Xi’an is the capital of China’s Shaanxi province and one of the country’s Four Great Ancient Capitals. Home to one of China’s most notable historical attractions, the renowned Terracotta Army of Emperor Qin Shi Huang, the city has a thriving tourism industry.
Xi’an is a sub-provincial city with direct jurisdiction over 10 districts and three counties, with a total population of approximately 8.59 million. Since 2000, Xi’an has benefitted extensively from the Chinese government’s ‘Go West’ policy to develop China’s western interiors. Xi'an forms part of the West Triangle Economic Zone in China, along with Chengdu and Chongqing. As the largest economy in China’s northwest region, Xi’an was listed as one of the country’s 13 emerging megalopolises in a 2012 report by the Economist Intelligence Unit.
The city’s GDP was US $74.28 billion (RMB 488.41 billion) in 2013 – registering a growth rate of 11.1 percent year on year – and contributed 30.4 percent of Shaanxi province’s total GDP.
The U.S. is Xi’an’s largest trading partner. Kansas City and Xi’an became sister cities in 1989.
The five pillar industries in Xi’an are IT and high-technology, equipment manufacturing, tourism, modern services, and culture. The value added by these industries accounted for about 51 percent of Xi’an’s GDP in 2012. Overall, industry contributed to 43.3 percent of the city’s GDP in 2013 while services accounted for 52.2 percent.
Shaanxi province is rich in natural resources that feed into a range of heavy industries in Xi’an, including defense hardware, power transformers, steel production, non-ferrous metals, non-metallic minerals, fuel processing, and chemical products. Other leading manufacturing industries include electronics, textiles, meters and instruments, aircraft, pharmaceuticals, building materials, and food products. The city has also made concerted efforts to attract multinational corporations (MNCs) such as Samsung and Bosch to strengthen its science and technology capabilities. State-owned factories in the area include the Xi’an Coal Mining Machinery Company and Xi’an Steel.
Xi’an has also seen the growth of domestic financial and professional services as well as software outsourcing, in which more than 800 firms are engaged. The city also recently completed a ‘Software New Town’ – an e-commerce and tech start-up hub in the city.
The tourism industry is one of the strongest growth areas of Xi’an’s services sector due to the city’s numerous historical sites, museums, hotels, and related tourist infrastructure. Xi’an is also China’s third-largest education hub and the northwest region’s retail center.
Machines, Engines, and Pumps
Xi’an is an old military industrial center. While the lead industry is equipment manufacturing, other important industries include machinery, automobile manufacturing, and metallurgy. This is helpful in understanding why mechanical goods, including those imported from the U.S. - such as machines, engines, and pumps - dominate imports bound for the city.
This is a growth opportunity for American exporters, as U.S. export data showed a negative trade balance for machines, engines, and pumps in 2014 despite the sector growing by 56.3 percent to reach US $219.8 billion.
Electrical goods continue to be a strong industry for U.S. exporters in Xi’an, as the city has a prominent defense sector, a nascent industry manufacturing LEDs and photovoltaic materials, and an expanding IT and hi-tech industry. The U.S. electrical equipment manufacturing industry has been in decline since the 2008 recession due to increasing international competition. Second-tier manufacturing cities in China such as Xi’an can become important markets for U.S. traders.
Xi’an is northwest China’s primary retail center, and attracts shoppers from Shaanxi and neighboring provinces. Growth in this segment builds on the city’s favorable demographics, a large, well-educated workforce, and an expanding consumer class.
Retail segments (clothing, footwear, toys and games) have thus far exhibited product trade balance deficits for the U.S. China’s markets provide growth opportunities for U.S. exporters who can tap into the buying needs of a generation who are earning higher incomes and increasingly becoming brand conscious.
Beyond Xi’an’s city center, economic activity is driven by several major specialized development zones. These may be noted by U.S. exporters looking to plug potential gaps in their supply chains.
Xi’an Hi-Tech Industries Development Zone (Hi-Tech Zone)
Xi’an’s Hi-Tech Zone was established in 1991 and features electronic information, equipment manufacturing, biological pharmaceuticals, and automobile industries. MNCs present with production facilities or R&D centers include Samsung, Schneider Electric, BYD Auto, Micron, Applied Materials, Honeywell, Intel, IR Semiconductor, Infineon and NEC.
Xi’an Economic and Technological Development Zone
This zone was re-classified as a national-level economic and technological development zone in February 2000. The zone has developed facilities catering to manufacturing enterprises such as mechanical, electronic, light industrial and new materials. More than 3,600 companies are based here, including 30 ‘Fortune Global 500’ companies such as BP and Siemens.
Xi’an Yanliang National Aviation Hi-Tech Industrial Base (Civil Aviation Industrial Base – CAIB)
Set up in 2004 and with more than 300 enterprises, this zone is the largest aviation R&D, training and production base in Asia.
Xi-Xian New Area
The Xi-Xian New Area was approved in 2010 and is planned to comprise 10 industrial parks, including the Airport Comprehensive Bonded Zone and Jinghe Trade and Logistics Park. Located at the center of the eastern section of the “Eurasian Land Bridge,” it is well-linked with other Chinese cities.
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