China has spent the last three decades building and strengthening its links with cities worldwide through the outward flow of goods, investment, people and, more recently, a wave of corporate expansion.
From San Francisco to Seoul, the financial, economic and cultural aspects of China’s international ambitions have become increasingly visible.
Jeremy Kelly, global research director, and author of the China Cities Go Global report, says: “While the Belt and Road Initiative, focused on Chinese financing and construction of new infrastructure overseas, is the major narrative around China’s internationalization, increasingly its global influence will be felt in much more diverse and innovative ways.
“We’re seeing China’s ‘next generation’ businesses greatly enhancing their links with the rest of the world and, while the high order business centers like New York and Tokyo will continue to be locations of choice, by virtue of size and strength, we can see a shift towards large consumer markets in Southeast and South Asia. Meanwhile, tourism and trade will continue to play a role in forging links between China and international cities.”
View the slideshow to find out which cities have the strongest links with China.
As a key gateway to Southeast Asian markets for financial services and logistics, Singapore shares longstanding trade relationships with China, not to mention a deep cultural affinity. The city-state will play a key role in enabling China’s Belt and Road roll out, which will support demand within its well-established financial and professional services sectors. And a growing cohort of fast-growing Chinese firms are choosing to do business with, and within, Singapore, making it the number one destination of choice for Chinese corporates. Many Chinese firms are lured by Singapore’s ability to foster innovation, as well as its engineering and scientific talent pool.
Chinese capital has poured into New York’s real estate in recent years with several high-profile, trophy deals such as the purchase of the Waldorf Astoria along with 245 Park Avenue, 717 Fifth Avenue and One Chase Manhattan Plaza. While it may be the second most connected city to China overall, according to JLL, New York tops the list in terms of real estate investment.
Chinese developers have spent more than $2.5 billion since 2013 on buying up land, with a number of major projects such as Pacific Park, Central Park Tower and South Street Seaport impacting New York’s cityscape.
While China’s ongoing measures to restrict overseas investment, coupled with political tensions between the two nations, could impact direct investment volumes and limit the number of megadeals, New York’s size, transparency and strategic importance as an entry point to the U.S. will continue to attract China’s business activity. New York is already among the leading locations for Chinese financial and professional services companies and the Belt and Road Initiative will open new opportunities for the city’s financial industry to fund large scale infrastructure projects.
Australian cities have been punching above their weight in terms of their ability to attract Chinese capital for several years thanks, largely, to their relative proximity, safe-haven status, and openness to overseas investors. In third place overall, Sydney is by far the most sought-after location for Chinese buyers looking for land with land sales totaling US$4 billion between 2013 and 2017 and developers such as Ping An, Greenland and Country Garden active in the market. Corporate leasing activity is on the rise, too, with some major Chinese companies such as the Bank of China owning and occupying space in the city.
But it’s not all about money flowing in; Chinese tourists are increasingly flocking to the city for a taste of its culture and beaches while students are opting for its world class universities. Indeed, China overtook New Zealand as Australia’s top source for visitor arrivals this year.
An innovative, transparent and mature market, Tokyo takes the fourth spot for its ability to attract Chinese capital and companies alike. In recent times, Chinese investors have paid close attention to prominent Japanese technology firms such as Nissan, Toshiba and NEC as they seek to gain access to new technologies. It sits only behind London and Singapore in the corporate footprint ranking as Chinese firms, especially financial and professional services, have long had a foothold in the city. Increasingly, however, tech firms are flocking to forward-thinking Tokyo. Only Singapore, Silicon Valley and Seoul surpass Tokyo in attracting innovative e-commerce, FinTech and consumer electronics firms who are keen to capitalize on the city’s expertise in these areas.
From cars to K-pop, to retail and tourism, trade ties between China and Korea are critical to the success of both economies; China is South Korea's largest trading partner, while South Korea is the third largest market for China. Only Singapore and Silicon Valley attract more Chinese technology firms, and the Korean capital also ranks highly among financial services companies. However, Seoul is the only city in the top ten lacking in major real estate investment from mainland China but activity is expected to grow as investors follow corporate expansion. Like in Tokyo, tech firms - and financial services – are top of the list as China seeks to strengthen its technology capabilities.
London’s financial credentials, and its position as a landing point for other European markets, have helped to maintain its appeal among Chinese businesses even with uncertainty surrounding Brexit. In recent times, investors from mainland China and Hong Kong have piled into London, snapping up trophy assets from office skyscrapers such as the Walkie Talkie (20 Fenchurch Street) and the Cheesegrater (122 Leadenhall Street) to residential developments, placing it second in both the corporate and investment activity rankings. Meanwhile, Chinese travelers continue to spend their renminbi in London’s luxury stores, restaurants and hotels, many of which employ Mandarin speaking staff, especially during the major holiday period such as Chinese New Year when visitor numbers spike dramatically.
The Southeast Asian megahub already has long-standing links with China and these are set to deepen as Chinese firms seek to benefit from growing numbers of middle class consumers. As such, they’re snapping up office space and driving up leasing activity in the city. Tourists are also flocking to Thailand’s cities and beaches with almost 10 million visits in 2017.
Culturally, China shares more similarities with its Southeast Asian neighbors than Western markets and many of the products and innovations coming out of China – from FinTech to food – are easier to market in this part of the world, setting the scene for more Chinese companies to consider expanding their footprint in the Thai capital. The Belt and Road initiative will also strengthen ties with Chinese involvement in Southeast Asia’s planned high-speed rail network from Bangkok to Nakhon Ratchasima.
A global center for entertainment with a thriving technology scene, Los Angeles is firmly on the radar of Chinese companies and investors. The city received more than US$1 billion of Chinese real estate investment between2014 to 2017. Elsewhere, Chinese developers have also been active building some of LA’s most eye-catching new landmarks including Metropolis and other large-scale mixed-use developments. LA’s thriving tech scene is also of interest to China’s booming tech sector at home; the future could see stronger ties between LA and Chinese cities such as Shenzhen.
Melbourne is another Australian city punching well above its weight for investment activity. Between 2013 and 2017, Chinese investors ploughed more than $1 billion in both commercial real estate investment and land sales in Melbourne, largely due to its safe-haven reputation, openness to overseas investment and Chinese interest in the city’s residential market. Furthermore, the city is attracting growing numbers of Chinese companies, with headquarters of online retailers Alibaba and JD.com. Tourism and education links between Chinese cities and Melbourne are also helping to reinforce its position. Meanwhile, Chinese buyers purchased the John Holland Group – a Melbourne-based construction firm – which is heavily involved in a number of major infrastructure projects across Australia, including Melbourne Metro.
The beating heart of the Bay area - the U.S.’s primary technology hotspot - San Francisco is a mainstay market among Chinese firms and is ripe with potential to forge even greater links as corporate China expands its web of influence. Tech-rich West Coast cities offer Chinese firms the talent, advanced technologies and opportunities for investment they need to grow internationally. For investors, San Francisco has long been a favorite destination both for commercial real estate – receiving more than $1 billion of mainland Chinese capital - and land sales as Chinese developers such as Oceanwide Holdings, which is building the Oceanwide Center in San Francisco’s Transbay neighborhood, become increasingly active in the market.