Why is Xi'an, the city with a trillion-yuan GDP, experiencing booming foreign trade but a sluggish overall economy?
In the first half of 2026, Xi'an's economy showed a set of contrasting trends.
On one hand, foreign trade data is booming. According to data from Xi'an Municipal Bureau of Statistics, the total import and export value of Xi'an in the first half of this year increased by 96.2% year-on-year, leading the 20 top national foreign trade cities in terms of growth rate.
On the other hand, the growth rate of Xi'an's gross domestic product (hereinafter referred to as "GDP") continues to slow down. In the first half of the year, the actual GDP growth rate of Xi'an was only 1.1%, ranking the second last among 29 trillion-yuan cities.
From the perspective of the whole Shaanxi Province, Xi'an's total GDP of 650.914 billion yuan accounts for about 37% of Shaanxi's total, but its 1.1% growth rate is 2.7 percentage points lower than the provincial average. Among the 11 prefecture-level cities (districts) in the province, Xi'an and Yangling Demonstration Zone are the only two regions whose growth rates are lower than the provincial average. In addition, Xi'an's GDP increment in the first half of the year was surpassed by Yulin, a resource-based city, for the first time.
Why can't the soaring foreign trade data drive Xi'an's economy upward?
Under Pressure on Pillar Industries
The low GDP growth of Xi'an in the first half of the year was not caused by a single factor, as investment, consumption and industry are all under synchronized pressure.
Industry is the economic foundation of Xi'an. In the first half of the year, the added value of industries above designated size in Xi'an decreased by 0.9% year-on-year. In terms of monthly trend, the added value of industries above designated size decreased by 7.5% year-on-year from January to February, 4.7% year-on-year in the first quarter, narrowed to 4.2% from January to April, and decreased by 3.3% year-on-year from January to May. Although the decline narrowed month by month, the industry as a whole is still in the negative growth range.
Zeng Zhaoning, professor at the School of Economics and Management of Xi'an Shiyou University, believes that as an industrial city, Xi'an's weak industrial performance will naturally affect its GDP.
By industry, the automobile industry, as one of Xi'an's 100-billion-yuan pillar industries, saw the added value of its automobile manufacturing industry above designated size drop by 6.3% from January to June. Xi'an is the core of Shaanxi's automobile industry, bearing most of the impact of the industry downturn, and this pressure is highly concentrated on BYD alone.
Data from Shaanxi Association of Automobile Manufacturers shows that in 2025, Shaanxi's automobile output reached 1.725 million units, ranking 8th in China, of which Xi'an BYD produced 1.003 million automobiles, contributing nearly 60% of the total output. In the first half of 2026, according to data from the National Bureau of Statistics, Shaanxi's automobile output dropped to 493,000 units, down 47.7% year-on-year, and its ranking dropped from 8th to 14th across the country.
Li Dong, dean of Xi'an Tongji Regional Planning Research Institute, analyzed that the sharp decline of Shaanxi's automobile output is mainly caused by three reasons: first, the Ministry of Industry and Information Technology promotes industry governance to reduce "involution", guides enterprises to actively limit production, and resolves overcapacity; second, BYD Caotang Base carries out production line switching, old models are gradually phased out, and new models have not yet achieved capacity release; third, BYD allocates part of its best-selling models to Zhengzhou and overseas bases, diverting the local output in Xi'an. Shaanxi's manufacturing industry mainly relies on the automobile industry, which in turn highly relies on BYD. Once this main engine "shuts down", the economy may stall. If a city's development is excessively tied to individual industries and individual enterprises, it will be easily affected by policy adjustments, industry cycles and enterprise capacity scheduling. This high-dependency model on a single enterprise has poor stability and prominent risks, which urgently needs to be adjusted.
On June 26, Zhao Yide, Secretary of the Shaanxi Provincial Party Committee, held a discussion with Wang Chuanfu, Chairman of BYD, hoping that BYD would increase its layout in vehicle production, high-end manufacturing, technology R&D and other aspects, and jointly promote the new energy automobile industry to create new competitive advantages.
The 2026 Xi'an municipal government work report proposes that the growth rate of fixed asset investment (hereinafter referred to as "FAI") should strive to be no lower than the provincial level. However, in the first half of the year, Xi'an's fixed asset investment fell by 29.9% year-on-year, lower than the provincial level. Among them, industrial investment decreased by 32.1%, real estate development investment decreased by 25.0%, private investment decreased by 19.1%, and infrastructure investment decreased by 30.8%.
Zeng Zhaoning analyzed that the sharp decline in industrial investment is on one hand due to the weakening of enterprise expectations under the macro environment, and market entities lack confidence and are unwilling to easily expand reproduction; on the other hand, the effect of investment attraction is less than expected, there are few newly landed projects, and there is no effective incremental support.
Li Dong added that the major infrastructure projects that drove Xi'an's FAI to grow rapidly in the past few years — Xi'an East Railway Station (the starting point of Xi'an-Shiyan High-speed Railway), the third phase of the subway, etc. — were all completed in the first half of this year. A number of national-level large projects have been completed intensively, and new major investment projects have not been connected in time, resulting in a "cliff-like" decline in FAI. Xi'an's economy is mainly driven by investment. Once investment declines, it is difficult to stabilize the overall economic situation.
While investment is "losing blood", the consumption side also continues to weaken. In the first half of the year, the total retail sales of consumer goods in Xi'an decreased by 3.6% year-on-year, making it the only city (district) with a decline in Shaanxi Province. Zeng Zhaoning believes that weak consumption is not unique to Xi'an, but a nationwide phenomenon. The root cause lies in the slowdown of residents' income growth, which restricts their consumption capacity; at the same time, concerns about social security have pushed up residents' savings; in addition, the existing consumption stimulus policies (such as national subsidies) have limited pulling effect, which only treats the symptoms rather than the root causes.
Xi'an has a permanent resident population of over 10 million, ranks among the top in China in terms of the number of universities and the scale of students on campus, has prominent cultural and tourism resource endowments, and its holiday tourist reception volume has long been in the first echelon of the country. However, judging from the consumption data in the first half of the year, the huge passenger flow has not been effectively converted into physical consumption, and the traffic advantage has not been fully converted into economic increment.
"On Paper" Prosperity
With many economic indicators under pressure, foreign trade is one of the few bright spots in Xi'an. Zeng Zhaoning believes that under the background of weakening investment and consumption, it is difficult to support the overall economy solely by exports.
Driven by the outbreak of global AI (artificial intelligence) computing power demand, China's integrated circuit exports have increased significantly this year. Relying on the layout of Samsung and Micron, Xi'an has seized the dividends of this round of AI industry.
Data from Xi'an Municipal Bureau of Statistics shows that in the first half of the year, the total import and export value of Xi'an increased by 96.2% year-on-year. Among them, the total export value increased by 1.2 times, exports of high-tech products increased by 2.2 times, and exports of mechanical and electrical products increased by 1.4 times.
From the perspective of trade structure, processing trade is still the growth engine of Xi'an's foreign trade. According to the data from January to May released by Xi'an Municipal Bureau of Statistics, the total import and export value of processing trade accounts for about 70% of the city's total, and the import and export of foreign-invested enterprises accounts for 76.4%. This means that Xi'an's foreign trade advantage is highly dependent on foreign-funded enterprises and processing trade chains.
In the past more than ten years, with the settlement of Samsung and Micron, Xi'an has seized the opportunity of the development of the semiconductor industry. Data from Xi'an Customs shows that as of 2025, the import and export volume of Micron Xi'an has ranked first in Shaanxi for 19 consecutive years; since Samsung settled in Xi'an High-tech Comprehensive Bonded Zone in 2012, its Xi'an factory has undertaken about 40% of the world's NAND flash memory production capacity.
Li Dong said that both Samsung and Micron belong to the typical processing trade mode of "both ends outside": core design and R&D are all placed in overseas headquarters, and Xi'an only undertakes part of the processing and packaging links. According to the profit distribution logic of the "smile curve", Xi'an is precisely in the manufacturing and processing link with the lowest added value and the thinnest profit. Although the export data is booming, its actual pulling effect on Xi'an's local GDP is very limited.
In essence, Xi'an is more like a semiconductor "production workshop": it imports a large number of raw materials, completes processing and then exports on a large scale, expanding the total foreign trade volume, but what the local area earns is mainly processing fees.
Li Dong analyzed that when Xi'an introduced Samsung in 2012, the original intention was to cultivate Xi'an's local semiconductor industry ecosystem through the technology spillover of leading enterprises. However, this goal has not been achieved since the project landed.
On one hand, Samsung's factory is located in the comprehensive bonded zone, with dual isolation of physical space and system. Local universities, scientific research institutions and semiconductor-related enterprises in Xi'an cannot get close to it. The core process and product architecture are not open to the public, and Samsung's factory is almost a closed-loop operating "industrial enclave". On the other hand, many of Samsung's supporting enterprises are extensions of the original Korean supply chain, forming a closed supporting circle of Korean-funded enterprises, where local enterprises cannot enter the core supply chain, and the driving effect on the regional economy is very limited.
In contrast, Hefei, which also benefits from the semiconductor industry, has taken a different development path. Hefei's GDP in the first half of the year increased by 6.8% year-on-year, ranking first among trillion-yuan cities. Li Dong believes that Hefei's Changxin Memory follows the path of local cultivation and independent control, with deeply localized industrial chains, and builds a complete industrial ecosystem from scratch, which is a very valuable reference sample for Xi'an.
Breakthrough in Industry
Overall, the decline in consumption and investment, and the stall of pillar industries share a common root cause: Xi'an's industry is not strong enough, and its industrial system is not diversified enough. The low proportion of the secondary industry and the "over-reliance on single large enterprise" syndrome leave the city with little buffer space against cyclical fluctuations.
Shan Yuanzhuang, dean of Xi'an Zhaohua Management Science Research Institute, mentioned that after 2010, many cities pursued the goal of 70% proportion of the tertiary industry, and Xi'an's industrial proportion dropped from nearly 50% in the past to about 28%. Industry is the "backbone" of the economy. If industry is weakened, the economy will easily suffer from "chondropathy". In the first half of 2026, the proportion of the secondary industry in Xi'an was 25.5%.
In addition, Xi'an still lacks a sufficient number of leading enterprises, ecological and platform-based enterprises. The automobile industry bets on BYD, and the electronic information industry bets on Samsung, which is highly dependent on a single leading enterprise, making the industrial system insufficient in risk resistance.
To achieve a breakthrough, the focus must also be placed on the industry.
Shan Yuanzhuang believes that Xi'an needs to adjust its industrial structure and attach great importance to new intelligent industrialization. Promote leading enterprises such as Shaanxi Automobile and BYD to release non-core production links, attract a number of private supporting enterprises to gather around, extend the industrial chain, and build a real industrial cluster.
Zeng Zhaoning said that the current competition is no longer a competition between individual enterprises, but a competition between industrial clusters. Relying on only one or two leading enterprises cannot support the overall market. It is necessary to cultivate and expand upstream and downstream enterprises, deepen the supporting system, and increase the local supporting rate.
Li Dong believes that to reverse the economic situation, both the stock and increment sides need to make efforts at the same time. On the stock side, Xi'an should stabilize the basic market of five 100-billion-yuan manufacturing clusters, expand the cluster ecosystem through the "chain owner + chain chief" mechanism to avoid drastic industrial fluctuations, increase investment in industrial technology transformation, and promote the transformation and upgrading of traditional industries. "On the increment side, Xi'an must cultivate the second growth curve representing new quality productive forces as soon as possible, otherwise its position among new first-tier cities will face great pressure," Li Dong said.
Li Dong also specially mentioned that if Xi'an can obtain national funds in the second half of the year to promote investment to stop falling and turn positive, the overall economic situation will be significantly improved. At present, Shaanxi Province and Xi'an City are relying on policy channels such as "two major projects" and "five networks" to apply for superior funds. Under the situation of declining private investment and tight local finance, applying for funds from the national level is almost the only path for Xi'an to boost investment — as long as the investment volume rises, the economic pressure will be relieved to some extent.
This article is from the WeChat official account "The Economic Observer", author: Liu Yaning, published by 36Kr with authorization.