Behind China's fastest-growing big city: Aviation, tourism and a potential housing bubble

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  • The central Chinese city of Xi’an saw its GDP grew 4.5% in the first three quarters of the year, the fastest of all major Chinese cities, according to Wind Information.
  • High-value manufacturing in industries such as aviation and pharmaceuticals, and development of transportation infrastructure have contributed significantly to Xi’an’s growth, said Perry Wong, managing director of research at the Milken Institute.
  • However, the city faces challenges from a surge in house prices and the coronavirus pandemic’s affects on tourism.

BEIJING — The Chinese city of Xi’an remains a bright spot of growth in a country still recovering from the shock of the coronavirus pandemic.

Xi’an is best known to many for its Terracotta Warriors — an army of clay sculptures from ancient times. Located in central China well over 800 miles from the east coast metropolis of Shanghai, Xi’an is one of the last major urban areas before the poorer regions of the west.

The city’s GDP grew 4.5% in the first three quarters of the year, the fastest of all major Chinese cities, according to Wind Information. Beijing city grew 0.1%, while Shanghai contracted 0.3% during the first nine months of the year, the data showed. National GDP is set for roughly 2% growth this year.

Xi’an’s rapid expansion reflects how local governments are trying to boost growth, while revealing questions about sustainability.

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High-value manufacturing in industries such as aviation and pharmaceuticals as well as the development of transportation infrastructure have contributed significantly to Xi’an’s growth, said Perry Wong, managing director of research at the Milken Institute.

In the institute’s ranking this year of China’s “Best-Performing Cities” released on Dec. 17, Xi’an rose to fourth place, up from sixth place last year and ninth place in 2018.

High levels of foreign direct investment are another factor behind Xi’an’s growth, Wong said.

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