As China undergoes a sweeping economic transition, its regions are also in the process of embracing change. The powerhouses of yesteryear must adapt or risk falling behind, as traditional industries become less reliable growth drivers and new sectors take prominence. Millions of migrant workers were once attracted to Kunshan – a city in Jiangsu province that is part of Suzhou and was dubbed “Little Taipei” – but its attraction is changing, as old technology dreams fade and new ones emerge. A decade ago, every young person coming to Kunshan hoped to get into Foxconn, but this is no longer the case. For three decades, Kunshan was home to around 100,000 Taiwanese residents and a supply chain that produced one-third of the world’s laptops – making it the ultimate symbol of cross-strait economic integration. Foxconn Technology Group, the world’s biggest maker of electronic components by revenue and a key supplier to Apple, set up its first plant in Kunshan in the 1990s. It was at the vanguard as Taiwanese manufacturers expanded their presence in mainland China’s electronics supply chain, capitalizing on the city government’s supportive policies and Kunshan’s location next to Shanghai. But the economic landscape has been changing, as rising labor costs, geopolitical shifts and China’s push for technology self-sufficiency force Kunshan to transition from a low-end assembly hub into a hi-tech fortress of AI, new energy and the low-altitude economy centered on drones and flying cars.
The nature of job seeking has changed in Kunshan as the city looks for new engines to drive its economy – which has ranked first among China’s nearly 400 county-level cities for over 20 years. Taiwanese companies still have a strong presence in the city with a total of over 6,200 Taiwan-funded projects – up from more than 5,300 at the end of 2020 – with a total investment value exceeding USD70 billion. But as Taiwanese plants have scaled back, domestic champions have been keen to fill the vacuum. Chief among them is Luxshare Precision, a major rival to Foxconn. Co-founder Wang Laichun, once a worker on a Foxconn assembly line in Shenzhen, is now one of the world’s richest self-made women, with her company effectively becoming an anchor of Kunshan’s economy. It has swallowed up the Kunshan assets of a number of Taiwanese competitors, buying Wistron’s iPhone factory in 2021 and taking a majority stake in contract electronics manufacturer Pegatron’s Kunshan plant in 2023. In February last year, it doubled down with plans for a CNY12 billion base for smart terminals and wearable devices in Kunshan – the biggest investment project the city had seen in three years. The company now plans to produce AI servers and personal computers in an “AI industrial estate” in the city. It is a shift that mirrors Kunshan’s broader industrial evolution. A road map issued by the city government calls for its main economic drivers to pivot from the laptop and Apple chains to the “intelligence chain”. Already the first county-level city in China with gross domestic product above CNY500 billion, Kunshan’s pursuit of strategic depth saw its GDP grow 5.8% year-on-year last year to CNY561.5 billion, outpacing the growth of Suzhou as a whole as well as Jiangsu province.
The city has maintained an average economic growth rate of 5.5% for the past five years, with the combined output value of its electronics and equipment manufacturing industries exceeding CNY1 trillion during the period. Sitting at the heart of the Yangtze River Delta area, with Shanghai to the east and Suzhou to the west, Kunshan possesses “unique geopolitical advantages”, said Yao Rongwei, Chief Researcher at the Shanghai-based think tank Hualue. Yao said the city should take advantage of the opportunities presented by the rapid advancement of AI – particularly embodied intelligence – and transform its electronics industry into a comprehensive “super industry cluster”.
Beyond AI, Kunshan’s future is also being written in the air as the country’s flying car ambitions take off. On the outskirts of the city, a futuristic silver aircraft lifted off on a recent afternoon. The Matrix electric vertical take-off and landing (eVTOL) aircraft, the largest of its kind in the world, was developed by AutoFlight, an aviation start-up backed by Contemporary Amperex Technology (CATL), the world’s largest maker of electric vehicle batteries. AutoFlight set up its flight testing hub in Kunshan in 2022, with the aim of making it an “integrated platform” for eVTOL testing, production and deliveries, Director of Operations Pierre Lin said last month, crediting the establishment of the facility to “the help from Kunshan government officials”. Kunshan has built 73 low-altitude take-off and landing facilities, 10 of which have been integrated into a larger “low-altitude infrastructure intelligent network platform” in Suzhou. Since the beginning of last year, Kunshan has signed agreements related to 18 low-altitude economy projects with a total investment value of nearly CNY4.5 billion.
Kunshan’s transformation is also part of a broader metamorphosis in Suzhou as a whole. Serving as Jiangsu’s economic powerhouse, Suzhou’s GDP hit CNY2.77 trillion last year, ranking sixth among Chinese cities and trailing only Shanghai, Beijing, Shenzhen, Chongqing and Guangzhou, the South China Morning Post reports.
