What happened
An island known as “a city on the sea” has treated its lack of land as a reason to specialize rather than expand. More than four decades ago, when Xiamen’s special economic zone grew to cover the whole island, officials drafted a 15-year strategy emphasizing long-term, coordinated thinking. That instinct still guides the city today: it focuses on a handful of supply chains and pushes them deeper instead of spreading thin. By 2025, high-tech manufacturing accounted for 41.3% of above-scale industrial added value, and the new-energy sector’s output value crossed 100 billion yuan for the first time.
Three clusters illustrate the approach. Around display maker Tianma Microelectronics, Xiamen assembled a chain spanning glass substrates, polarizers, driver ICs, automotive screens and smart terminals, with nearly 50 billion yuan of state capital invested in Tianma projects and dozens of suppliers clustered nearby. In new energy, Xiamen worked through funds with CATL and Gold Yuan Group to help build the chain from materials and cells to storage systems and recycling; CALB is establishing a 70 GWh battery base there, while Haichen Energy Storage’s global shipments of energy-storage batteries ranked second in 2025. Integrated circuits followed a different path, focusing on specialty processes through companies like Lianxin, Tongfu Microelectronics, Silan and SigmaStar, deliberately not chasing the most advanced process nodes.
Patient state capital has been central to the strategy. Hantian Tiancheng, a global leader in silicon carbide epitaxy, received early support from Torch High-tech Zone, a Pre-IPO financing led by Xiamen Industrial Investment, and cornerstone backing from the city’s advanced manufacturing fund when it listed in Hong Kong; one early investment returned 50 times. Yuntian Semiconductor, which broke technology monopolies, got fresh funding from Xiamen when it faced a cash crunch, and Shuocheng, an AI predictive-maintenance firm, saw repeated investment from Xiamen Venture Capital. The city also built institutional tools: a “grant-to-equity” mechanism that turns early-stage grants into equity once projects mature, an innovation tax index that helps small firms get bank loans, and loss-tolerance thresholds for guidance funds that let managers take risks.
Why it matters
Xiamen’s story matters because it offers a counterexample to the usual recipe for industrial success. Cities often compete by offering cheap land or courting big-ticket assembly plants; Xiamen had almost no spare land and instead chose to deepen selected value chains, using long-term public investment to carry companies through early losses and cycles.
The city shows that institutional patience can be engineered. By allowing funds to tolerate specific loss rates, treating R&D spending as profit for state-owned firms, and converting grants into equity, Xiamen creates incentives for decision-makers to back projects that would otherwise die young. That complements the private sector’s focus on quick returns, especially in capital-intensive fields like semiconductors and advanced materials.
If the model continues to work, it could become a template for other resource-constrained regions trying to move from “small and beautiful” to “big and strong” without sprawling outward.
Key facts
Xiamen’s 15-year development strategy, set when the special economic zone expanded island-wide more than 40 years ago, embedded a preference for long-term, overall planning in the city’s industrial approach.
In 2025, Xiamen’s high-tech manufacturing made up 41.3% of above-scale industrial added value, and the new-energy industry’s output value exceeded 100 billion yuan for the first time.
State-backed patient capital supported companies including Hantian Tiancheng, Yuntian Semiconductor and Shuocheng, while clusters grew around Tianma, CATL, CALB and Haichen Energy Storage; the city’s industrial investment funds have backed over 300 Xiamen firms with more than 30 billion yuan.
What to watch next
Whether Xiamen hits its 2030 goals of raising R&D spending to more than 4% of GDP and lifting strategic emerging industries to over 45% of above-scale industrial output — targets set at the city’s plenum in August.
How the new-energy expansion continues: with output already past 100 billion yuan and companies like Haichen ranked globally, the next test is whether Xiamen can sustain its high growth rate and move further up the technology chain.
Whether the patient-capital model keeps working when early successes are fully proven. The fate of companies such as Yuntian Semiconductor and Hantian Tiancheng, amid market shifts, will show whether Xiamen can broaden the model from state-led bets into a self-reinforcing innovation ecosystem.