– Foshan, China’s designated ‘industrial fourth city,’ faces a critical growth slowdown, highlighted by its 2025 nominal negative growth among trillion-yuan cities, signaling urgent need for industrial repositioning.
– Provincial and municipal strategies emphasize transitioning from traditional manufacturing to smart, green industries, with key initiatives like AI integration and support for emerging sectors such as high-performance computing and environmental tech.
– Structural issues, including over-reliance on real estate-linked industries and lagging emerging sectors, are being addressed through institutional reforms like the new Chancheng District New Economic Development Bureau.
– Success hinges on improving R&D conversion rates, leveraging regional integration within the Guangdong-Hong Kong-Macao Greater Bay Area, and learning from peers like Dongguan to foster innovation-driven growth.
– Foshan’s efforts could serve as a blueprint for similar Chinese manufacturing hubs seeking to navigate economic transitions and enhance global competitiveness in advanced industries.
Nestled in the core of the Pearl River Delta, Foshan has long stood as a bastion of Chinese manufacturing prowess, proudly bearing the title of the ‘national industrial fourth city.’ Yet, recent economic indicators reveal a stark reality: in 2025, Foshan’s GDP growth slowed to a mere 0.2%, making it the only city among China’s 29 trillion-yuan GDP clubs to record nominal negative growth. This slowdown underscores a pivotal moment for Foshan’s industrial repositioning, as it grapples with structural imbalances and intensifying competition from rising peers like Hefei and Xi’an. With Guangdong province relying on its major cities to ‘shoulder the heavy responsibility’ of economic stability, Foshan’s ability to engineer a breakthrough will not only determine its own future but also influence regional industrial transformation. The city’s journey to reshape its industrial discourse is now at a crossroads, demanding strategic shifts to reclaim its competitive edge in an evolving global landscape.
The Growth Slowdown: Diagnosing Foshan’s Industrial Stagnation
Foshan’s economic trajectory has hit a concerning plateau, exposing vulnerabilities in its industrial foundation. As the third-largest economy in Guangdong and a key national manufacturing hub, the city’s recent performance contrasts sharply with its historical resilience, raising questions about its capacity for sustained industrial repositioning.
Comparative Data: Losing Ground to Peer Cities
A closer look at the numbers reveals the depth of Foshan’s challenges. In 2025, Foshan’s GDP reached 1.3157 trillion yuan, but its growth rate lagged significantly behind Guangdong’s provincial average and was eclipsed by high-performing peers like Shenzhen and Guangzhou. Among national trillion-yuan cities, most posted growth rates above 5%, making Foshan’s slowdown an outlier. This trend isn’t isolated; over the ’14th Five-Year Plan’ period, Foshan was overtaken by cities like Hefei, Xi’an, and Quanzhou in economic size, while Dongguan closed the gap rapidly. For instance, Dongguan’s industrial ‘scale-up’ initiatives added over 8,500 enterprises during this period, outpacing Foshan’s efforts. Such data underscores the urgency for Foshan’s industrial repositioning, as its traditional advantages in sectors like ceramics and home appliances—which account for nearly 60% of its manufacturing—fail to drive new growth. Experts like Zeng Gang, Dean of the East China Normal University Urban Development Institute, note that Foshan’s market-driven past, while successful, left it unprepared for the shift to strategic emerging industries, a gap now manifesting in competitive decline.
Structural Imbalance: The Traditional vs. Emerging Industry Divide
The core of Foshan’s struggle lies in its industrial composition. Local media aptly summarize it as ‘traditionally strong, emergingly weak,’ with strategic emerging industries still occupying a low share of the economy. This structural mismatch has created a ‘long and short legs’ problem, where reliance on real estate-linked sectors—such as furniture and ceramics—has stifled innovation. In contrast, cities like Suzhou in the Yangtze River Delta have diversified into tech-driven fields, boosting their resilience. Foshan’s industrial repositioning must address this by rebalancing towards high-value sectors. Zeng Gang emphasizes that for a city in the Pearl River Delta core, lagging in emerging industries is ‘unacceptable,’ as it erodes long-term competitiveness. The negative effects are already visible: slowed growth, reduced investment appeal, and diminished influence in national industrial policies. To turn the tide, Foshan needs a deliberate pivot, even if it means short-term sacrifices, to build a modern industrial system aligned with global trends like digitalization and sustainability.
Provincial Backing and Strategic Vision: Catalysts for Change
Recognizing the stakes, both provincial and municipal authorities have ramped up efforts to steer Foshan toward renewal. This top-down support is crucial for fostering Foshan’s industrial repositioning, providing policy direction and resources to complement market dynamics.
Governor Meng Fanli’s (孟凡利) Emphasis on High-End, Smart, and Green Development
In a clear signal of commitment, Guangdong Provincial Governor Meng Fanli (孟凡利) visited Foshan’s research and production lines in March 2025, shortly after the national ‘Two Sessions.’ He stressed the need to ‘adhere to the real economy as the foundation and manufacturing as the mainstay,’ advocating for a ‘more powerful modern industrial system.’ His remarks highlighted three pillars: high-end, smart, and green development, with a focus on accelerating AI applications across all industries. This aligns with broader Guangdong strategies urging major cities to ‘prop up the provincial economy.’ For Foshan, this provincial endorsement translates into targeted initiatives, such as funding for tech upgrades and incentives for green manufacturing. As Zeng Gang observes, ‘This indicates that the Guangdong provincial level intends to encourage and urge Foshan’s development,’ pushing the industrial giant to accelerate its transformation. The emphasis on AI and smart manufacturing is particularly timely, given global shifts toward Industry 4.0, and positions Foshan’s industrial repositioning within a forward-looking framework that could enhance its role in regional supply chains.Case Studies: Shenling Environmental and Jihua Laboratory as Beacons of Transformation
Concrete examples illustrate Foshan’s potential for renewal. During Governor Meng’s visit, he toured Guangdong Shenling Environmental System Co., Ltd., a specialist air-conditioning leader with 25 years in Foshan. The company’s new liquid cooling manufacturing base, focused on AI computing infrastructure, exemplifies how traditional firms can pivot to emerging tech. Similarly, Jihua Laboratory—one of Guangdong’s first provincial labs—targets breakthroughs in display equipment, semiconductors, and high-end CNC machine tools, directly supporting local industry upgrades. These cases show Foshan leveraging its manufacturing base to incubate new growth areas. However, challenges remain: while Foshan leads Guangdong’s prefecture-level cities in provincial science awards, its R&D intensity of 2.23% in 2025 trailed the provincial average, pointing to a gap in innovation conversion. For Foshan’s industrial repositioning to succeed, such platforms must bridge research and commercialization, a lesson underscored by Dongguan’s higher R&D spending and robust high-tech enterprise growth. Strategic partnerships, like those within the Greater Bay Area, could amplify these efforts, as seen in collaborations with Shenzhen’s tech hubs.
Innovation Ecosystem: Bridging the R&D to Commercialization Gap
Foshan’s innovation infrastructure, though improving, requires optimization to fuel its industrial repositioning. The city boasts assets like Jihua Laboratory and a rising patent count, but translating these into economic momentum demands systemic changes and regional synergy.
Analyzing Foshan’s Research Strengths and Weaknesses
Data from the ‘2025 Guangdong High-Quality Development Report’ reveals a paradox: Foshan excels in award-winning research but underperforms in R&D investment and commercial output. Its R&D intensity of 2.23% contrasts with Dongguan’s steady 4%, highlighting a resource gap. Moreover, patent quality—not just quantity—matters for industrial repositioning. Zeng Gang notes that Foshan must ‘focus on the commercial value and conversion outcomes of patents,’ learning from models where labs directly feed into industry clusters. For example, Foshan could emulate Dongguan’s approach of fostering ‘small to large’ enterprise scaling, which added thousands of firms to the industrial registry. Enhancing tech transfer offices, offering tax incentives for innovation, and attracting venture capital are steps that could bolster Foshan’s ecosystem. The city’s goal to shift from a ‘manufacturing hub’ to a ‘smart manufacturing powerhouse’ hinges on such improvements, as smart industries rely on continuous R&D and rapid market adoption.Learning from Neighbors: Dongguan’s Model and Greater Bay Area Integration
Regional collaboration offers a viable path for Foshan’s industrial repositioning. Dongguan’s success—with over 10,000 national high-tech enterprises and strong R&D—stems from its integration into the Guangdong-Hong Kong-Macao Greater Bay Area’s innovation network. Foshan can replicate this by deepening ties with core cities like Shenzhen and Guangzhou, accessing their tech talent and funding. Zeng Gang advocates for ‘cross-regional industry-university-research integration,’ a core tenet of the Greater Bay Area International Science and Technology Innovation Center. Instead of pursuing self-sufficiency, Foshan should plug into this ecosystem, using platforms like the Greater Bay Area Alliance to co-develop projects. Outbound links to resources like the Guangdong Science and Technology Department’s announcements can provide further insights. For instance, joint ventures in AI or green tech could accelerate Foshan’s transition, leveraging its manufacturing scale with external innovation. This regional lens is critical, as isolated efforts often fall short in today’s interconnected economy.
Institutional Innovation: The New Economic Development Bureau and Beyond
Beyond tech and policy, Foshan’s industrial repositioning requires institutional reforms to overcome legacy structures. The city’s rise was built on a ‘township economy’ model—decentralized and grassroots-driven—but this now hinders coordinated advancement, necessitating new mechanisms for growth.
The Establishment of Chancheng District’s New Economic Development Bureau
A landmark move came with the creation of Guangdong’s first county-level New Economic Development Bureau in Foshan’s Chancheng District. This body aims to ‘systematically solve bottlenecks in cultivating new quality productive forces,’ focusing on new industries, formats, and models. As Chancheng District Party Secretary Pan Shi (盘石) stated, the government must ‘operate the city like a listed company,’ prioritizing efficiency and resource alignment. The bureau will handle research, policy liaison, and resource matching, centralizing efforts that were previously fragmented across townships. This reflects a broader shift in Foshan’s ’15th Five-Year Plan’ toward ‘municipal-level coordination,’ seeking to transform scattered township strengths into a unified competitive advantage. For Foshan’s industrial repositioning, such institutional innovation is pivotal, as it can streamline approvals, attract investment, and foster clusters in sectors like AI and biotech. Early outcomes, though nascent, signal a commitment to adaptive governance, essential for navigating complex economic transitions.
Expert Perspectives: Liu Shouying (刘守英) and Zeng Gang on Systemic Reforms
Academic insights reinforce the need for holistic changes. Professor Liu Shouying (刘守英) of Renmin University of China’s School of Economics, in local media interviews, stressed that Foshan must ‘build a clear hierarchical urban-rural integration system’ to support advanced manufacturing with talent and innovation hubs. This aligns with the new bureau’s goals, but experts caution that single departments alone cannot drive Foshan’s industrial repositioning. Zeng Gang notes that ‘new economy cultivation is never a proposition for a single region or department,’ requiring cross-sectoral coordination and resource pooling. The bureau’s success will depend on its ability to mobilize support from provincial agencies, private sector actors, and educational institutions. For example, partnerships with universities for skill development or with financial institutions for startup funding could amplify its impact. These perspectives highlight that while Foshan’s institutional steps are promising, sustained effort and evaluation are needed to ensure they translate into tangible growth, avoiding the pitfalls of bureaucratic silos.Foshan’s journey toward reclaiming its status as China’s industrial fourth city is fraught with challenges but brimming with potential. The city’s industrial repositioning efforts—spanning government initiatives, innovation upgrades, and institutional reforms—mark a decisive response to slowing growth and structural imbalances. Key takeaways include the critical role of provincial support in driving smart and green transitions, the necessity of improving R&D conversion through regional collaboration, and the importance of new governance models like the Chancheng District bureau. Looking ahead, Foshan’s success will hinge on its ability to integrate into the Greater Bay Area’s innovation ecosystem, leverage its manufacturing heritage for emerging tech, and foster a culture of continuous adaptation. For global investors and policymakers, Foshan serves as a test case for industrial transformation in mature economies, offering lessons on balancing tradition with innovation. As the city navigates this breakthrough moment, stakeholders should monitor policy implementations and partnership outcomes, engaging with local opportunities in sectors like AI infrastructure and environmental tech to capitalize on Foshan’s evolving landscape.