Hefei, how did it become China's industrial investment hub?
Editor's Note:
On July 27, Changxin Technology was listed on the Sci-Tech Innovation Board, with its market value exceeding 3 trillion yuan on the first trading day of listing, ranking first among A-share listed companies. The ten-year growth of Changxin Technology is inseparable from the ten-year accompanying support of Hefei's state-owned capital, which has also brought generous returns. Before the issuance, Hefei's state-owned capital held about 36.79% of the shares, and the book floating profit after listing exceeded 1 trillion yuan.
The story of Changxin Technology "sharpening a sword for ten years" is another vivid portrayal of the rise of Hefei as the "City of Industrial Investment". In this issue of the "Urban Wealth" column, we focus on Hefei, review the industrial leap path it has gone through in the past 40 years, and explain in detail the "Hefei Model" featuring state-owned capital leadership, market-oriented operation, and positive interaction between the government and the market.
In 2025, Hefei's GDP reached 1.42 trillion yuan, a year-on-year increase of 6.1%, higher than the national growth rate of 5.0%. The proportion of Hefei's strategic emerging industries in the output value of industries above designated size reached 60.4%. From "Chips, Screens, Automobiles and Integration" to "Emergency, End, Intelligence", and then to three national-level strategic emerging industry clusters of integrated circuits, new displays and artificial intelligence — what exactly does this inland city, once called the "isolated provincial capital", rely on to achieve such achievements?
Urban Fundamentals: The Counterattack Code of a "Latecomer"
The Premier Prefecture of Jianghuai, Located in the Center of Anhui
The name of Hefei, Anhui, first appeared in *Records of the Grand Historian: Biographies of Merchants*, and it was a place where merchants gathered and ships and carriages converged. In 1952, the administrative offices of southern Anhui and northern Anhui merged, the People's Government of Anhui Province was established, and the new provincial capital was set in Hefei.
From a geographical perspective, Hefei is not located in the coastal area, so it cannot directly benefit from the economic advantages enjoyed by coastal regions. Although Hefei is part of the Yangtze River Economic Belt, it is far away from the Yangtze River. Compared with Bengbu and Wuhu, which have more superior geographical locations, Hefei has no obvious geographical advantages, and was even called the "isolated provincial capital" in the past. It was not until 2016 that the State Council approved Hefei as a "sub-central city of the Yangtze River Delta urban agglomeration", integrating into the Yangtze River Delta to form an urban agglomeration with regional cooperation and complementary advantages. In 2020, Hefei achieved the goals of "GDP exceeding 1 trillion yuan, permanent resident population approaching 10 million, and market entities exceeding 1 million", officially announcing its integration into the core of the Yangtze River Delta.
From the perspective of urban planning, Hefei has gone through four rounds of overall urban master planning, gradually forming an urban development space where technology-intensive industries and high-tech industries are relatively concentrated. In the 1990s, Hefei took the old town as the core and expanded to the east, north and southwest, forming a "fan-shaped" urban layout, which is one of the classic urban planning models in China. In the 2005 "Eleventh Five-Year" Development Plan, Hefei established the "141" spatial development strategic layout, that is, 1 old town, 4 peripheral clusters, and 1 Binhu New Area, which laid the foundation for collaborative division of labor in industrial innovation.
GDP Growth Curve: Latecomer Advantages and Stable Momentum
After the millennium, Hefei seized policy opportunities and combined its own regional advantages, and its total GDP rose to the 10th place among provincial capitals and above in China. In the process of industrial upgrading and transformation, Hefei has maintained the stable growth of its traditional advantageous industries on the one hand, and actively introduced strategic emerging industries on the other hand. By successfully attracting leading enterprises in the fields of integrated circuits, new display technologies and new energy automobile industries to settle down, the formation of industrial clusters has further promoted the development of upstream and downstream enterprises in the relevant industrial chains.
From the perspective of economic growth rate, the gross domestic product index of Hefei is higher than the national average level. Even in key moments such as the global financial crisis in 2008 and the domestic economic restructuring in 2015, Hefei still achieved resilient growth. Hefei's per capita GDP exceeded US$10,000 for the first time in 2021, and further rose to about US$20,000 by 2025. The economic growth model has also successfully transformed from relying on factor input to innovation-driven.
Industrial Structure: Innovation-Oriented and Industrial Upgrading
Hefei's industrial development has evolved from the early "Chips, Screens, Automobiles and Integration" to "Emergency, End, Intelligence", and then to three national-level strategic emerging industry clusters of integrated circuits, new displays and artificial intelligence. It keeps up with the pace of global industrial transformation, takes the industrial chain as the core, and carries out forward-looking scientific research and capital layout.
While GDP continues to maintain a rapid and stable growth trend, the proportion of the added value of the tertiary industry in the city's total GDP remains stable at 60%. From the perspective of the output value of strategic emerging industries, the information technology and new energy industries account for a relatively high proportion, and the total proportion of the two exceeds 60%. By the end of 2025, the number of high-tech enterprises in Hefei had exceeded 10,000. In addition, according to the latest data from Wind Information (as of the close of trading on July 28, 2026), there are 91 A-share listed companies in Hefei, with a total market value of about 4.4 trillion yuan, of which 70 are listed high-tech enterprises, accounting for 76.9%.
The construction of scientific and technological infrastructure and innovation achievements are also remarkable. By the end of 2023, the city had built 3 major national scientific and technological infrastructures including the fully superconducting tokamak, the steady-state high magnetic field, and the synchrotron radiation light source, and the number of national-level laboratories reached 15. The number of registered scientific and technological achievements reached 6,563 for the whole year, the number of valid invention patents increased to 68,000, and the transaction amount of technology contract output was 69.46 billion yuan.
State-owned Capital Leadership: How the Three Platforms Cooperate and Support Each Other
After the reform and opening up, the development models of different cities in China gradually diverged due to differences in resource endowments and policy support — the "Shenzhen Model" that leverages special zone policies to attract a large amount of foreign capital, the "Wenzhou Model" with private economy as its essence, and the "headquarters economy model" with inherent endowments such as political status. However, Hefei has taken a completely different path: local governments focus on strategic emerging industries, invest in high-quality projects through state-owned investment platforms to take root and grow, and realize the value-added exit of government investment through listing and equity transfer after growth. This is the sci-tech financial logic of the "Hefei Model".
At the local level, Hefei has reorganized and integrated state-owned capital operating institutions, and established three major state-owned assets investment and financing platforms — Hefei Construction Investment Holding Group, Hefei Industrial Investment Holding Group, and Xingtai Holding Group. The three platforms have clear positioning, complementary functions and unified connection. In the semiconductor industry, Hefei Construction Investment chose to invest in JHICC, which focuses on wafer foundry, while Hefei Industrial Investment invested in Changxin Storage, which focuses on memory chip production, showing their different investment strategies and priorities in the same industry.
Hefei Construction Investment: Transformation from "Land Fund" to "Industrial Fund"
Facing the contradiction between market-oriented operation and local finance, Hefei Construction Investment has completed three identity transformations, realizing the transformation of urban investment platforms from the "financing end" to the "investment end".
From 2006 to 2014, as a traditional government financing platform, Hefei Construction Investment helped the government raise a total of nearly 1.1 trillion yuan, undertaking more than 50% of the urban construction capital guarantee tasks in Hefei. Since 2008, Hefei Construction Investment has led and participated in the investment and establishment of strategic emerging industries with a total investment of more than 3.4 trillion yuan, led by the BOE project, which has laid a solid foundation for the subsequent promotion of a number of major strategic emerging industrial clusters such as Corning, Visionox, NIO, and O-film to settle and put into production. After 2019, Hefei Construction Investment, aiming at becoming a "city operation service provider combining specialization and diversification, and a state-owned capital operator leading the development of strategic emerging industries", transformed into a state-owned capital investment and operation company in a market-oriented manner.
At the investment end, Hefei Construction Investment has taken the initiative to reform and implement the "investment-cooperation-exit" industrial investment model since 2014. In the BOE project, Hefei Construction Investment carefully selected the industrial type and designed a safe exit mechanism at the initial stage of project planning. In 2014, Hefei Construction Investment completed the full exit of its investment in the 6th generation line project through secondary market reduction, obtaining an investment return of 33.3%. In 2015, Hefei Construction Investment seized the market opportunity to reduce its holdings in the 8.5th generation line project, successfully exited and obtained a net income of about 12 billion yuan, with an investment return rate as high as 343%. Up to now, Hefei Construction Investment has led and participated in the investment of 20 strategic emerging projects in new displays, integrated circuits, new energy and other fields including BOE, JHICC and NIO, with a total project investment of more than 319.3 billion yuan.
Hefei Industrial Investment: How to "Manage Capital Well"
Hefei Industrial Investment was established in March 2015, positioned as a state-owned capital investment enterprise focusing on industrial investment and innovation drive, and is one of the first batch of units in the city to participate in the pilot reform of state-owned capital investment companies. The company has a registered capital of 16.541 billion yuan and enjoys a domestic AAA main body credit rating. By the end of 2025, the total assets of the group exceeded 160 billion yuan.
Hefei Industrial Investment adopts the "1+3+3+N" organizational structure, relying on three major fund management companies to carry out differentiated development and close cooperation, creating a diversified "fund jungle". In terms of industrial platforms, the model of "chain owner enterprise - core project - industrial chain integration - industrial cluster - industrial base" has been adopted in the field of emerging industries, and key projects such as Changxin Storage and China Voice Valley have been successfully promoted. Changxin Storage has invested more than 20 billion yuan, successfully developed the 10-nanometer class dynamic memory chip manufacturing process, and became the first domestic enterprise to realize mass production of domestic DRAM memory.
In terms of capital platforms, Hefei Industrial Investment has established a fund system covering all development stages of enterprises from germination to maturity, with a total scale of more than 100 billion yuan, a cumulative investment of more than 30 billion yuan, covering more than 800 projects, of which 51 projects have been listed, including 25 Sci-Tech Innovation Board projects. Hefei Industrial Investment has established an angel fund with a scale of 1 billion yuan, focusing on investing in start-up technology enterprises with a founding time of no more than two years, with a risk tolerance increased to 40%, and has successfully cultivated more than 100 national high-tech enterprises.
Xingtai Holding: Dislocation Competition in Financial Control
Xingtai Holding was initially established in 1999 and formally established in 2002, dedicated to financial capital operation. As of June 2024, the registered capital was 7 billion yuan, and it has 16 subsidiaries and equity participation in 7 financial institutions. By the end of 2023, the total number of funds managed by Xingtai Holding reached 71, with a cumulative capital scale of 75.2 billion yuan, and the capital amplification effect was nearly 6 times.
Xingtai Holding competes with Hefei Construction Investment and Hefei Industrial Investment in a differentiated way, providing detailed services for science and innovation enterprises such as asset management, financing guarantee, alternative asset acquisition, and intellectual property operation. Xingtai Asset Management is the first professional operating institution for guarantee industry security funds in China, and has provided nearly 5,000 renewal bridge loans for small, medium and micro enterprises in the city, with a total amount of more than 23 billion yuan. As the first financing guarantee institution in Anhui Province focusing on the technology field, Xingtai Guarantee has provided guarantee services for more than 1,100 science and innovation enterprises, with a cumulative guarantee amount of more than 4 billion yuan. In April 2024, Anhui's first "S Fund" — Hefei Co-creation Relay Venture Capital Fund, was jointly initiated with a scale of 2.8 billion yuan, managed by Xingtai Capital, forming a capital relay mechanism to support innovation in the science and innovation industry.
Industrial Chain Development: The Underlying Logic of 40 Years of Industrial Leap
Innovation is the process of new combination of production factors. Startups, unicorn enterprises and industry leaders fight side by side, leading Hefei's industrial structure to transform from traditional automobile and home appliance industries to new display, integrated circuit and automobile industries characterized by advanced manufacturing, and then to strategic emerging industries such as integrated circuits, biomedicine and aerospace information, realizing generation after generation of industrial upgrading and leap.
Originated from Home Appliances: The First 100 Billion-Yuan Industry after the Reform and Opening Up
Hefei's home appliance industry began to rise at the beginning of the reform and opening up. As a pioneer in China's home appliance industry, Hefei has manufactured the world's first variable-capacity refrigerator, the first VCD, the first bionic washing machine and the first domestic window-type air conditioner. In 2021, the main business income of Hefei's home appliance industry exceeded the 100 billion yuan mark historically, and the industrial scale accounted for about one-tenth of the national total.
The development of Hefei's home appliance industry has gone through three stages. The first stage is technology introduction: Meiling Refrigerator realized technology upgrading by introducing the Ariston refrigerator production line from Italy's Merloni Company, and Royalstar introduced the washing machine production line from Japan's Sanyo. The second stage is merger and reorganization: in the mid-1990s, Meiling and Royalstar sought breakthroughs through capital operation by introducing foreign capital. The third stage is local supporting: Hefei has built a number of national-level home appliance industry support centers, enabling local home appliance enterprises to easily complete product certification and performance testing.
The story of Meiling began in 1983. Founder Zhang Jusheng led Hefei No. 2 Light Industry Machinery Factory to boldly transform to produce refrigerators, drawing on the technology of Japan's Mitsubishi refrigerators, and successfully developed the first Meiling BY-158 refrigerator, filling the gap in the field of refrigerator production in Anhui Province. In 2003, Guangdong Kelon became the controlling shareholder of Meiling Co., Ltd., and the final acquisition by Sichuan Changhong brought new opportunities for Meiling. Entering the "13th Five-Year Plan", Meiling launched the first "Smart Home Ecosystem Plan" in the global white goods industry.
The rise of Royalstar began in 1986. Chen Rongzhen was appointed as the director of Hefei General Washing Machine Factory at a critical moment, using fixed assets as collateral and borrowing 900% of the debt to introduce advanced equipment from Japan's Sanyo. Chen Rongzhen's high-level capital operation ability promoted Royalstar's assets to grow from 100 million yuan in 1992 to nearly 3 billion yuan in 1998. From 1995 to 1998, Royalstar won the first place in the national washing machine industry in terms of production and sales for four consecutive years.
Hefei Haier is a classic case of revitalizing stock assets — the "shock fish" reform. At the end of 1997, Hefei decided to "marry" the bankrupt and reorganized Huangshan Electronics Co., Ltd. to Haier Group. Haier Group accepted Huangshan Electronics for free, on the condition that the enterprise stayed in Hefei and accepted the original 2,500 employees. With the reform of "not seeking ownership, but seeking existence", after Haier Group's merger, the output of color TVs quickly increased from less than 50,000 units to 400,000 units, and also attracted Hefei Haier Industrial Park, an industrial park with an annual output value of over 10 billion yuan. Under the agglomeration effect of Haier, giants such as Midea, Gree and Changhong