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Published by ChinaMNC · Hangzhou

Hangzhou’s ‘New’ Economy: What Foreign Founders Should Know

Hangzhou’s latest economic data reveals robust growth in advanced manufacturing, AI, and high-tech exports—key sectors for foreign founders setting up in China.

Hangzhou’s Economic Performance: A Snapshot for Foreign Founders

Hangzhou’s economy grew by 5.2% year-on-year in the first three quarters, outpacing the national average by 0.6 percentage points. The city’s GDP reached RMB 1.8128 trillion, with the service sector contributing 75.8% of economic growth. For foreign founders considering Hangzhou, the data points to a dynamic market with a strong industrial base and a rapidly evolving tech landscape.

Industrial Strength and Advanced Manufacturing

Hangzhou’s industrial sector remains a key driver. The added value of large-scale industries rose 6.9% year-on-year, marking 19 consecutive months of growth above 6%. Growth was particularly strong in computer and communication equipment (17.2%), automotive manufacturing (11.0%), and general equipment manufacturing (11.2%).

The “296X” advanced manufacturing clusters—a government-backed initiative—generated RMB 1.1354 trillion in output, up 9.5% and outperforming overall industrial growth. This indicates a clear policy focus on high-value industries that could offer opportunities for foreign firms in related supply chains.

AI and Digital Economy: From Concept to Commercialization

The digital economy is a standout. The core digital economy manufacturing sector grew 16.8%, while the AI core industry generated RMB 429.8 billion in revenue, up 28.6% year-on-year—maintaining growth above 20% throughout the year. These figures suggest that AI is no longer just a buzzword in Hangzhou; it is generating real revenue and orders.

Examples include Hikvision’s large model, applied across 90+ vertical industries, and Unitree’s robots operating in substations and inspection lines. According to IDC’s 2026 H1 global quadruped robot market report, three of the top five global shippers are based in Hangzhou. This concentration of AI and robotics companies creates a fertile ecosystem for foreign founders seeking partnerships or talent.

Services and High-Tech Investment

The service sector is also upgrading. Revenue for large-scale services grew 8.3%, with information transmission, software, and IT services up 13.0%, and leasing and business services up 13.4%. High-tech services and digital economy core services outpaced overall service sector growth, indicating a shift toward knowledge-intensive activities.

Investment data further underscores this trend. Manufacturing investment grew 10.5%—the eighth consecutive month of double-digit growth—and now accounts for 17.3% of total fixed asset investment. High-tech industry investment represented 18.8% of the total, up 4.2 percentage points. Notably, investment in computer and communication electronics surged 26.0%, and general equipment manufacturing jumped 30.9%. For foreign founders, this signals expanding infrastructure and supply chain capabilities.

Consumer Market: Premiumization and Smart Spending

While total retail sales dipped slightly by 0.3%, excluding automobiles, they rose 4.9%. Upgraded consumer goods performed strongly: smartphone retail sales increased 18.5%, wearable smart devices soared 222.2%, and cosmetics grew 24.7%. This suggests that Hangzhou consumers are willing to spend on smart, high-quality products—a potential market for foreign brands in consumer tech and lifestyle.

Foreign Trade: High-Tech Exports and Private Enterprises

Hangzhou’s foreign trade demonstrated resilience. Total goods imports and exports reached RMB 779 billion, up 15.4%, with exports growing 13.6% to RMB 546.2 billion. High-tech product exports rose 22.3% and now account for a larger share. Private enterprises contributed 78.3% of exports, highlighting the city’s entrepreneurial dynamism.

Hangzhou-based robotics companies like Unitree and Deep Robotics are expanding globally. According to a September State Council press conference, Hangzhou AI companies’ exports grew 156% in January-July 2025, and AI orders accounted for over half of pre-arranged deals at the Global Digital Trade Expo. This export momentum could benefit foreign founders looking to leverage Hangzhou as a manufacturing or R&D hub for global markets.

Green Transition and Quality of Life

Energy consumption per unit of industrial added value fell 5.8%, and new energy vehicles accounted for 57.3% of retail car sales. Resident income grew steadily: per capita disposable income reached RMB 67,135, up 4.8%, with rural income growing faster at 6.3%. CPI rose 1.3%, indicating moderate inflation. These factors contribute to a stable living environment for foreign employees and a growing consumer base.

Challenges and Policy Outlook

The Hangzhou Statistics Bureau acknowledges external uncertainties and insufficient domestic demand. However, the policy direction is clear: maximize policy effects to continue industrial upgrading and structural optimization. For foreign founders, this implies ongoing government support for high-tech and advanced manufacturing sectors, but also a need to navigate a complex economic environment.

Practical Takeaways for Foreign Founders

This summary is based on information published by the relevant Chinese government website and is general information, not legal or tax advice.

For assistance with registering and operating a company in China, foreign founders can contact ChinaMNC on WhatsApp / WeChat at +86 153 1898 8535.

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General information only, not legal or tax advice.