Municipalities as Drivers of Investment and Exports

Companies often see municipalities as entities removed from their productive reality, perceiving them as mere tax collectors. However, this can change when companies and municipalities are in tune.

I. The Success Story of Made in China 2025

The Made in China 2025 program counts the city of Hefei, capital of Anhui Province, among its most notable achievements. Li Keqiang, Premier of China from 2013 to 2023, came from this city. He was the second-ranking member of the Politburo Standing Committee of the Chinese Communist Party (CCP) from 2012 to 2022 and one of the drivers, in 2015, of the Made in China 2025 program. Over the last two decades, the economy of this city of more than 9 million inhabitants has grown more than 25-fold, more than double the national growth rate. Today it has become an electric vehicle manufacturing center, surpassing Detroit, with factories such as JAC, NIO and Volkswagen, while BYD is completing an investment of US$5.4 billion in the city.

II. How the Hefei Model Works

Hefei is a city with more than 2,200 years of history. In 1949, when the People's Republic of China was established, it had only 50,000 inhabitants; today it has become a metropolis with a permanent resident population of more than 9 million, covering an area of 11,408 km². Hefei is also known as a National Pilot City for Scientific and Technological Innovation and a National Research and Education Base, thanks to its strong R&D and teaching institutions. The municipal government invests capital directly in leading companies in emerging sectors that private investors consider too risky. Investment decisions are oriented toward the domestic market but above all toward international markets, and are made by officials with market knowledge. State capital then withdraws gradually as the companies' market prospects become clearer. The returns are used to support further projects, maintaining a sustainable industrial chain. Beyond financing, the success of the model rests on the creation of research and development centers, the development of suppliers alongside the main industries, and the attraction of skilled human resources.

Electric battery factory

III. The Hefei Model and Argentine Municipalities

The Hefei Model could be an alternative for Argentine municipalities and provincial governments, especially those with an industrial tradition or in the Norte Grande region that will receive mining royalties from new mining investment projects, as a way to strengthen the industrial fabric and exports that guarantee the sustainability of companies and jobs. Santiago de Chile is a city that signed a sister-city agreement with Hefei in 2007, something Argentine cities could aim for as a way to begin a path of cooperation.

(1) “China wants to go high-tech to boost its economy. Does the success of Hefei city hold the key?” 6-4-2024 Joyce ZK Lim and Lim Min Zhang straitstimes.com

(2) Electric vehicle manufacturer Nio, backed by the municipal government nio.com

“The heart of JAC: The JAC factory in Hefei, China” jaccostarica.com

(3) BOE sixth-generation liquid crystal display (TFT-LCD) device production line in China. hfjtjt.com - boe.com

(4) The nine strategic tasks of Made in China 2025: - Foster innovation, - Promote the use of digital technology, - Strengthen the overall industrial base, - Improve product quality and create global Chinese brands, - Focus on the application of green manufacturing methods, - Achieve innovative technological breakthroughs in the 10 key sectors, - Restructure industries to improve efficiency and output, - Improve the service and manufacturing-service industries, - Globalize Chinese industry. theasiadialogue.com

(5) “What China’s E.V. City Says About the State of the Economy” New York Times nytimes.com

(6) “ Behind 'Hefei model': How reforms reshape China's emerging tech hub” Xinhua | 19-12-2023 english.scio.gov.cn

(7) Hefei Construction Investment Group hfjtjt.com

(8) “Hefei: An emerging city in inland China, Cities”, Wanxia Zhao, Yonghua Zou,.Volume 77, 2018,Pages 158-169 . doi.org

Development of the information industry and technology in China 2023 - scio.gov.cn

(9) Photo of electric battery production in Hefei: spanish.news.cn

(19) Why Do Chinese Local Governments Act Like Entrepreneurs?

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