Limited Space, Unlimited Growth

An ancient city grows innovatively by developing its digital economy

- Ding Ying & Wang Hairong

There is a famous Chinese saying that “in heaven, there is paradise, on earth, Hangzhou and Suzhou.” Hangzhou, capital of east China’s Zhejiang Province, is reputed for its enchanting scenery and abundant natural resources. With the boom in information technology (IT) and Internet Plus industries, the city now has grown into a paradise for innovation and entrepreneurship.

A flourishing industry

As reform and opening up entered a new phase in China, Hangzhou seized the opportunity to develop its digital economy and its efforts have paid off. Today, it is known as “the capital of e-commerce” because of its robust Internet industry.

Hangzhou’s Internet industry has maintained an annual growth rate of more than 40 percent, higher than that of megacities such as Beijing and Shanghai. Its Internet companies account for 6.5 percent of the total nationwide, only behind Beijing, Shanghai and Shenzhen, according to a report on the Internet industry published by Lagou.com and NetEase’s joint Innovation Center in October.

Hangzhou had 21 unicorns as of the end of October—startups in emerging industries valued at more than $1 billion. Though fewer than Beijing’s 83 and Shanghai’s 34, it outpaced Shenzhen’s 18, according to ITjuzi, a business information service provider focusing on the Internet industry.

In 2017, the value added of Hangzhou’s information industry accounted for more than one quarter of the city’s GDP, growing at 21.8 percent and contributing more than 50 percent to the economic growth of the whole city, according to the local government’s work report released at the beginning of this year.