Foshan Loses Third-City Status, Launches Industrial Overhaul
Foshan, historically Guangdong Province’s third-largest city by economic output, has lost its position to Dongguan in the first quarter of 2026 — a symbolic blow that has prompted the city’s most aggressive industrial restructuring in decades. On June 24, the city government convened a high-profile “Accelerating the Construction of a Modern Industrial System Work Conference,” announcing a comprehensive overhaul of its industrial governance structure, as reported by Sina News.
A Sharp Economic Decline
The numbers paint a stark picture. Foshan’s GDP growth rate fell to just 1.1% in 2024, then dropped further to 0.2% in 2025 — ranking last among China’s trillion-yuan GDP cities for two consecutive years. In Q1 2026, growth plunged to -2.4%, making Foshan the only city in the trillion-yuan club with negative growth, according to National Business Daily.
Dongguan’s GDP historically surpassed Foshan’s during this period, ending Foshan’s long-held status as Guangdong’s “third city” after Shenzhen and Guangzhou. The shift reflects deeper structural challenges in Foshan’s economy, which remains heavily dependent on traditional manufacturing industries closely tied to the real estate sector.
The Policy Response
In response, Foshan’s municipal government announced the creation of a “Modern Industrial System Construction Command Headquarters” co-led by the city’s party secretary and mayor. The conference also released three policy documents focused on building an “intelligent manufacturing powerhouse” and established seven Key Industry Offices targeting priority sectors.
As reported by Pedaily.cn, the new framework — dubbed “1+7+3+3+N” — focuses on seven priority industries: energy and power, intelligent networking, intelligent robotics, semiconductors, biomedical health, information software, and yachting. The move represents a shift from Foshan’s historically fragmented township-level governance to centralized, chain-based industrial management.
Peng Peng, Executive President of the Guangdong System Reform Research Association, described the initiative as “another major transformation for Foshan following the establishment of eight municipal state-owned enterprise groups in 2024.”
Signs of Progress
Despite the economic headwinds, Foshan has recorded notable achievements in emerging sectors. The city’s semiconductor industry output value has exceeded 90 billion yuan, approaching the 100 billion yuan target, driven by major projects including the XianDao Rare Materials optical chip project and Guangdong’s only mass-production lithography machine project, which both landed in Foshan in August 2025.
In the power equipment sector, Foshan attracted 50 new projects in 2025 with total contracted investment exceeding 36 billion yuan. As one of China’s three major medium-voltage switchgear manufacturing bases, the city is well-positioned to capitalize on growing demand driven by AI computing power needs.
The Road Ahead
Experts caution that Foshan’s transformation will not happen overnight. Lin Jiang, a professor at Lingnan College, Sun Yat-sen University, noted that “Foshan’s transformation is difficult to complete through endogenous动力 alone; it often requires experiencing ‘pain’ before being forced to advance.” He estimates the city may need a 3-5 year adjustment period.
A central challenge is balancing support for traditional industries — where Foshan’s famous slogan “Where there’s a home, there’s Foshan-made” reflects deep manufacturing roots in home appliances, ceramics, and furniture — with investment in emerging sectors. Hu Gang, a professor at Jinan University, argues that rather than abandoning this heritage, Foshan should evolve it through AI and health-tech integrations.
Background analysis from the Guangdong-Hong Kong-Macao Greater Bay Area portal highlights Foshan’s structural challenges: a “one town, one product” development model that has led to policy fragmentation, a weak service sector compared to peer cities, and an innovation deficit stemming from a lack of high-level universities and research institutions.
What to Watch
Foshan’s ability to execute its industrial governance reforms will be critical. The newly established Key Industry Offices must move beyond administrative coordination to genuinely restructure industries and rebalance interests across districts. The city also faces the question of whether to concentrate resources on a single focus — as Hefei did with its successful “patient capital” approach — or continue pursuing multiple sectors simultaneously.
As Foshan navigates this transition, its position within the Guangdong-Hong Kong-Macao Greater Bay Area provides strategic advantages. Experts suggest strengthening economic integration with Shenzhen to access innovation resources, building on Foshan’s existing integration with Guangzhou. Whether these measures can restore Foshan to its former position as Guangdong’s third-largest economy remains an open question — but the city has clearly signaled it is not going down without a fight.