Introduction
Anhui Province[1] is a strategically important province located in eastern China, spanning the Yangtze and Huai River basins. Historically, Anhui was initially known as an agricultural region, but has undergone a managed, rapid, and historic transformation into a key industrial powerhouse and high-tech innovation hub in the People’s Republic of China. The provincial capital, Hefei[2], which was relocated from Anqing in 1946, serves as the political, economic, and technological nexus of this transformation. The province’s contemporary development is underpinned by its strategic integration into the national Yangtze River Delta regional development plan[3], which positions Anhui as a vital inland bridge for advanced manufacturing and technological innovation. The economy is now driven mainly by the industrial sector, which accounted for nearly half (46.4%) of the province’s GDP growth in the first three quarters of the year. This industrial concentration is dominated by high value-added products. In particular, Anhui currently holds the national top position in automobile export volume.
This rapid structural rise is supported by a proactive policy framework focusing on institutional reform, high-level opening-up through the “China (Anhui) Pilot Free Trade Zone”[4], and a political mandate to cultivate “new quality productive forces.”[5] However, the prioritization of concentrated high-tech growth, especially in central Anhui (Hefei) and middle Anhui (Wuhu), has accelerated the process of moving towards long-term geographical balance. The historical prominence of southern Anhui is declining economically, with coordination indicators declining, while the central core is experiencing the fastest acceleration. This reflects a calculated policy decision to prioritize forward-looking economic clustering—focused on achieving industrial maturity—rather than ensuring immediate and diffuse regional equity and accepting the difficulties of temporary fiscal development mismatch in exchange for rapid structural transformation.
Historical and civilizational roots
1. The early era
The territory that now constitutes Anhui has deep historical roots and is considered an important cradle of Chinese prehistoric civilization. Archaeological evidence, such as the findings of the “Upside Down Cave”[6] in Fanchang County, attests to human habitation as early as 2.5 million years ago, and the region was the center of Neolithic cultures, including Yangshao and Longshan. The abbreviation for the province, “Wan”,[7] is derived from the name of a small state that existed in the region during the Spring and Autumn Period (722–481 BC), reflecting an ancient regional identity. During the imperial period, territory shifted between the various provinces of Jiujiang, Zhang, Tang, and Xishui after the unification of the Chinese dynasties in 221 BC. During the Ming Dynasty (1368–1644), the region was directly governed by the imperial capital at Nanjing. The formal establishment of Anhui as a distinct political entity occurred in 1667 during the reign of Emperor Kangxi of the Qing Dynasty. The name Anhui itself is a combination of the first letters of two important historical provinces of the time: Anqing and Huizhou. This administrative division of Jiangnan Province, which merged Anhui and Jiangsu, reflected the Qing government’s recognition of the distinct regional identities and challenges of these neighboring territories.
One of the defining administrative changes in the 20th century was the relocation of the provincial capital from Anqing to Hefei in 1946. After 1949, the People’s Republic of China briefly divided the province into two administrative regions, Wanbei (Northern Anhui) and Wannan (Southern Anhui), before reuniting them into a single province in 1952. This history of administrative division and reunification has resulted in enduring geographical and cultural differences between the north (Huai River basin) and the south (Yangtze River region), which are still evident today.
2. The Era of Warlords and Geopolitical Turmoil (1916-1938)
Anhui played a pivotal and often destabilizing role in the early Republic of China during the Warring States period. The “Anhui Group”[8], led by Duan Qirui, was one of three main factions competing for control of the Biang government. The group, whose provincial character stemmed from Duan’s Anhui roots, ran a sophisticated civilian political faction called the Anfu Club. The organization successfully dominated the Northern National Assembly, gaining three-quarters of the seats, largely through strategic vote-buying. The Anhui Group’s power structure was heavily dependent on military discipline inherited from Biang traditions, and was heavily supported by foreign powers, receiving aid, military equipment, and strategic loans from the Japanese. This dependence on foreign loans undermined any long-term stability desired by the so-called republican government. The group’s direct control of Beijing ended abruptly with their decisive defeat by the rival Zhili and Fengtian groups in the Zhili-Anhui War[9] in July 1920, which led to Duan’s resignation and the collapse of the government.
The historical period of fragmentation following the collapse of the Anhui group power bloc stands in stark contrast to the modern era. The current political emphasis on deep institutional integration in the Yangtze River Delta can be seen as a contemporary strategy to counter historical regional factionalism and ensure the province’s stability through national strategic unity. Geopolitical turmoil also affected the region in 1938, when President Chiang Kai-shek ordered the destruction of the vital Yellow River Dam to block the advance of the Imperial Japanese Army. This disastrous decision severely damaged large areas of northern and central Anhui and highlighted the province’s vulnerability to major conflicts.
3. Rich cultural heritage as an economic asset
Southern Anhui remains the geographical heartland of Huizhou (Hui) culture, a unique area defined by its intellectual tradition, commercial history, and distinctive architectural style. Hui-style architecture, a vital cultural asset, uses brick, wood, and stone, and features timber frames and tall, closed enclosing walls, often topped with “horse-head swings”[10] (fireproof walls). Houses are typically multi-tiered with narrow courtyards known as tianjing (skylights), designed to improve lighting, ventilation, and drainage in the humid subtropical climate. In addition, the architecture adheres closely to the principles of feng shui, with villages often designed with specific symbolic shapes (such as ships, oxen, turtles) and featuring large ancestral halls (zongchi) for worship and social gatherings.
The province is also internationally renowned for Mount Huangshan (Yellow Mountain), which has been a UNESCO World Heritage Site since 1990. Huangshan’s impressive granite peaks, ancient trees, and “Sea of Clouds”[11] have been a magnet for ascetics, poets, and artists since the Tang Dynasty, inspiring the influential “Shanshui” (Mountain and Water) school of landscape painting.
This rich cultural heritage is now being used as a vital economic driver. Mount Huangshan provides a sustainable income for local communities, and its tourism revenue accounts for almost a quarter of Huangshan City’s annual income. This makes the region an important model for optimizing the economic benefits of heritage-based tourism. However, the economic dependence on tourism and traditional sectors in southern Anhui is part of a growing inequality. While this cultural capital is invaluable, analysis shows that the overall economic coordination of southern Anhui is showing a declining trend compared to the rapidly growing central and northern regions. This suggests that policy mechanisms should focus on enhancing the “resource conversion capacity” of these cultural centers to better transform heritage capital into sustainable, modern wealth, and prevent the historic south from falling behind the technologically advanced central region.
Political structure and governance strategy
1. Dual management and leadership structure
Like all government institutions in mainland China, the politics of Anhui Province are structured in a dual party-state system. Political authority is distributed between the leadership of the Communist Party of China and the “administrative government”[12]. The most powerful position is the “Secretary of the Anhui Provincial Committee”[13], currently Liang Yanshun[14] (since June 2024). The head of the administrative body, the “Anhui People’s Government”[15], is Wang Qingxian[16] (since February 2021). This structure ensures that administrative efforts and economic policies are strictly aligned with the central directives of the Communist Party of China. The provincial government oversees 16 provincial-level cities and manages a wide range of local administrative departments.
2. Strategic Mission: Integrating the Yangtze River Delta
Anhui’s political agenda is defined by its deep commitment to the national strategy of integrated development of the Yangtze River Delta. The annexation of Anhui formalized the expansion of the Yangtze River Delta into “three provinces and one city”[17] (Shanghai Municipality and Jiangsu, Zhejiang, and Anhui provinces) with the goal of creating a world-class urban agglomeration. This strategic location, adjacent to coastal economic powerhouses, is designed to facilitate Anhui’s reform and opening up by integrating international resources, capital, technology, and talents through the Shanghai Open Platform. Key areas of cooperation include strengthening inter-regional scientific and technological innovation, cooperation in industrial clusters, enhancing regional market integration, and strengthening environmental protection and shared governance.
The success of the region’s integration depends not only on overcoming geographical distance but also on overcoming “institutional distance”[18] — the barriers created by different regulations and administrative standards. Anhui’s political leadership seems to have prioritized aligning its governance with the high standards of its coastal neighbors.
3. Policy priorities for high-quality development
A) Cultivating high-quality productive forces: The province has explicitly focused on the real economy as its cornerstone, and strives to develop the cultivation of high-quality productive forces through optimizing traditional industries, cultivating and expanding emerging sectors, and planning for future industries. This includes vigorously promoting fields such as semiconductors, display technologies, electric vehicles, intelligent manufacturing, commercial space, and low-altitude emerging economy. The strategy involves continuously promoting industrial innovation through technological advancement.
b) Improving the business environment and governance: Recognizing that attracting advanced industries requires world-class governance, Anhui Province has consistently taken comprehensive measures to improve its business environment. These measures include implementing more than 800 reforms, adopting advanced practices from its neighbors in the Yangtze River Delta. These efforts have been highly rated in national surveys.
A key indicator of success is the presence of large international companies: German automotive giant Volkswagen has established its largest overseas research, innovation and procurement center for smart connected cars in Hefei. The investment demonstrates that Anhui’s focused policy initiative to reduce institutional distance – by creating regulatory predictability and government efficiency – is successfully positioning the province as a reliable hub for advanced foreign capital.
c) China (Anhui) Pilot Free Trade Zone: The establishment of the China (Anhui) Pilot Free Trade Zone in August 2020 serves as a vital institutional innovation platform. Covering 119.86 square kilometers, the free trade zone is strategically divided into three sub-zones: Hefei Zone (64.95 square kilometers), “Wuhu Zone”[19] (35 square kilometers), and “Bengbo Zone”[20] (19.91 square kilometers). The main goal of the free trade zone is to accelerate the deep integration of technology and economic development, simplify customs clearance, and build internationally competitive enterprises that can be promoted and replicated throughout China.
4. Civil and urban governance
Governance priorities also extend to people’s livelihoods and urbanization. The provincial committee of the Communist Party of China has dedicated special instructions and conferences to social welfare and has continuously implemented 50 livelihood projects to enhance people’s sense of benefit, happiness and security. At the same time, urbanization is managed through comprehensive planning focused on integrating urban and rural areas and building new types of cities, especially green cities, smart cities and cultural cities, with the aim of improving the quality of domestic development.
Economic and industrial sphere
1. Macroeconomic indicators and structural transformation
Anhui Province has made remarkable progress in macroeconomics, transforming from an agricultural region into an important industrial economy. The province’s GDP increased from 1.9 trillion yuan (approximately 263 billion U.S. dollars) to 4.7 trillion yuan in the decade to 2023. The structure of the economy reflects this industrial transformation. The secondary industry (manufacturing and construction) has maintained a strong growth rate, with the GDP index for the secondary industry reported at 107,400 (previous year = 100) in December 2024, up from 106,100 a year earlier. This sector contributes disproportionately to overall economic development, accounting for 46.4% of the province’s GDP growth in the first three quarters of 2025. Anhui’s total GDP in 2022 ranked 14th among China’s 31 provincial regions. Analysis of industrial income identifies the main drivers of the province’s manufacturing competitiveness.
Table 1. Major industrial sectors by share of commercial profit
Motor vehicle productionMotor vehicle productionMelting and pressing of metals (other than iron)Production and distribution of electricity and thermal energyProduction of non-metallic civil products
Industrial scrap |
Share of commercial profit (in percent) |
10.9 |
|
8.2 |
|
6.7 |
|
6.1 |
|
5.7 |
2. The field of technology and creative innovations
Hefei, the provincial capital, serves as the central engine of Anhui’s technological leap strategy. The city is the political, economic, commercial, educational, scientific, and technological center. The city’s 2020 census population was 9,369,881, underscoring its scale as an urban center. Hefei’s development is driven by the deep integration of scientific and industrial innovation, with an emphasis on leading-edge technologies. The Hefei High-Tech Zone is home to world-class industrial clusters:
A) Quantum Information: The city has successfully housed leading companies such as Origin Quantum[21], Quantum C-Tech[22], and SicTech[23], which were founded by “renowned scientists affiliated with the University of Science and Technology of China”[24].
b) Artificial Intelligence: Hefei hosts the “China Speech Valley”[25], which is the first national industrial cluster in China with a special focus on AI applications. Hefei’s strategy includes “context-based deep integration”[26], which uses application scenarios to guide the development of future industries such as commercial space, 6G Internet, and embodied AI. This approach is demonstrated by the rapid development of the low-altitude economy, including the successful demonstration flight of a vertical take-off electric aircraft[27] in Hefei.
3. Advanced manufacturing clusters
Anhui’s success in advanced manufacturing, especially in the automotive sector, is notable globally. Auto exports exceeded one million units in 2025, setting a new record. In the first four months of this year, Anhui exported 272,000 vehicles, maintaining its leading position among all provinces and cities in China in terms of export volume. Wuhu, the second largest economic city, complements Hefei’s high-tech focus by playing a key advanced manufacturing and logistics hub. Wuhu specializes in sectors such as heating and ventilation equipment[28] and smart home appliances, alongside facilities focused on new energy solutions and green technologies. Wuhu’s strategic location along the Yangtze River enhances its role in logistics and connectivity to the wider economic belt of the River Delta region.
4. Regional economic heterogeneity and coordination challenges
Despite the overall rapid economic growth, there are significant internal inequalities and complexity of the development structure in the province. The coordination between the fiscal structure (taxes and expenditures) and high-quality economic development remains low and is often classified with labels such as “almost disorganized” or “barely coordinated”. This situation reflects the high cost associated with developing a strategic leap towards the development of productive forces, which requires extensive public investment in infrastructure and research and development, which puts pressure on the fiscal balance of the province.
In addition, the province is experiencing a significant change in domestic economic dynamics, which is: the rise of central and middle Anhui and the backwardness of southern Anhui. The coordination of financial structure and high-quality economic development in central Anhui (Hefei) and central Anhui (Wuhu) show a growing trend. With central Anhui accelerating faster than northern Anhui. On the contrary, the overall coordination in southern Anhui, the historical Huizhou region, shows a declining trend. Southern Anhui is being overtaken by the rapidly developing central regions.
This divergence highlights the deliberate prioritization of policies towards high-growth, high-tech clusters in the center, over dispersed or traditionally dependent southern regions. While this focus has yielded impressive growth outcomes (e.g., automobile exports), it has created a two-speed Anhui economy. Cities such as Huaibei and Suzhou currently rank low in clusters and face the challenge of limited resource conversion capacity and increasing spatial inequalities that policy must address to ensure inclusive growth.
Trade, Logistics and Global Connectivity
1. Dynamics of foreign trade and exports
Anhui Province has rapidly upgraded its position in national trade, ranking ninth in the country and first in central China in terms of total import and export value of goods. In the first four months of this year, the value reached 292.47 billion yuan, an increase of 14.1% over the previous year. The province’s trade structure is dominated by high-value-added goods. Exports totaled 198.68 billion yuan (+16.7%), with mechanical and electrical products accounting for more than 70% of the total export value. This export competition is highly specialized, driven by automobiles (the leading national export volume), laptops and home appliances. Exports of high-tech products in particular increased by 9.8% over the previous year. Private enterprises are the main engine of this trade growth, accounting for more than half of the total import and export value, driving an overall increase of 9.1%.
2. Strategic business partners
a) Major partners: The EU remains Anhui’s first major trading partner, followed by ASEAN and the United States. Trade with all three major partners is experiencing rapid growth, including double-digit growth with the EU and ASEAN.
B) Emerging markets: Trade with countries involved in the Belt and Road Initiative serves as a major driver for the expansion of foreign trade. This strategy ensures that Anhui’s export engine is resilient to potential fluctuations in traditional Western markets and provides a geopolitical trade cover. Specific examples of strong Asian export markets include Saudi Arabia and Pakistan.
3. Developing infrastructure and logistics backbone
a) Yangtze River-Huaihe River Water Transfer Project: This is a massive infrastructure project designed to increase the accessibility of bulk cargo transportation via inland waterways. Analysis shows that the project will significantly reduce the “minimum average transportation cost”[29] and “weighted average transportation cost”[30] for bulk goods among 16 cities in Anhui, especially those along the project route. This reduction in logistics friction is expected to improve the “total economic linkage strength”[31] by 27.62% within Anhui and 9.04% across the Yangtze River region, with Hefei benefiting the most. These strategic infrastructure investments are prerequisites for Anhui to make its bulk production cost competitive with coastal manufacturing centers.
b) Multimodal hubs and free trade zones: Anhui Province vigorously promotes logistics development through appropriate multimodal transportation infrastructure, including extensive highway and rail systems. The Paihe Port Railway Logistics Base in Hefei is an example of the province’s commitment to using rail transit stations and ports along the Yangtze River to facilitate exports. The sub-zones of the free trade zone, particularly in Hefei and Wuhu, include comprehensive linkage zones (1.4 square kilometers and 2.17 square kilometers, respectively) designed to simplify customs clearance and create a high-quality free trade zone conducive to trade and investment.
Conclusion and outlook
Anhui Province is firmly on a path to establish itself as a major economic hub in the Yangtze River Delta, transforming from its historical identity to becoming a leading region in high-tech manufacturing. The province’s industrial ambition is summed up in its goal of creating several multi-trillion-yuan industrial clusters, driven by the integrated development of advanced manufacturing chains and clusters. A commitment to nurturing specific, forward-looking sectors—such as quantum technology, artificial intelligence, and low-rise economy—through a context-based R&D approach positions Anhui to achieve the next generation of industrial wealth.
However, the low level of fiscal-economic coordination suggests that rapid development necessitates heavy and targeted investment, leading to temporary fiscal imbalances. Sustaining this high-quality growth requires that tax and fee structures adapt more quickly to fully support the high-tech ecosystem. The biggest regional challenge is the widening economic gap. Institutional tools (free trade sub-zones, infrastructure investment) have disproportionately accelerated growth in the center, reducing the level of coordination in southern Anhui. Policies should enhance the “resource conversion capacity”[32] of less coordinated cities and traditional centers to prevent regional gaps from deepening.
Ultimately, the long-term sustainability of the Hefei Innovation Hub depends on its ability to retain talent. Given the competition from neighboring Jiangsu and Shanghai, Anhui should continue to prioritize improving urban infrastructure (developing smart and green cities) and livelihood projects to effectively compete for highly talented graduates and professionals.
References
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[1]. Anhui/皖
[2]. Hefei
[3]. Yangtze River Delta
[4]. Pilot Free Trade Zone
[5]. New Quality Productive Forces (NQPF)
[6]. Inverted V Cave
[7]. 皖
[8]. Anhui Clique
[9]. Zhili-Anhui War of July 1920
[10]. horse head warping
[11]. Sea of Clouds
[12]. Administrative Government
[13]. Anhui CPC Provincial Committee Secretary
[14]. Liang Yanshun
[15]. People’s Government of Anhui
[16]. Wang Qingxian
[17]. three provinces and one city
[18]. Institutional Distance
[19]. Wuhu Area
[20]. Bengbu Area
[21]. Origin Quantum
[22]. QuantumCTek
[23]. CIQTEK
[24]. University of Science and Technology of China (USTC)
[25]. China Speech Valley
[26]. Context-driven Deep Integration
[27]. EHang’s EH216-S electric vertical takeoff and landing (eVTOL) aircraft
[28]. HVAC equipment
[29]. Minimum Average Transport Cost (MATC)
[30]. Weighted Average Transport Cost (WATC)
[31]. Strength of Economic Linkages
[32]. Resource Transformation Capacity