From "Most Willing to Gamble" to "Gravity Well", Hefei Rewrites the Logic of Urban Competition

A new urban logic: not luck, but a gravity well

Hefei (合肥) has quietly rewritten the rules of city competition in China. Once caricatured as the place "most willing to gamble" on big bets, Hefei’s rise is now better framed as the creation of a “gravity well” — an industrial ecosystem that continually attracts firms, capital and talent rather than one-off marquee projects. The city’s first-quarter GDP reached RMB 3229.6 billion, up 6.8% year‑on‑year, and its industrial added value surged almost 20%. High‑tech manufacturing grew even faster, reportedly up 64.6% — numbers that suggest this is more than a cyclical blip.

For Western readers: Hefei is the capital of Anhui province in eastern China and has been punching above its weight across strategic sectors — semiconductors, displays, new‑energy vehicles (NEVs) and big‑science facilities — at a scale that puts it among China’s largest urban economies. What makes Hefei different is the density of interlocking supply chains and institutions: chips feed AI and EVs; panels power car interiors and consumer electronics; and world‑class research platforms spin off applied startups.

How the gravity well was built

The city’s industrial logic is visible in four pillars locals call “xin‑ping‑qi‑he” (芯屏汽合) — chips, panels, autos and integrated AI/future industries. In semiconductors, Hefei now hosts more than 400 integrated‑circuit firms, including Jinghe Integration (晶合集成), Tongfu Microelectronics (通富微电) and Huicheng (汇成股份), forming a linked materials‑design‑manufacturing‑testing chain. BOE (京东方) — once a loss‑making panel maker — was courted with early, sustained public support and is now one node among 190 display firms stretching from raw materials to advanced flexible and holographic displays. NEVs are a crowded “full‑house” ecosystem: NIO (蔚来), BYD (比亚迪), Volkswagen Anhui (大众安徽), JAC (江淮汽车), Changan Auto (长安汽车) and Ankai (安凯客车) anchor a supplier base of some 600 firms and produced about 1.37 million vehicles in 2025.

Hefei’s strategy is not indiscriminate subsidy. It blends state capital, patient finance and market mechanisms — for example, the BEST fusion project mixes stakes from NIO, provincial investment platforms and municipal funds and uses policy finance to build park infrastructure leased to commercial operators. The city has also iterated its business‑environment playbook for years: targeted credit products for R&D, “project concierge” services, and an eighth consecutive annual action plan to push convenience, marketization, rule‑of‑law and internationalization.

Why this matters beyond China

Hefei’s story matters because it shows how a second‑tier Chinese city can climb global value chains without simply poaching single large projects. Its export data underlines the point: high‑tech product exports jumped sharply in the latest quarter, with integrated‑circuit and auto exports growing at triple‑ and double‑digit rates respectively, suggesting Hefei is embedding itself into international supply networks at higher rungs. In a geopolitical environment where semiconductor supply chains are increasingly politicized and trade barriers loom, China’s regional hubs are doubling down on self‑contained ecosystems — not to decouple entirely, but to make their cities harder to dislodge.

Three takeaways emerge: city competition has shifted from “who wins the biggest prize” to “who builds the stickiest ecology”; betting big works only when it’s backed by strategy and patient capital; and a long horizon on policy — not one‑off flash investments — creates the deepest moat. Call it a gamble, if you like. Or call it a gravity well: once the ecosystem is built, firms and people simply don’t want to leave.