China: City-Tier Classification Explained

A common mistake made by foreign investors entering China is to approach the country as a single, unified market, according to an article from China Briefing. In reality,the Chinese market is of enormous size, scale, and diversity.

To give an example of this, the country is home to some of the wealthiest cities in the world, such as Shanghai, which records a population equal to that of Australia at about 24 million people, and a GDP that rivals the Philippines at US$469 billion.

China is also home to much smaller, lesser-known cities like Gannan in the north-central province of Gansu, with a population of 710,000 whose GDP recorded in 2016 was US$2 billion. In 2016, Shanghai’s GDP per capita income was over US$17,000 and Gannan’s was about US$2,876.

Consequently, the city-tier classification system offers foreign investors a practical tool to navigate the 613 (officially recorded) cities that make up China. Businesses use the tier categorization to track city development, market trends, and tax policies and incentives, among other things.

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