Hangzhou may be considered one of China’s second-tier cities, but it beat metropolitan Shanghai to be named Best City in China for Business for the fifth consecutive year in the Forbes China survey ranking, which was based on each Chinese city’s climate for commercial start-ups and private capital.
Shanghai is the traditional business center for foreign investment in China, while more than 92% of Hangzhou’s GDP is generated by the private sector. The Forbes list also evaluated the top cities’ key business attributes by the quality of their labor force, business costs, market size and capitalization to derive the final rankings.
194 mainland cities were shortlisted by Forbes China from 652 Chinese cities with annual GDP above 19 billion yuan (US$2.77 billion) in 2006. Hangzhou hails from southeast China’s Zhejiang province, which produced over 5000 SMEs this year and is located at the southern part of the economically developed Yangtze River Delta.
Of the top 42 cities, 10 are from Jiangsu province, 9 are from Zhejiang and 7 are from Guangdong (map of China). Guangdong and Jiangsu are so large as to feature among Asia’s top ten economies. China’s export powerhouse and richest province, Guangdong, has a population of 95 mil and GDP of US$404 bil, according to the Economist Intelligence Unit (EIU). 
| 2008 Forbes Ranking - Top 10 Best Places For Business In China |
||
| CITY | PROVINCE | |
| 1 | Hangzhou | Zhejiang |
| 2 | Shanghai | Shanghai |
| 3 | Wuxi | Jiangsu |
| 4 | Nanjing | Jiangsu |
| 5 | Ningbo | Zhejiang |
| 6 | Beijing | Beijing |
| 7 | Foshan | Guangdong |
| 8 | Suzhou | Jiangsu |
| 9 | Changzhou | Jiangsu |
| 10 | Guangzhou | Guangdong |
In a separate report by The Economist, Shanghai came out tops in overall business environment ranking and followed closely by Guangzhou, which was ranked No. 1 for infrastructure. Although Shenzhen eclipsed the rest in terms of economic performance, the coastal city from Guangdong province was affected by its 20th placing under infrastructure.
The EIU’s business environment ranking was derived from a comparison of 44 Chinese cities in 5 categories; namely economic performance, market opportunities, labor market, infrastructure and environment. The cities currently ranking highest for each category are:
- Best Economic Environment: Shenzhen
- Best Market Opportunities: Shenzhen
- Best Infrastructure: Guangzhou
- Best Labour Market: Beijing
- Best Environment: Haikou
The top 15 ranking also includes large cities focused on the booming domestic market such as Tianjin and Chengdu.
