 1 city.
Provincial capitals more cut off from the world or next to less-developed countries are usually lower tier, e.g., Xinjiang, Tibet, Ningxia, Guangxi, Guizhou, and Gansu.
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Any company interested in doing business in China should monitor changes in the tier system to get a sense of the economic developments and how this could influence business strategy and a marketing campaign.
But if you find yourself looking at a map of China and feel a bit overwhelmed, arrange a free consultation with one of our strategy consultants here to discuss where to concentrate your marketing efforts.
For more information on Chinese marketing in general, there’s our China Digital Marketing 101 page.