JLL's China Cities series has tracked and reported on China's economic and infrastructural growth since 2007.

As China's economy and society enter a "new era" its leading cities are becoming hubs of innovation, global interaction and influence. JLL's most recent report, China12: China's Cities Go Global, has identified these leading Mainland cities as the China12.

The China12's focus extends beyond traditional drivers to include "future-proofing" credentials, as an indication of their readiness to embrace change through innovation platforms, business environments and each city's overall livability.

Warner Brown, Associate Director for China Research JLL told WILLIAMS MEDIA, "While well known that China is driving to transition from its traditional growth model to an innovation economy, our report went a step further to identify which cities are best-placed to take advantage of and guide this transition." 

From 287 prefecture-level cities, JLL short-listed 12 cities based on a mix of size, momentum, wealth and global connectivity. 

The China12:

1. Shanghai 
2. Beijing
3. Shenzhen
4. Guangzhou
5. Nanjing
6. Hangzhou
7. Suzhou
8. Wuhan
9. Tianjin
10. Chengdu
11. Xi'an
12. Chongqing

Source: JLL China12: China's Cities Go Global Report

JLL Report - Real Estate Outlook for the China12:

• Office markets: take-up by technology companies has encouraged traditional occupiers to move into co-working space. As the China12 move up the value chain, there is potential for rental uplift in several China12 office markets over the medium term.
• Retail markets: are moving into the next phase of development as e-commerce businesses gain traction. The China12 are likely to become global pioneers in 'new retail' concepts and encourage the integration of online and offline shopping.
• Logistics markets: will continue being defined by supply and demand. Warehousing will continue to be pushed out of the largest China12 markets by higher-value uses, resulting in further growth in satellite cities where industrial land is easier to access.
• Hotel markets: in the China12 are set to gain from the continued expansion of business and leisure travel, and growing MICE activities. The primary challenge for the sector will be absorbing volumes of new supply, but this will lessen over time. 

China as an innovator

In recent times, JLL reports, China has transitioned from imitator to innovator. While it has long been considered as the world's "factory" and while the manufacture and trade of lower-value goods remain a key pillar of China's economy, the country is becoming a source of innovation and a driver of technological change. China's leading cities are set to become key players in the market for information, innovation and technology. 

What makes China's cities so competitive?

Until recently, China's cities developed rapidly on the back of a "one-size-fits-all" model that emphasised high levels of investment and fast growth. Now, the central government has called on cities to limit their dependence on investment and focus on new growth drivers that are more sustainable and better-suited to building competitive cities in a globalised economy. JLL has coined these drivers "future-proofing" metrics. 

Source: JLL China12: China's Cities Go Global Report

Brown also said, "The report also was an effort to shift the narrative of Chinese urban development and city ranking away from a traditional focus on statistics like GDP, growth rates, and investment levels. These remain important, but changes in the global economy and signals from China’s own government indicate that cities will need to do more to prepare for the future. Our “future-proofing” metrics cover talent, innovation, quality of life, and other areas in which cities will need to excel in order to cultivate thriving, diverse economies and world-beating new companies.  All twelve cities identified in the report do well in these measures, and we believe they will become focal points of China’s dynamic new economy."

"Traditional" Metrics

"Traditional" metrics offer a snapshot of the current position and short- to mid-term outlook for China's cities. These metrics analyse 45 variables across six categories:

• Size - measuring population, economic scale and commercial property stock
• Wealth - assessing incomes and consumer spending
• Growth - including population, economic and real estate supply growth
• Connectivity - measuring movements of goods and people by air, rail and road
• Traditional corporate activity - including multinationals and established domestic firms,
• Investment and openness - assessing fixed investment, land sales, foreign direct investment and real estate investment.

Source: JLL China12: China's Cities Go Global Report

"Future-Proofing" Metrics 

JLL has established "future-proofing" metrics which represent the factors that will be important for Chinese cities in the next phase of their development. These metrics analyse 51 variables across nine categories:

• Education - measuring the quantity and quality of (mostly tertiary) education
• Talent - assessing the depth of the talent pool
• Innovation - assessing the level of innovation in terms of patents, R&D spending and start-ups
• "Next Generation" corporate activity - measuring the presence of China's "next generation" of private and innovative technology firms
• Liveability - evaluating a city's retail scene, F&B, and cultural offerings
• Environment - measuring air quality, climate and green buildings
• Infrastructure - assessing both physical and digital infrastructure quality
• Regional clustering - evaluation of a city's proximity to nearby centres of economic activity
• Real estate transparency - assessing market transparency as measured by JLL's Global Real Estate Transparency Index.

 
Source: JLL China12: China's Cities Go Global Report

See how the China12 rank against JLL's "Future-Proofing" Metrics. 

"Going forward, we expect that our “future-proofing” measures will be increasingly important lead indicators of activity and performance in commercial real estate markets. As these markets become more dynamic, we think it will be particularly important for the China12 to cultivate matching levels of real estate market transparency. This will encourage efficient and innovative real estate space solutions, help companies manage costs and create safer built environments for workers and residents. Greater transparency also would be likely to stimulate more investment activity in these markets," says Brown.  

Moving forward, Brown explains, " The China12 cities will be prime beneficiaries of a virtuous cycle in which dynamic local economies, strong infrastructure and high quality of life help attract and retain China’s best talent. This educated workforce is expected to power the innovations and create and grow companies that will define the next stage of China’s (and increasingly the world’s) economic development. This activity will make the cities still more prosperous, making them more attractive to people seeking new opportunities, thus perpetuating the cycle ."

For more information about JLL's report on the China12 click here.

To view the JLL Global Research China12: China's Cities Go Global Report click here. 

For more information or to discuss the report, phone or email Warner Brown, Associate Director for China Research JLL via the contact details listed below. 

Source: JLL

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