China's GDP competition simultaneously drags down the housing market, fully revealing the true inside story of "mayor economy".

The renowned Chinese economist Keyu Jin (, in an exclusive interview, delves into China's unique political and economic system, pointing out that the central leadership power in China is highly concentrated, and the promotion or retention of local officials is almost entirely in the hands of the central authority.

This design of the system has led to fierce competition among local governments, resulting in the Chinese-style “mayor's economy” phenomenon. From initially competing on GDP to later frantically building real estate and supporting the electric vehicle and new energy industries, local governments in China once drove rapid economic expansion, but also left behind many concerns.

The promotion of local officials is entirely controlled by the central government in Beijing.

Jin stated that the political core of China is highly centralized, and whether local officials can be promoted, punished, or even removed from office completely depends on the central government. This system makes it clear to local governments that they must demonstrate better results than neighboring cities in order to have a chance to rise up.

The GDP race ignites the “mayor economy”, and the Chinese real estate cycle kicks off.

Jin revealed that the performance of early local mayors was almost solely based on GDP. Taking Nanjing as an example, the mayor would closely monitor the GDP figures of neighboring cities.

The competition is quite fierce, as every mayor wants to “climb to a higher position” in the officialdom. As a result, in the beginning, various places desperately promoted exports and industrialization, but later realized that selling land and developing real estate could bring enormous fiscal revenue, leading to a wave of frenzied “selling land and building houses.”

Local governments have more money and reinvest in various industries to further accelerate the economic cycle. This is the origin of the real estate cycle in China, a product designed by local officials for “performance evaluation.”

In order to prioritize GDP over environmental protection, consumption has become the biggest problem in China.

Jin stated that such trends have led the central government to adjust the assessment standards. For example, “environmental protection” was once listed as one of the indicators, but due to its conflict with GDP, local governments were relatively passive. It was not until the central government strictly regarded “insufficient environmental protection” as a deductive item that Beijing truly experienced “blue skies every day.”

However, the biggest challenge lies in consumption. Jin pointed out that although China is a global manufacturing powerhouse, individual consumption capacity has not kept pace. If “consumption” is included in the evaluation criteria for local officials, it may prompt local governments to pay more attention to social safety nets, healthcare, pensions, and employment, encouraging people to spend money rather than just save it.

) Note: “Every day is a blue sky” refers to the severe impact of industrial emissions on Beijing's air quality in the past, where smog heavily affected the sky. However, after strict requirements from the central government, the air quality has significantly improved in a short period of time. (

The technology competition has become a hidden indicator, wasting resources through reckless spending.

Jin pointed out that in recent years, the implicit assessment criteria of local governments in China have shifted to “innovation and technology,” leading cities across the country to invest in electric vehicles, with reports indicating that 80 cities have their own brands.

Solar panels, semiconductors, and AI startups have also become key targets for local support, with each locality eager to cultivate “its own champion enterprise.” Although this competition has spurred industrial development, it has also resulted in significant capital waste, leading to the gradual elimination of many companies.

China's industrial policy helps to revitalize, but is accompanied by waste and inefficiency.

Jin candidly stated that although this model of “national support combined with local competition” is not very efficient and suffers from serious capital misallocation, it has been successful in strategic emerging industries.

Electric vehicles, solar energy, and even semiconductors have quickly caught up with international standards due to a rush of investment from local governments. The problem is that when the market has already matured, if the country does not withdraw in a timely manner, it will lead to waste and inefficiency. Theoretically, market competition and venture capital should determine who can remain.

The East and West still differ due to political systems.

The host asked, why don't the United States or the West engage in “mayor economy”?

Jin stated that the reason lies in the differences in political systems. In China, local mayors can be promoted as long as they please the central government, but in the West, they rely on votes, so they must first meet the needs of voters. Therefore, they place more emphasis on education, healthcare, and social welfare, rather than just focusing on economic figures.

The contradiction between long-term planning and “short and quick” approaches, the rise of the new generation consciousness in China.

Jin revealed that another characteristic of China is the contradictory culture of being both “long-term and impatient.” The long-term aspect lies in the fact that the central government can plan for development over twenty years or more, and parents are also willing to invest in their children for decades.

On the other hand, there is the so-called “short, flat, and fast,” which originally referred to volleyball tactics but later became a common term in economic society. It means achieving short-term results, making quick profits, and having a very flat emotional or cooperative relationship. This mindset has allowed many Chinese companies to become popular within five to ten years, but it also makes them prone to rapid decline. After the pandemic, coupled with an economic slowdown, this culture is weakening, and the younger generation is more concerned with quality and long-term value.

“Mayor's Economy” brings rapid growth, but can it transform to a consumption-driven model?

Overall, China's “Mayor Economy” model has indeed driven rapid growth over the past few decades and has allowed China to gain a leading position in new industries.

However, resource waste, insufficient consumption, and short-term mentality remain the most urgent challenges at present. Whether we can shift the assessment criteria from focusing on production to focusing on “consumption” in the future may determine whether China can transform from a “manufacturing giant” to a true “consumer powerhouse.”

This article reveals how China is pushing GDP while dragging down the housing market, fully uncovering the true inside story of “mayor economy”. It first appeared in Chain News ABMedia.