How cities can go for the new normal

A new Deutsche Bank study says that last year, China's 300 cities faced a 37 percent drop in their land-sale revenues - which is a major setback given that land sales accounted for 35 percent of total local government revenues. Such revenues had risen at an average annual rate of 24 percent from 2009 to 2013.

Moreover, annual consumer and producer inflation dropped to 1.5 percent and minus 3.3 percent in December, owing partly to the sharp decline in world oil prices. China now faces deflation and an inhospitable external economic environment, and its urban centers are struggling with the complex interaction of solvency, liquidity and structural issues.

But some cities are better equipped than others to weather these challenges. China's first- and second-tier cities are very wealthy, benefiting from high property values and the continuous inflow of talent, capital, companies and investment projects. Despite a slowdown in the property market, Beijing's recent land auction concluded with record-breaking prices of about 38,000 yuan ($6,200) per square meter.