Hefei's 'Hefei Model': China's new high-tech strategy

The NIO F2 factory in Hefei, China, stands as a testament to the city's dramatic transformation into a high-tech powerhouse. Located in the Xinqiao NeoPark, this advanced facility, producing electric vehicles at a rate of one per minute, showcases a highly automated production line. Approximately 1,300 production robots and 500 transport robots are in operation, with a sophisticated underground network collecting 1.5 terabytes of process data daily. The factory's ultimate goal is to automate decision-making processes, reflecting Hefei's ambition to become the world's largest electric vehicle production base.

Once described as a "large rural town," Hefei has experienced explosive growth, driven by strategic investments from the municipal government and the central government's "Yangtze River Delta Integration" strategy. This has led to Hefei achieving the highest growth rate among 29 major Chinese cities in the first quarter of the year. The "Hefei Speed" and "Hefei Model" are now seen as symbols of China's new economic trajectory, particularly in the context of a globalized world giving way to an era of security concerns and intense U.S.-China technological competition. Unlike Shenzhen's 1980s model of private-led growth during reform and opening up, Hefei's strategy is state-driven and focused on cutting-edge technologies.

“

Hefei's success is not gambling; it is the result of meticulous research and checks on whether investments align with development strategies.

The "Hefei Model" is built on four key pillars. First, the government plays a pivotal role through its five investment funds, such as Hefei Industrial Investment and Xingtai Capital. In 2008, Hefei prioritized investing in display manufacturer BOE, which is now the global leader in LCD panels and second in OLEDs. Later, in 2013, the city secured a 37% stake in semiconductor firm CXMT, which has become a leading Chinese semiconductor company, especially after U.S. sanctions on China. Hefei also invested heavily in electric vehicle company NIO, attracting other EV manufacturers and battery companies, forming a crucial industrial ecosystem. City officials emphasize that these investments were not gambles but carefully researched decisions aligned with a development strategy focused on integrating semiconductors, displays, automobiles, and artificial intelligence.

Second, talent is a critical component. The University of Science and Technology of China (USTC) in Hefei is a hub for research in next-generation industries like AI, quantum technology, and aerospace. Hefei provided USTC with prime land and established national-level laboratories, fostering a close relationship that led to the creation of the "USTC Silicon Valley" science and technology park. A significant portion of USTC graduates remain in Hefei, contributing to the innovation ecosystem. Companies like iFlytek, a leading voice recognition AI firm, originated from USTC's language and speech laboratories. Third, a comprehensive supply chain ecosystem has emerged, centered around electric vehicles and extending to solar power and batteries. This has spurred the growth of related industries such as robotics, drones, and energy storage systems. Companies like Gotion High-Tech, a major battery manufacturer, have benefited from Hefei's support, becoming a global top-five player in battery shipments.

“

The 'Keda' in 'Keda Xunfei' means the University of Science and Technology of China.