An unlikely tech cluster exemplifies China’s economic vision
semiconductors. These so-called strategic, emerging industries now account for over 56% of Hefei’s industrial output, compared with less than 27% in 2013. Whatever local officials have been doing, it appears to be “the right mix of industrial policy and private-sector mojo," says Robin Xing, an economist at Morgan Stanley and a Hefei local.
This style of growth is precisely how Xi Jinping, China’s leader, envisions the country’s future. Hefei’s technological progress chimes with Mr Xi’s call for an “Industrial Revolution 4.0", in which China shakes off “low-quality" growth—cheap manufacturing and debt-financed homebuilding—by capturing entirely new industries and their supply chains. This vision reserves special attention for the inland backwaters that have missed out on much of the internet boom in coastal provinces.
If Mr Xi has his way, the next decade of development will look more like Hefei than today’s tech hubs of Shenzhen and Hangzhou. BOE Technology, the world leader in LCD displays, has some of its main factories in Hefei. So does NIO, one of the world’s fastest-growing ev companies.
China’s leader in voice-recognition artificial intelligence, iFlyTek, was founded by the local university. Its most advanced DRAM chipmaker, CXTM, was co-founded by the local government. Foreign companies have also endorsed Hefei’s efficiency.
Volkswagen, a German carmaker, has operated manufacturing plants in the city for years. Earlier this year it announced plans for a €1bn ($1.1bn) innovation centre in Hefei that will help design EVs. Such hubs are rare outside China’s largest coastal cities, especially for multinationals.
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