China’s ‘trillion-yuan districts’ reveal gains and gaps of its hi-tech push

The anticipated rise of Shenzhen’s Nanshan district to a “trillion-yuan district” marks a monumental milestone, placing it alongside Shanghai’s Pudong and Beijing’s Haidian as the only districts to reach such a GDP threshold. Beyond a mere numerical benchmark, the “trillion-yuan” label signifies China’s transition into a technology-powered economic era. This achievement underscores more than local success – it amplifies the resilience of China’s economy, increasingly driven by hi-tech innovation. The pace and quality of the nation’s future growth will depend on the ability of these knowledge-intensive hubs to innovate, navigate global headwinds and seize opportunities in emerging industries. Nanshan district exemplifies China’s shift from “Made in China” to “Created in China”. Looking at the broader “trillion-yuan club”, a common thread emerges: each district is powered by the knowledge economy and technological innovation. Across China’s hi-tech parks, energy is palpable. Passionate entrepreneurs turn fresh ideas into viable ventures; debates fill cafes, focused on the next breakthrough. This dynamism reflects economic vitality, as evidenced by a steady surge in new tech firms. Official statistics show more than 1 million new enterprises were established in China’s emerging and future industries from January to November 2025. This included 775,000 firms in sectors such as information technology and advanced manufacturing. Future industries – a category spanning healthcare, artificial intelligence (AI) and energy – saw growth of 35.8 per cent, adding 283,000 new companies. China’s strategic shift towards hi-tech innovation as a primary economic driver showed early success in 2025. Sectors such as new energy vehicles, industrial robots, AI and advanced electronics are contributing substantially to GDP. The hi-tech sector’s share of China’s GDP rose to an estimated 16.8 per cent last year and is projected to reach 18.3 per cent this year, nearly double its 2017 level. This transformation highlights how hi-tech industries are becoming the economy’s main shock absorber, offsetting slowdowns in traditional pillars such as real estate and low-end manufacturing. The Chinese economy looks more resilient than it feels. At the same time, it feels more stagnant than it looks. There are two sides to the story of China’s economy. In 2025, China’s property sector remained mired in a severe downturn. The prolonged slump has eroded household wealth, strained local government finances and heightened risks for the banking sector. Notably, banks have been reluctant at times to push heavily indebted developers into bankruptcy, opting to keep their financial distress undisclosed rather than triggering formal insolvency. China’s economy can be accurately described as one of “ice and fire” – a stark contrast depending on the sector or individual in question. This divergence has intensified since the end of the Covid-19 pandemic lockdowns. While headline GDP growth has continued to meet its annual target of around 5 per cent, the benefits of this expansion have failed to translate into broad-based public confidence or prosperity. The “ice” is palpable. A deepening property downturn and mounting local government debt continue to suppress economic vitality, eroding household wealth, weakening employment prospects and dampening consumer sentiment. Consequently, growth in household consumption has slowed markedly. Meanwhile, the “fire” burns in hi-tech and advanced manufacturing sectors, which are expanding rapidly in terms of output and investment. Yet these industries, though they add high amounts of value, have a limited capacity to absorb labour. Their gains are often concentrated, leaving ordinary citizens with little direct sense of participation or benefit. As a result, the dynamism in these sectors feels disconnected from the daily economic reality of many people, creating a persistent disconnect between measured growth and lived experience. Even for China’s most successful electric vehicle makers, profit margins remain low and under pressure. Intense domestic price competition, significant overcapacity and the reduction of government subsidies have eroded profitability across the sector. In 2025, the overall operating margin for China’s auto industry was less than 5 per cent. BYD, one of China’s most profitable carmakers, reported a margin of 5.2 per cent in 2024, less than half of Toyota’s 11.9 per cent operating profit margin. Beyond profitability concerns, major US and Western technology firms are moving to reduce their footprint in mainland China. This retreat is visible in key innovation hubs such as Shanghai’s Zhangjiang Hi-Tech Park. Microsoft closed its IoT & AI Insider Lab there in early 2025 and Amazon closed its AI research lab in July of that year. The trend extends to other giants such as IBM, which significantly scaled back its China research division and laid off more than a thousand employees. Geopolitical tensions are now pushing even China’s brightest tech stars to abandon their roots. A prominent example is the Chinese AI start-up Manus, which was acquired by Meta to bolster its advanced AI capabilities. Manus has been focused on developing a general-purpose AI agent designed for research, automation and complex tasks. With Meta’s landmark US$2.5 billion acquisition, however, it is no longer a Chinese company. Even before the acquisition, Manus closed its Beijing office and moved to Singapore. The firm now has offices in San Francisco and Tokyo, with another in Paris expected to open soon. The ascent of China’s “trillion-yuan districts” tells an exciting story of transformation – a decisive pivot towards a hi-tech-driven economy. The true measure of this progress, however, will be its translation into shared prosperity, ensuring that every citizen can feel its benefits in their daily lives.

China’s ‘trillion-yuan districts’ reveal gains and gaps of its hi-tech push

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}China’s pivot to a tech-driven economy is thrilling, but its success will be judged by how it improves people’s everyday lives

China’s pivot to a tech-driven economy is thrilling, but its success will be judged by how it improves people’s everyday lives