Beijing and Shanghai have moved to the top five global cities, in a ranking by PricewaterhouseCoopers and the Partnership for New York City, released this week.

The Chinese cities moved into fourth and second place after gaining in the 'Economic Clout' and 'City Gateway' indicators after London, Paris and New York in the fifth edition of Cities of Opportunity. Balanced progress, across a range of social and economic indicators represents the next step for Shanghai and Beijing in transforming exceptional growth into sustainable performance at the top tier of world capitals, said the report.

The report examined the current social and economic performance of the world’s leading 27 cities, with 10 overall indicators which cover 60 variables. The indicators include: Intellectual Capital and Innovation, Transportation and Infrastructure, Health, Safety and Security, Economic Clout and City Gateway. 

In the 2012 rankings, Cities of Opportunity reports that Shanghai ranks fifth in the world in Economic Clout, up from eighth place last year, and fourth in the City Gateway indicator. The latter is a new indicator category that measures a city’s global connectedness and international attraction with data including aircraft movements and passenger flows, where Shanghai ranks seventh in both, and number of hotel rooms, in which Shanghai leads the 27 cities. Shanghai also tops the list again this year in attracting foreign direct investment, both in the number of projects and amount of capital invested, and finishes fourth in the rate of real gross domestic product growth.

“Shanghai’s economic strength and global attraction represent the starting point for the city’s transformation into a world hub for talent and innovation,” says Nora Wu,
PwC China Shanghai office lead partner. “The city today offers great cultural and intellectual capital that we are building on actively. And, as Cities of Opportunity shows, we expect that Shanghai will be an even richer urban centre in 2025 than it is today, not just in the goods we produce but the services we offer, the culture we generate and the quality of the people who are drawn to live in and build this great world city.”

Beijing has leapt from ninth to first place in Economic Clout this year, and also ranks in the top five in all but one of the indicator’s component variables, including ranking second in the number of global 500 headquartered, after Tokyo; ranks third in the rate of real GDP growth; ranks third in FDI by amount of capital invested and fifth by greenfield projects, and has the fourth largest number of jobs in financial and business services, behind Milan, Paris and London.

“Besides ranking first in economic clout, Beijing ranks third in terms of City Gateway, first for its very easy access between the airport and city centre, and 4th in the number of international conference, becoming a ‘world’s city’,”  said David Wu, PwC China Public Policy and Regulatory Affairs Leader, PwC China Beijing Office Lead Partner. “However, there are some areas that need to be improved. Beijing ranks low in intellectual property and innovation, health, safety and security, and transportation and infrastructure.”

The overall ranking

Meanwhile, New York and London finish in a virtual tie to lead overall scoring. However, emerging cities are narrowing the gap within key economic indicators.

While New York officially edges out London by one point across 10 economic indicators, the city wins in no individual category. Toronto, which finishes third, also shows great balance yet wins no category. London, however, takes the lead in City Gateway. Rounding out the leaders are Paris, which advances four spots from 2011 to number four, and Stockholm at number five.

In addition to looking at the current performance of  27 cities at the centre of finance, commerce and culture, the study for the first time analyzes city employment in the most significant and telling job sectors and projects the trajectory of the cities in jobs, productivity, and population  to 2025.

The Cities of Opportunity key indicators and top three cities in each are:

•        Intellectual capital and innovation: Stockholm, Toronto, Paris
•        Technology readiness: Seoul, San Francisco, New York
•        Transportation and Infrastructure: Singapore, Seoul/Toronto (tied for second), Tokyo
•        Health, safety and security: Stockholm, Toronto, Sydney
•        Sustainability and the natural environment: Sydney, San Francisco/Toronto (tied for second), Berlin
•        Economic Clout: Beijing, Paris, London/New York (tied for third)
•        Ease of doing business: Singapore, Hong Kong, New York
•        Cost: Berlin, Seoul, Kuala Lumpur
•        Demographics and liveability: Paris, Hong Kong/Sydney (tied for second), San Francisco
•        City Gateway: London, Paris, Beijing

"Cities succeed when they invest in core needs important to both people and businesses," said Bob Moritz, PwC's US chairman and senior partner. "When a city invests continuously and aggressively in critical areas, including education, healthcare, safety and infrastructure, it creates a healthy urban environment. Entrepreneurs and businesses thrive. The city economy grows. And long-term resiliency follows."