Grassroots dynamo

Yiwu offers an example of how counties without natural resources or coastal access can successfully pursue economic development

The essence of high-quality county-level economic development lies in putting people at the center. Unlike major cities that prioritize high-tech industries, the comparative advantages of counties often reside in niche markets for livelihood products. Everyday goods, textiles and apparel may seem to have limited added value, but they have high flexibility in response to demand, strong employment absorption and wide market coverage, forming a solid industrial foundation.

The practice of Yiwu, a county in eastern China’s Zhejiang province, centered on small commodities, is particularly illuminating. In late 1970s, local leaders were among the first in the country to relax restrictions on individual business operations, allowing farmers to engage in commerce and encouraging long-distance trade. These moves broke the planned economy’s restrictions on circulation and gave legitimacy to individual entrepreneurs. This approach, starting from livelihood needs and focusing on institutional relaxation, enabled Yiwu to accumulate a broad social foundation and strong internal momentum. Today, its small commodities industry chain provides employment for millions nationwide.

Counties cannot compete with central cities in capital-intensive industries, but by forming specialized, clustered supply capabilities, they can still occupy an irreplaceable position in the global division of labor. Small commodities meet universal demand and open up vast global market potential as everyday life depends on basic consumer goods.

Yiwu vividly illustrates this logic. As an inland county-level city with neither coastal nor border advantages, few mineral resources and a weak industrial base, it has grown over decades into a global hub for the small commodities trade, with a trade network covering over 200 countries and regions. The scale effect has created a self-reinforcing mechanism: the more comprehensive the product portfolio, the more buyers are willing to come; the larger the pool of buyers, the more suppliers are willing to gather. The matching of supply and demand reduces transaction costs and enhances circulation efficiency.

Yiwu has thus established a virtuous cycle of small commodities, large clusters, large markets and large circulation networks. Crucially, the county is not merely a transit station. It promotes commerce to drive manufacturing, linking trade and industry, transmitting market demand back to production and fostering clusters for apparel, daily goods and electronics, forming a “front-shop, back-factory” structure. County-level economies do not have to pursue grand ambitions. By identifying niche markets, they can secure a competitive position in the global value chain.

Many countries mistakenly believe that an export-oriented economy simply means pursuing exports, expanding foreign sales blindly, and becoming passive when external environments fluctuate. Yiwu offers a clear reference: Development does not start by targeting overseas markets but by focusing domestically, thoroughly implementing “buy nationwide, sell nationwide” to hone supply chain organization and market responsiveness in the domestic cycle. Then, businesses gradually extend to international markets to form a “buy globally, sell globally” pattern.

Counties must first focus on local markets, using the domestic cycle as the main battlefield for cultivating competitiveness before seeking to climb the global value chain. The large-scale, multi-layered and fast-iterating domestic market provides a testing ground for businesses to hone low-cost, quick-response and flexible supply capabilities, which help sharpen a competitive edge when the companies export their products globally. The efficiency of the internal cycle determines the position of the external cycle. Yiwu’s first development phase was to form a domestic circulation hub, building a vast distribution network, refining its strengths in sourcing, logistics and commercial credit. When globalization surged, these capabilities quickly transformed into international competitive advantages. Currently, Yiwu links domestic industry clusters internally and extends its network globally through China-Europe freight trains, overseas warehouses and cross-border e-commerce.

Trade is not merely an exchange of goods, but a vehicle for information aggregation, capital flow, technology diffusion and institutional innovation. Establishing a leading position in trade can effectively drive industrialization, urbanization and modernization of the service industry in tandem. Once a trade hub is established, logistics, warehousing, finance, e-commerce and related services flourish, transforming counties into comprehensive economic centers.

Yiwu’s experience over more than 40 years profoundly validates this rule. Since establishing the “prosper through commerce” strategy in the 1980s, the strategic mainline has remained consistent despite administrative adjustments and leadership changes.

This steadfastness has resulted in leapfrog development. In 2025, Yiwu had a GDP of 269.33 billion yuan ($39.66 billion), with a per capita disposable income of 92,852 yuan. Its foreign trade exports reached 730.7 billion yuan, surpassing that of most provinces and regions in China. It also has more than 30,000 foreign entrepreneurs residing permanently, with more than 10,000 foreign-invested business entities. Today, Yiwu empowers itself through technologies such as artificial intelligence and blockchain, promoting the integration of digital trade and physical markets, cultivating a global digital trade center. Trade-led urban development is not a temporary measure but a long-term strategy that iterates and upgrades with new technology.

The fundamental methodology for high-quality county-level economic development lies in adhering to the doctrine of emancipating the mind and seeking truth from facts, breaking through institutional and mechanism barriers. As grassroots units, counties are more susceptible to traditional concepts and path dependence.

Every leap in Yiwu began with a leap in thinking. When the national understanding of the market economy was still contested and individual commerce faced bias 40 years ago, local leaders were early to recognize and support individual business operations and the development of specialized markets, introducing open policies and gaining an advantage in the transition from a planned to a market economy.

Subsequently, facing bottlenecks in administrative divisions, institutional authority and production factors, successive local officials solved problems through reform, piloting comprehensive trade reforms and innovations in the digital trade system, continuously releasing institutional dividends. Local merchants have always displayed a keen market instinct, a resilient entrepreneurial spirit and a global perspective. This spirit, combined with a pragmatic approach, forms the deepest spiritual core of high-quality county-level economic development.

The Yiwu experience offers a methodology rather than a template, a set of values rather than dogma. Different regions have different resource endowments and cannot simply replicate it. However, by adhering to a people-centered approach, starting small, building internal strength before expanding externally, and boosting trade-driven urban development, while maintaining an open mind, pragmatic approach and a bold and enterprising spirit, regions can discover high-quality development paths suited to their own realities, contributing grassroots strength to Chinese modernization.

The author is the vice-chairman of the Academic Committee of the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce.

The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.