Checked out Morgan Stanley’s Xing Ziqiang talking about the 'Hefei Model': The 'Hefei Model' looks impressive right now, but don’t blindly worship or copy it—it might just be a case of survivorship bias. Hefei reached its peak by leveraging what’s called an ecosystem planning closed loop: rejecting scattershot subsidies, mobilizing patient capital, joint investments between government and enterprises, nurturing supply chains, and finally achieving market-oriented exits through a five-step method. This approach successfully incubated leading companies in sectors like new energy vehicles and quantum information, even securing global leadership in areas like photovoltaic inverters. But the success of this logic is built on unrepeatable timing and circumstances: precisely bottoming out during the fragmented phase of industries, making bold, heavy investments, and perfectly aligning with local industrial DNA. It’s a case of high skill and high risk. The sharper reality is that even Hefei, with its impressive investment returns, is grappling with overcapacity and deflation: Between 2021-2025, Hefei’s exports (CAGR over 12%) and secondary industry GDP significantly outperformed the national average, but retail consumption lagged far behind. This directly led to Hefei’s secondary industry GDP deflator experiencing deeper deflation than the national average.