China's Industrial Cities Seek New Growth Beyond Coal and Steel

From steel towns to solar lakes

A 500 megawatt floating solar base in Peixian county, part of Xuzhou in Jiangsu Province, stretches across more than 700 hectares of a former mining area. It generates over 600 million kilowatt hours of electricity a year. In Panzhihua, Sichuan, a city built around heavy industry in the 1960s, officials are promoting wellness tourism while pushing steel production toward more valuable alloys and materials.

These projects illustrate how Chinese cities that once supplied coal, steel and machinery are seeking new sources of jobs and income. Former mining land is becoming a base for renewable power. Factory towns are investing in advanced equipment, clean energy and digital services. Panzhihua, carved into mountains on the upper Yangtze, is trying to turn its sunshine and climate into economic assets alongside its industrial expertise.

As of October 28, 2025, the transition is uneven. Cities must keep existing industries competitive while finding businesses that can sustain them when extraction declines. They also need to attract skilled workers and improve daily life for residents, reflecting China's shift from rapid expansion toward growth centered on people.

China officially classifies more than 200 places as resource based cities. Many developed around one dominant resource, with infrastructure and institutions designed to support extraction. Falling ore quality or declining mines can weaken local tax revenue and make private investors cautious. Rebuilding an economy around different activities requires new skills, financing and, often, a new identity.

Why the old growth model is under pressure

Slower urbanization and pressure on the property market are weakening two familiar sources of growth: construction and local government income from land. Cities that supplied materials for building projects face pressure to diversify just as their budgets become more constrained.

China's climate targets add another reason to change. The country aims to reach a carbon emissions peak before 2030 and carbon neutrality by 2060. Those goals redirect investment toward cleaner electricity, greener industrial production and more efficient energy use.

Manufacturers also face a world of increasingly digital production, more volatile export markets and tougher competition. Cities need businesses that produce more value from their workers, equipment and energy. Better services and quality of life matter because skilled employees can choose where to live.

The government's agenda of new quality productive forces favors advanced manufacturing, clean technology, basic research and the digital economy. For an old industrial city, that means developing activities beyond digging up resources or processing them into basic materials, while finding productive uses for the factories, transport links and technical knowledge already in place.

Panzhihua builds on metals and sunshine

Panzhihua was established in the 1960s to anchor an industrial corridor in western China. It became home to Pangang Group, the largest steel enterprise in western China and a major producer of vanadium and titanium. Its reinvention therefore involves upgrading an established industrial base as well as creating new activities.

The city, with roughly 1.2 million residents, is pursuing higher value alloys and materials while promoting wellness tourism based on its climate and sunshine. Local leaders want to retain the benefits of industrial production, reduce pollution, widen the economy and attract new talent.

Panzhihua has improved its environment, added economic sectors and invested in public spaces. Yet its industrial base remains narrow, its capacity for innovation is limited, and recruiting young graduates is difficult. A larger services sector and stronger small and medium businesses would reduce its exposure to rises and falls in commodity prices.

Residents and researchers describe an effort to avoid the decline associated with former industrial strongholds, while acknowledging that success is far from guaranteed. One possible combination is modern metallurgy using vanadium and titanium, applications in energy storage, and tourism tied to the city's climate and mountain setting.

Xuzhou turns mining damage into electricity

Peixian's floating solar development uses water covering land affected by mining subsidence, where the ground has sunk. Photovoltaic panels generate electricity above the water while aquaculture operates below, combining energy production, local livelihoods and ecological recovery.

The 500 megawatt base saves about 190,000 tonnes of coal and cuts roughly 490,000 tonnes of carbon dioxide annually. Its output of more than 600 million kilowatt hours a year illustrates the difference between a plant's capacity and its production: megawatts describe generating capacity, while kilowatt hours measure electricity produced over time.

Another solar fishery site in Liuxin generates nearly 100 million kilowatt hours annually. Xuzhou has also established dozens of factories recognized as green factories at the national level. The output value of its new energy industries exceeded 100 billion yuan in 2024, supported by a growing renewable energy supply chain.

Businesses are developing energy storage and fuel cell projects alongside solar power. A hydrogen fuel cell company in Peixian says it can assemble up to 10,000 stacks a year and is working with universities on testing platforms. The aim is to connect manufacturing with research, services and skilled employment.

A Peixian resident described the changes a decade after mine closures, pointing to the return of public recreation and wildlife:

Now we have wetlands, clear water, and birds coming back. People walk, jog and fish here in the evening. It is completely different from what it used to be.

Coal regions expand solar, wind and hydrogen

Across coal regions from Jiangsu to Inner Mongolia, cities are looking to solar, wind and hydrogen as parts of a broader energy transition. Ordos in Inner Mongolia has installed a 500 megawatt solar facility on abandoned mining land, matching the generating capacity of the Peixian base. Drought tolerant vegetation helps green the surface while reducing dust and erosion.

Huainan in Anhui began building a 390 megawatt solar site in September 2025. It is expected to generate 10.9 billion kilowatt hours over its lifetime. In Shanxi, a province long associated with coal, a new solar complex backed by 21 billion yuan of investment is expected to supply about 9.3 billion kilowatt hours annually to northern cities, including Beijing and Tianjin.

China's installed solar capacity reached about 1,120 gigawatts by August 2025, nearly half again as much as a year earlier. The expansion shows how local redevelopment projects fit into a much larger change in the country's power system and industrial base.

The main dates framing this transition span decades:

• 1960s: Panzhihua developed as an industrial center in western China.
• 2013: The Sustainable Development Plan of Resource Based Cities set a roadmap for moving beyond extraction.
• August 2025: China's installed solar capacity reached about 1,120 gigawatts.
• September 2025: Construction began on Huainan's 390 megawatt solar project.
• Before 2030 and by 2060: China aims to reach its carbon emissions peak and carbon neutrality, respectively.

What research says about industrial change

The Sustainable Development Plan of Resource Based Cities, launched in 2013, provides a national framework for economies seeking alternatives to extraction. Research using panel data for hundreds of cities between 2007 and 2023 links the plan to industrial upgrading, measured through an increasing share of services relative to manufacturing. Panel data follow the same places over multiple years.

Researchers identify three channels behind the gains: green patents, stronger human capital and greater foreign direct investment. Human capital means the skills, knowledge and experience people bring to work. The effects tend to be larger in cities with higher incomes and denser populations, showing how local conditions shape results.

Other studies use composite indices, which combine several indicators into one measure, to track the transition toward lower carbon emissions in more than 200 cities at the prefecture level. They show rapid improvement between 2011 and 2019, with eastern centers in the Beijing Tianjin corridor, the Yangtze River Delta and the Pearl River Delta leading.

Low carbon pilot policies, higher foreign direct investment per person and greater population density support progress. Resource dependence can slow early change, particularly where infrastructure is old or growth targets exceed local capacity. Cities therefore need plans suited to their resources and stage of development.

Digital networks and regulation shape the results

A study of 271 cities from 2003 to 2019 examined the Broadband China program as a quasi natural experiment. This approach uses a policy rollout to compare changes across places and assess its effects. The research found that stronger digital infrastructure tends to improve green economic performance.

The authors identified better energy efficiency, the development of digital industries and green innovation as the main channels. Networks can help factories monitor energy use, make logistics more efficient and allow new services to develop in cities previously dominated by extraction.

The authors of the study evaluating city outcomes under Broadband China expressed their central finding in these words:

Digital infrastructure can enable green economic transformation in Chinese cities.

Research comparing environmental regulation across nearly 300 cities also points to differences in policy design. Command and control rules, which directly require businesses to meet standards, and broad regulatory frameworks can produce benefits locally and in nearby areas.

Market incentives and tools for public participation also help within cities, although their effects on neighboring jurisdictions can be weaker or sometimes negative. Coordination within major city clusters, including the Beijing Tianjin Hebei area and the Yangtze River Delta, tends to strengthen gains when policies work together.

Talent and investment favor established centers

Young graduates consider wages, schools, parks and cultural life when deciding where to settle. A city seeking new industries must therefore compete as a place to live as well as a place to work. Strong city clusters attract a disproportionate share of investment and skills.

The Yangtze River Delta, anchored by Shanghai and extending across Jiangsu, Zhejiang and Anhui, combines advanced manufacturing, research networks and a strong business environment. It accounts for roughly a quarter of China's economic output and more than a third of foreign trade by value. It also attracts a large share of foreign capital and services activity.

Those strengths reinforce one another, making it difficult for inland cities to catch up. Yet the delta itself faces internal development gaps and coordination problems. Local protection and overlapping industrial plans can divide markets and produce excess capacity, weakening competitiveness over time.

Resource based cities can reduce duplication by cooperating across administrative boundaries and using common standards. Universities, vocational programs and public services also help build the skills businesses need. Research on science and technology finance finds that funding has a larger positive effect on innovation and measures of high quality growth where human capital and digital infrastructure are stronger.

Cities with weaker networks of researchers, businesses and skilled workers do not receive the same returns from new funds or industrial parks. Financing matters, but its results depend partly on the capabilities already present and those a city is able to develop.

New industries face a difficult economic setting

Advanced materials, large renewable power installations, equipment upgrades, robotics and services that help reduce carbon emissions offer opportunities beyond raw resource extraction. Parts of the electric vehicle supply chain have moved inland as companies seek lower costs and more varied transport routes. Health care and elder care offer lasting demand in cities with aging populations.

Timing and scale remain difficult. Global demand is volatile, trade friction creates uncertainty, and price competition is intense in some manufacturing sectors. China's domestic demand recovery has been uneven. Property weakness continues to weigh on local budgets that previously depended on land sales.

Macroeconomic analysis cited a cautious growth outlook of near 4 percent for 2025. Supportive monetary and fiscal policies were aimed at stabilizing property and capital markets and strengthening local finances. Policy priorities included technology, the energy transition, logistics efficiency and equipment renewal.

Companies also faced higher tariffs in some markets and tighter global rules. Cities able to control costs, raise productivity and compete through technology and service were better positioned. Regulations that support business activity and predictable local governance were also important.

In coal regions, solar modules, inverters, batteries and hydrogen systems could anchor industrial parks alongside testing laboratories and engineering services. Purchasing policies that reward equipment for saving energy, rather than simply having the lowest initial price, could speed its use in local vehicle fleets and buildings. Attracting and retaining workers would still require livable districts, cultural amenities and dependable public services.

Measuring progress beyond new projects

Research tracking six resource based cities in Shaanxi between 2001 and 2015 shows why success needs several measures. Social progress and environmental quality improved on most indicators, while economic adjustment was often slower and sometimes reversed.

Cleaner air, restored land and better public spaces can appear before a new industrial structure is secure. Economic renewal also depends on private investment, a wider base of entrepreneurs and access to markets. Evaluating economic, social and environmental outcomes together helps reveal trade offs that a single growth figure can miss.

Composite measures of lower carbon development show progress clustering around eastern centers with deep capital markets and international connections. Western and central cities need investment in the foundations for private activity: stable rules, good infrastructure, workforce skills and open regional markets.

Cities that repeatedly switch between fashionable sectors without developing practical capabilities risk excess production capacity and assets that no longer earn a return. Sequencing reforms, expanding approaches that work and closing those that do not can help retain investors and residents. Whether Panzhihua and other former industrial centers can achieve lasting diversification is still uncertain.

What to Know

• More than 200 officially classified resource based cities face the challenge of building economies beyond extraction and heavy industry.
• Panzhihua, with roughly 1.2 million residents, is combining metals upgrades with wellness tourism while confronting a narrow industrial base and difficulties recruiting graduates.
• Peixian's 500 megawatt floating solar base generates over 600 million kilowatt hours annually and combines electricity production with aquaculture.
• China's installed solar capacity reached about 1,120 gigawatts by August 2025, nearly half again as much as a year earlier.
• Research links industrial upgrading to the 2013 resource cities plan, supported by green patents, skills and foreign investment.
• Digital infrastructure, coordinated environmental rules and strong research and training networks can support economic change.
• Trade friction, uneven domestic demand and pressure on local finances constrain investment and industrial renewal.
• Economic diversification needs to be measured alongside environmental recovery and improvements in residents' lives.