Understanding Chinese City Tiers (Part 1/2)

3rd Tier? 5th Tier? New 1st Tier? What does it all mean?

A few weeks ago, Chinese financial magazine Yicai Global (or 第一财经 in Chinese) released its 2025 tier ranking list for Chinese cities. You’ve probably seen me or others previously refer to Chinese cities as being a “Tier 1 city” or a “Tier 4 city” without knowing exactly what that referred to, or having only a vague idea it refers to categorization of cities by development level…and that’s basically right, but not the whole store. I wanted to write an essay talking about this in more detail, so here we are. This will be a two-part series, with the first part looking at the basic concept and methodology of the Tier rankings, and the second part digging into some interesting results from the new 2025 list.

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The first thing to know about China’s Tier system, and the basis of a common misconception, is it’s not an official ranking from the Chinese government! The most famous one is the one from Yicai Global/第一财经, which has issued it annually since 2016. You can think of this ranking like US News and World Report's annual college rankings - unofficial but influential. That said, Chinese municipalities definitely pay attention to their ranking and placement, just like American universities do!

The full name of Yicai's ranking is 中国城市商业魅力排行榜, or the "Chinese Cities Commercial Attractiveness Ranking. Because Yicai is a financial magazine, they frame their ranking as an assessment of which Chinese cities provide the best environment for doing business. However, according to Yicai, their analysis considers a wide range of quality-of-life indicators that contribute to a city's competitiveness, based on data collected from nationwide brands and big data companies, including Jingdong, Ele.me, Taobao, Alipay, Zhihu, Didi, Qunar, Amap, etc.

Of course, people had tried to sort Chinese cities into tiers for years before Yicai started doing it in 2016. Yicai's unique contribution to the Tier Discourse starting from was to introduce a new category called "New 1st-Tier". Their objective was to identify and designate up-and-coming cities OTHER THAN the famous big 4 (i.e., Shanghai, Beijing, Guangzhou, Shenzhen) that everyone already knows.

In 2016 Chengdu led the “New 1st Tiers” to earn the title of 5th-strongest city in China (a position it has maintained every year since). The rest of the New 1st Tiers in Yicai’s inaugural ranking were as follows (of course they’ve changed a bit since then):

In the early years of Yicai’s tier list, Beijing and Shanghai were normalized to 100 points, with all other cities scoring somewhere from 0-100 index points based on their component ratings. Later, this system was tweaked so the top-ranking New 1st Tier would always be normalized to 100 instead.

The introduction of “New 1st Tiers” naturally aroused some jokes about “tier inflation" but more broadly has also made it kind of annoying to talk about city rankings. “New 1st Tier?” Come one, everyone really knows that means “2nd Tier”, right? Do I really have to use that label when I talk about Hangzhou or Nanjing? Will people be confused if I call them 2nd Tier？

My personal preference would be to just directly call them “1st Tier” and then use the label “S-Tier” for Beijing, Shanghai, Guangzhou, and Shenzhen Unfortunately, that bit of internet culture isn’t quite ready to leap into mainstream academia…yet.

Although Yicai's focus was on identifying "New 1st-Tiers", their analysis generated point scores for all 337 prefecture-level cities in China (what’s a prefecture-level city? It’s in my guide). They then fixed the following bucket sizes for their different Tiers:

• 4 1st-Tiers (Beijing, Shanghai, Guangzhou, Shenzhen)

• 15 New 1st-Tiers (you’ve heard of most of these)

• 30 2nd-Tiers (you’ve heard of some of these)

• 70 3rd-Tiers (you’ve heard of just a few, but your Chinese friends know them)

• 90 4th-Tiers (you’ve never heard of them, but your Chn friends know most of them)

• 128 5th-Tiers (no one has ever heard of these, not even your Chinese friends) *unless they have some famous tourist attraction, or they’re actually from there

One very important thing to note here: These tiers exist on a curve. Yicai's ranking is a ranking of RELATIVE competitiveness, not ABSOLUTE performance. There are ALWAYS the same number of cities in each tier. For one city to rise, it must kick another down!

Yicai’s ranking tells you how well a city is developing relative to its peers, but not how well it is doing versus its own past performance, or versus some standard of "ideal" performance. Remember this…

You wouldn't expect to see a city rise through the ranks unless it's consistently outperforming its peers to a notable degree, over a period of years (or if there’s a big change to the weighting methodology in a single year, as well shall see). 4th-tier doesn't automatically mean “weak and/or poor city”; it just means "relatively less attractive vs 3rd-tier cities and better than 5th-tiers".

…and remember, attractiveness is in the eye of the beholder. In Yicai’s case, their evaluation framework biases towards business-related activities (although many general quality-of-life items are included too). Let's look more closely at their criteria:

Quantifying the Qualitative

From 2016-2023, Yicai's evaluation comprised the same five dimensions, with the first change only happening in 2024 (see below). Each of these dimensions included 3-4 sub-components with different weighting values (2025 weight values provided below).

1. 商业资源聚集度 = Concentration of commercial resources

   

2. 城市枢纽性 = The city's status as a hub

   

3. 市人活跃度 = Urban residents’ activities (consumption, social engagement, engagement level for entertainment consumption)

   

4. 生活方式多样性 = Diversity of lifestyles (freshness of lifestyle options, diversity of options, availability of free time) *was removed in 2024*

5. 未来可塑性 = Future potential (literally: "future plasticity". Looks at city environment, ability to attract talent, consumption growth potential, city scale)

   

Starting from 2024, Yicai changed one of their evaluation dimensions for the first time. The big change was the removal of "Diversity of Lifestyles", (#4 above) replaced by a new item called New Economy Competitiveness (新经济竞争力)."New Economy" segments include high-tech manufacturing, financial and legal services, new energy vehicles, new materials, renewable energy, next-gen IT, biopharm, envirotech, etc.

There’s lots of room for differing opinions about what makes a good or strong city, but this is their methodology, and they’ve put quite a lot of resources into developing and maintaining it. Personally, I think it seems reasonable.

Now keep in mind, we can safely assume most cities in China have grown and become nicer from 2016 to 2025, but Yicai's tier rankings won't actually tell us that. However, they are useful for showing us which cities have slumped relative to their peers…

...as well as highlight which cities have outperformed their peers:

Other Things about Yicai’s Tier System

• Cities are ranked by point value, but the tier sizes are fixed. That means the top-ranked 2nd-tier city and the lowest-ranked New 1st-tier can have only the barest of point differences between them but still be in separate tiers. Same with the top-ranked 3rd-tier and the lowest-ranked 2nd-tier. In fact, cities just on the edge of a tier have frequently swapped back and forth among different tiers over years.

• County-level cities are not ranked by Yicai; only prefecture-level regions. That means you wouldn't find a city like Kunshan in the rankings, because it's a county-level city administered by Suzhou. Autonomous prefectures ARE ranked overall, but not their capital cities. (what’s a county-level city? read my guide).

• These rankings are correlated to development level, but you should be cautious about using them as a straight proxy, especially for middle and lower tiers. A city could be less-attractive according to Yicai's methodology, but still very pleasant to live in or visit due to affirmative action investment policies or a mature tourism industry.

  • Take, for instance, 4th-Tier Zhoushan in Zhejiang. Zhoushan is an island archipelago with no train service and a tiny airport. It has many areas only accessible by ferry, surely hurting its ranking. But this is downtown Zhoushan:

• Cities in the same Tier ities may have HUGE disparities between them. This is very obvious in the "New 1st Tier" category. Qingdao or Hefei are lovely places, but there's a big gap between them and Hangzhou or Chengdu.

• Because the administrative unit evaluated is prefecture-level, these rankings will gloss over the huge disparities that can exist among counties within the same prefecture. For instance, Liangshan Yi Autonomous Prefecture in Sichuan is ranked as a 4th-Tier city, but its rural mountainous counties are literally the poorest, least accessible, least developed places in the entire country. Meanwhile, the capital of Liangshan (Xichang City) looks like this.

• In Yicai's tier system, the “median Chinese city” is by definition the 169th highest-ranked city in the points system. Mathematically, this city will always be a 4th-tier city, unless Yicai changes their methodology. In 2024, this city was Jiaozuo, in Henan. This year, the new median city is Linfen, in Shanxi. But there are dozens of cities in the middle of the 4th Tier ranking section that are all very similar, and could all represent the median.

Okay, enough of that! Hopefully now you have a better idea of what we mean when we talk about Chinese city Tiers, and have better context if you see me write that a certain place is, e.g., a “typical 5th Tier City”.

Here are Yicai’s rankings of the top Chinese cities for 2025:

What do you think? How many have you visited? I’ve seen 17/19 myself!

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That’s all for Part 1. Next time, I’ll do a deep dive into the 2025 results, trying to understand what this dataset can reveal about strong provinces, weak provinces, and which place is the most average province in China!