Wuhu: The City that birthed its own Engine
How a Replaceable River Port Built a National Champion from a Failing Workshop
Forge sovereign gravity not by attracting an existing anchor, but by becoming its founder. This is the strategy of the industrial parent; treating state capacity not as regulator or incentive provider, but as patient capital, existential risk bearer and controlling shareholder. It is the art of winning not by competing in the bidding war for mobile capital, but by building the immobile asset that makes the ecosystem cluster around you.
The anchor you build yourself cannot be bid away. The ecosystem it pulls into existence is yours permanently.
Most cities wait for gravity to find them.
They build industrial parks. They offer tax breaks. They cut ribbons and hope that somewhere, a major firm decides to land. This is the passive model; prepare the soil and wait for seeds to blow in. And for most cities, it never works. The seeds land elsewhere. The soil stays empty.
Wuhu did not wait.
In 1997, this mid sized Yangtze River city had nothing that should have attracted an auto industry. No coastal access. No policy favor. No joint venture partner. What it had was a failing auto parts workshop, a leaky roof in the president’s office and a government willing to do something unusual .
It decided to become the founder.
While other cities competed to host assembly lines built by others, Wuhu built its own engine; literally. It took that workshop, staffed by a team led by a FAW-Volkswagen engineer who had come home to Anhui and turned it into Chery . The city acted as venture capitalist, incubator and controlling shareholder rolled into one. It bore the existential risk. It broke the rules when it had to. And then it let that single anchor pull an entire ecosystem into existence around it .
Today, that ecosystem exports nearly a million cars annually. Global suppliers like Bosch, Siemens and Visteon cluster in Wuhu’s industrial parks; not because of tax breaks, but because the anchor is there. A second ecosystem; drones, aircraft, components for the low altitude economy has spun directly out of capabilities forged in the first. CATL, the world’s largest battery maker, has locked itself into Wuhu’s stack.
The anchor Wuhu built cannot be bid away. The ecosystem it pulled into existence is permanent.
Most cities wait for gravity. Wuhu became it.
THE ORIGIN
To understand what Wuhu built, you have to understand what it started with.
In 1995, Wuhu’s GDP was 12.3 billion yuan; roughly one third of Hefei’s 36.8 billion yuan and barely visible beside coastal giants like Suzhou’s 90.3 billion.1 The city’s industrial output came primarily from building materials: cement, PVC, plasterboard. It had no auto production, no advanced manufacturing, nothing that qualified as strategic.2
Any other Yangtze River port could do what Wuhu did. It was replaceable. But it had one thing others didn’t have: a failing auto parts workshop. And it had a leader willing to make an unusual bet.
The Decision
In 1997, the Wuhu municipal government made a decision that would define its next three decades. Instead of waiting for an automaker to land; an impossibility given China’s strict auto licensing regime, it decided to build one from scratch.3
The vehicle would be Chery. The name came from auspicious in Chinese, but the ambition was anything but modest. The city took over the failing parts workshop, invested 1.7 million yuan in seed capital and began recruiting talent.4
The key hire was Zhan Xialai, a former FAW-Volkswagen engineer who had left the industry and returned to his hometown of Wuhu. He became Chery’s founding chairman and later, a symbol of the fusion between public authority and industrial execution.5 The team he assembled was small; just 30 people and operating without a license to sell cars.6
The Engine Problem
There was one immediate problem: Chery had no engine.
In 1996, Chery purchased a used engine assembly line from a British company called Powertrain; which had originally acquired it from Ford’s plant in Bridgend, Wales. The line cost $25 million, a fraction of the $150 million for a new line. It was disassembled, shipped to Wuhu in 20 shipping containers, and reassembled by the same British engineers who had dismantled it.7
Chery reverse engineered the Ford engine, adapted it and by 1999, the first Chery engine; a 1.6 liter, 65 horsepower unit roared to life. By late 2000, the first Chery car, the Fengyun, rolled off the line.
The License Problem
But there was a second problem: Chery had no license to sell cars.
China’s auto policy required that all passenger vehicles be produced through approved joint ventures. Chery was an orphan; built by a provincial city with no foreign partner, no central approval and no legal right to exist in the market.8
So Wuhu improvised. In 2001, it transferred 20 percent of Chery’s equity to SAIC, a Shanghai based state owned giant, in exchange for regulatory cover. Chery cars could now be sold under SAIC’s license. The city retained operational control; SAIC provided legitimacy.9
The arrangement was temporary. By 2004, Chery had grown large enough to stand alone and SAIC exited, selling its stake back to Wuhu. By then, the anchor was planted.10
The Wait
With the engine running and the license secured, Wuhu did something harder than building a car: it waited.
It understood that anchors do not create ecosystems overnight. Suppliers would not cluster until Chery’s volume justified the move. The labor pool would not form until thousands had been trained. The second act; the one that could not be planned, would only emerge after decades of compounding.
So Wuhu built industrial parks and waited. It kept investing. It kept protecting its anchor. And eventually, gravity did its work.
THE MECHANISM
Most cities approach industrial development the same way: they build a park, offer incentives, and hope an anchor lands. This is the attraction model. It assumes the anchor exists elsewhere and can be lured.
Wuhu did the inverse. It built the anchor first and let the ecosystem form around it. This is the founder model.
The difference is not semantic. It is structural.
The Anchor Investment Principle
The Anchor Investment Principle holds that a city that builds its own anchor firm creates an immobile gravitational field that no incentive package can replicate. The anchor cannot be bid away because it was born inside the city’s own industrial apparatus. Its suppliers locate not for tax breaks, but because proximity to the anchor reduces logistics costs, accelerates design iterations and guarantees demand.11
Wuhu understood this intuitively. From 1997 onward, the city treated Chery not as a company to be regulated, but as an asset to be nurtured. The municipal government acted as:
Founder: Taking the initial equity stake and placing officials in key roles
Financier: Providing patient capital through bear markets and policy headwinds
Protector: Absorbing regulatory risk, including the 2001 SAIC license arrangement
Infrastructure provider: Building the Yangtze River Bridge (completed 2000) and subsequent industrial parks specifically to serve Chery’s logistics needs12
This was not passive ownership. It was industrial parenthood; the willingness to bear existential risk that no private investor would touch.
Why Building Beats Attracting
The attraction model has a fatal flaw: the anchor can leave.
When a city wins a factory through incentives, it has won a bidding war. But the next city can offer more. The next election can change the calculus. The firm’s shareholders have no loyalty to geography.13
The founder model closes this loophole. Chery cannot leave Wuhu because Wuhu is not just Chery’s location; it is Chery’s origin. The company’s founding team came from Wuhu. Its early capital came from Wuhu’s treasury. Its first engines were assembled in Wuhu by workers trained in Wuhu. The relationship is not contractual; it is constitutive.14
The Gravity Effect
Once the anchor is planted, it begins to pull.
Suppliers do not need to be incentivized. They need to be near the anchor. By 2005, Chery had attracted 50 suppliers to Wuhu, including global names like Bosch and Siemens. By 2010, that number exceeded 200. By 2025, the Wuhu Economic and Technological Development Zone alone hosted 110 industrial enterprises above designated size in the new energy vehicle space, driving nearly 1,000 associated enterprises across the entire supply chain.15
This is gravity, not incentives. Suppliers locate in Wuhu because Chery’s production schedules demand just in time delivery. Engineers locate in Wuhu because the jobs are there. The labor pool deepens with every passing year, making the city more attractive to the next wave of suppliers. The flywheel turns.16
The Second Ecosystem
The most powerful evidence of the mechanism is what happens next: the capabilities forged in the first ecosystem become the feedstock for the second.
By 2025, Wuhu had developed the most complete low altitude aviation supply chain in China; drones, aircraft components, avionics. This did not happen by accident. It happened because a workforce trained in automotive precision manufacturing could transfer those skills to aerospace. A supplier base built to serve Chery could pivot to serve Diamond Aircraft. A government accustomed to nurturing a single anchor could replicate the model in an adjacent industry.17
The first ecosystem metabolized into the second. This is what gravity does when given enough time.
The Lock-In
The system is now locked in. Disentanglement is more expensive than maintenance for every actor:
Suppliers would have to find a new anchor customer large enough to replace Chery’s volume
Chery would have to retrain a new supplier base elsewhere
The labor pool would have to be recreated from scratch
The aviation cluster would lose its capability foundation18
Wuhu did not build a company. It built a gravitational field. And gravitational fields do not relocate.
THE EVIDENCE
A principle is only as good as the proof that it works. Wuhu’s proof is now measurable in billions.
The Anchor’s Scale
By 2024, Chery had become a national champion by any metric. Annual sales revenue reached 300 billion yuan; roughly $41 billion. Cumulative global users exceeded 17.72 million, with more than 5.43 million of those outside China.19
In the first quarter of 2025 alone, Chery sold 530,000 vehicles, a 60 percent increase year on year. New energy vehicle sales surged 124 percent. Exports reached 253,000 vehicles; the highest of any Chinese auto brand to over 80 countries and regions.20
These numbers did not appear by accident. They are the compound result of a bet placed in 1997 and nurtured for three decades.
The Ecosystem
The anchor has pulled an entire industrial civilization into existence around it.
In the Wuhu Economic and Technological Development Zone, 110 industrial enterprises above designated size now operate in the new energy and intelligent connected vehicle space. They are supported by nearly 1,000 associated enterprises across the full supply chain; vehicle assembly, power systems, chassis, bodywork, interiors, intelligent cabins, and electrical components.21
The zone’s ambition is not modest. By 2027, it aims to hit 500 billion yuan in annual output value, with over 2 million vehicles produced and 1 million exported annually.22
The Global Suppliers
The gravity effect is visible in real time. Global suppliers are no longer choosing between Wuhu and other locations. They are choosing Wuhu because Chery is there.
In November 2025, Magna; a global leader in propulsion systems, announced a new manufacturing facility in Wuhu’s Jiujiang Economic Development Zone specifically to supply electric drive systems for Chery. The plant covers roughly 15,000 square meters and will create about 200 jobs. Magna explicitly cited Wuhu’s strong industrial base as the draw.23
Other global names have made the same calculation. Bosch, Siemens, Visteon, and Aptiv all maintain significant operations in Wuhu. They are not there for tax breaks. They are there for the anchor.24
The Battery Stack
Chery is not leaving its fate to suppliers. Through its battery industrialization platform Anhui Deyi Energy Technology Co., Ltd. controlled by Chery subsidiary Wuhu ACTECO Powertrain; Chery is building a 20 GWh lithium-ion battery production base in Dangshan County.25
This is vertical integration by design: the anchor securing its own feedstock, ensuring that the most critical component of the EV transition remains inside the Wuhu stack.
In December 2025, CATL; the world’s largest battery maker signed a strategic cooperation agreement with Wuhu City and Chery, covering EV collaboration and the development of climate neutral cities.26 The message is unmistakable: the global battery giant now considers Wuhu a permanent node in its own strategy.
The Second Ecosystem
The most powerful evidence of the Anchor Investment Principle is not what Chery built for itself. It is what Chery’s existence made possible for others.
By 2025, Wuhu had developed the most complete low altitude aviation supply chain in China; drones, aircraft components, avionics, propulsion systems. The industrial chain includes nearly 200 enterprises with an output value exceeding 20 billion yuan. Domestically produced twin engine light aircraft hold more than 70 percent domestic market share. Propellers are exported to 74 countries.27
This did not happen because Wuhu saw drones coming in 1997. It happened because three decades of building cars had left behind something more valuable than any factory: a population that knew how to make things that move. When Diamond Aircraft needed precision components, the suppliers were already there. When the first eVTOL prototypes required motor controllers, the engineers had been refining them for Chery for years. The aviation industry did not have to be invented in Wuhu. It only had to be unpacked from capabilities already present.28
The first ecosystem metabolized into the second. This is what gravity does when given enough time.
The Provincial Recognition
Anhui Province has now codified what Wuhu built. The Anhui Province Intelligent Connected Vehicle Industry Development Action Plan (2025–2027) explicitly names a Hefei-Wuhu dual core development pattern for the automotive industry. Wuhu is designated as a core node in the province’s ambition to become a globally influential intelligent vehicle powerhouse by 2027. The plan tasks Wuhu with building an automobile city and advancing smart infrastructure.29
The provincial capital and the provincial founder are now partners in the same stack.
The Numbers That Matter
In the end, the evidence reduces to a single comparison:
In 1995, Wuhu was a replaceable river port with 12.3 billion yuan in GDP
In 2024, Wuhu’s GDP exceeded 540 billion yuan; a 44 fold increase in three decades30
The anchor built itself. Then it built the city.
KINSHIPS: Pre-City Pivot Global Kins
Five regions currently in Wuhu’s starting position; replaceable, passive, waiting and how they could apply the principle.
The Anchor Investment Principle is not only for China. It is for any city that finds itself in Wuhu’s starting position: replaceable, passive, waiting for an anchor that never comes. Here are five global cities that could apply it.
1. Newcastle, New South Wales: Australia
Coal port city facing terminal decline in thermal coal exports. Has deep water port infrastructure, industrial land along the Hunter, and a workforce facing transition. No indigenous industrial anchor beyond mining services. The city is a logistics pass through for a dying industry.31
Newcastle could apply Wuhu by treating its port not as a logistics asset to be leased, but as equity capital to be deployed. The port’s strategic value; deep water, rail connections, available land could underwrite a municipal investment vehicle that founds and owns next industry firms: green hydrogen production, offshore wind manufacturing, sustainable aviation fuel. These firms would be anchored in Newcastle not by incentives, but by the port’s permanent role as their dedicated export gateway. The anchor would be built, not attracted.32
2. Semarang: Indonesia
Semarang is Central Java’s largest city and a major port, but its economy remains fragmented across informal trade, low end manufacturing, and logistics. It has no indigenous anchor firm to pull a modern industrial ecosystem into existence. Foreign investment flows to Jakarta or Surabaya; Semarang waits.33
Semarang has something Wuhu had in 1997: a strategic location, a willing provincial government and the ability to act. It could create a municipal enterprise vehicle focused on Indonesia’s EV ambition. The country has nickel; the critical battery mineral, but lacks downstream processing. Semarang could anchor a battery component manufacturing firm, using its port for mineral import and finished goods export, with the city as founding shareholder. The anchor would be immobile because the city would own it.34
3. Belo Horizonte: Brazil
Belo Horizonte is the capital of Minas Gerais, Brazil’s mining heartland. It has iron ore, lithium and rare earths; the raw materials of the energy transition. But it exports them raw. The value accretion happens in China, Europe, and the United States. The city is a resource colony in its own territory.35
Belo Horizonte could apply Wuhu by asking: What if we built the anchor that processes our own minerals? The state government controls mining royalties; billions of reais annually. Instead of spending them on pensions and payroll, it could seed a state anchored industrial firm focused on battery materials, rare earth separation, or green steel. The anchor would be immobile because the resources are in the ground and the city would own the firm. The royalties become not consumption, but endowment.36
4. Klaipėda: Lithuania
Klaipėda is Lithuania’s only port and a Baltic logistics hub. But like many port cities, it is a pass through. Cargo moves, ships dock, but the city captures thin margins. No industrial anchor exists to transform the flows into value that stays. The port’s strategic position is underleveraged.37
Klaipėda could apply Wuhu by creating a municipal industrial anchor focused on offshore wind. The Baltic Sea is rapidly developing wind capacity, but the supply chain is dominated by Western European firms. Klaipėda has the port infrastructure, industrial land, and access to EU Just Transition funds. It could found a firm that manufactures monopiles, cables or substations; with the city as controlling shareholder. The anchor would be immobile because the port would be its permanent export gateway.38
5. Dar es Salaam: Tanzania
Dar es Salaam is Tanzania’s economic capital and primary port, serving several landlocked countries. But like other African ports, it captures logistics fees while the value flows elsewhere. The city has no indigenous anchor firm in manufacturing, processing, or advanced services. It remains structurally dependent on decisions made in Nairobi, Dubai, or Beijing.39
Dar es Salaam has something many African cities lack: a rapidly growing population, a strategic port and a government increasingly focused on industrialization. It could apply Wuhu by targeting pharmaceutical manufacturing; a strategic gap exposed by COVID. The city could seed a municipally anchored generic drug manufacturer, using its port for raw material import and finished product export to the region. The anchor would be immobile because the city would own it, and the regional market would depend on it.40
The Kinship Logic
Each of these cities shares Wuhu’s original condition: replaceable, passive, waiting. Each has assets; ports, resources, labor, strategic location but lacks the cognitive move. They think like hosts, not founders.
Wuhu’s lesson is that the cognitive move is the only one that matters. The assets follow.
STANDING COMPARATIVE CAPABILITY
Each city documented in this series adds a mechanism to a growing library. Over time, these mechanisms accumulate into pattern memory; a structured record of how jurisdictions solve for durability, value capture, and structural inevitability.
The work is observational. It does not prescribe. It extracts, codifies, and holds.
When a mechanism documented in Wuhu, Lishui, or any prior city becomes relevant to a partner jurisdiction, when a port city recognizes its own condition in Newcastle’s kinship, when a mining region sees Belo Horizonte’s predicament; China in 5 can prepare a structured brief.
That brief maps four layers:
The originating case and its specific mechanics
The mechanism extracted from it
The conditions required for transfer
The risks inherent in adaptation
This is not consulting. It is comparative observation made accessible to those who design and govern. The work assumes no mandate. It exists as a standing resource; accumulated, structured and ready when relevance emerges.
Jurisdictions seeking durable clarity on how structural inevitability is engineered may find reason to remain near this record. Not for replication. For comprehension. The rest is theirs to build.
COMING MONDAY: THE COMPANION ESSAY
Monday’s companion essay will go deeper into what this week’s deep dive could not.
It will explain why Wuhu exists at all; what function it serves that coastal cities with their foreign joint ventures could never perform. It will trace how Wuhu connects to Hefei, Yulin, Panzhihua, Lishui and other cities across Season 1, showing how the same province produced two different models of industrial statecraft. It will examine why Wuhu matters to China’s national system, not just to Anhui’s provincial accounts. How a replaceable river port became proof that the interior could build without waiting for permission.
The essay will also ask why this moment makes Wuhu’s logic urgent. The EV transition, the supply chain realignment, the pivot toward technological independence; all of them reward the founder model over the attraction model. And it will look at where Wuhu is headed next: battery independence, the low altitude economy, export deepening into new markets.
Finally, it will ask what an individual can learn from a city that built its own anchor. Not as metaphor, but as question: What are you waiting to attract that you could instead build?
The essay will be published Monday.
THE CLOSE
Most cities wait for gravity to find them.
They build their industrial parks. They cut their ribbons. They offer their incentives. And they hope that somewhere, a major firm decides that this place; this particular patch of soil is worth the bet.
Wuhu did not wait.
In 1997, when it had nothing but a failing workshop and a willingness to risk, it decided to become the thing it was waiting for. It built an engine from borrowed parts and reverse engineered plans. It gave away equity to cover its lack of a license. It bore risks that no private investor would touch and waited decades for the compounding to arrive.
Today, that bet has become a gravitational field. Nearly a million cars leave Wuhu every year for destinations across 80 countries. Global suppliers cluster not for incentives, but because the anchor is there. A second ecosystem; drones, aircraft, the next generation of mobility has spun directly out of capabilities forged in the first. CATL, the world’s largest battery maker, has locked itself into Wuhu’s stack.
The anchor Wuhu built cannot be bid away. The ecosystem it pulled into existence is permanent.
Most cities ask: Who can we attract?
Wuhu asked a harder question: What can we build?
And in asking it, Wuhu became not a place that hosts gravity, but a place that is gravity.
NEXT CITY
We began this journey in Anhui, with Hefei.
Now, after 34 cities across every province, we return. Not to Hefei, but to its provincial sibling. A city that took a different path; not the financier, but the founder. Not the acquirer of champions, but the builder of one.
Wuhu is our 35th city.
Next week, we leave the water and go to the desert.
Kashgar, Xinjiang.
For millennia, Kashgar has done what Wuhu once did: let value pass through. Caravans rested here. Goods changed hands. Silk, spices, ideas moved west and east while Kashgar collected dust and taxes.
But China is redrawing the maps. New corridors are being carved through the mountains. Rail lines now connect Kashgar to Pakistan, to Central Asia, to Europe. The flows that once passed through are being asked to stop.
The question is whether a city designed to be a doorway can learn to become a destination. Whether a crossroads can capture what travels across it. Whether Kashgar can pull off what Wuhu did; but in a geography where the constraints are not a river but a border, not a bridge but a belt.
We’ll know more when the audit is done.
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What an interesting project!
This shows how one person with expertise can be crucial to the success of an endeavor. Seems to me that many cities could perhaps be successful in different ways. What is required is a decision and then focus on that option.