Some cities in China have been severely affected by their property problems and the impact of U.S. sanctions.

• Despite the impact of property struggles and U.S. sanctions on some Chinese cities, others are thriving due to Beijing's tech push, according to the Milken Institute's best performing cities China index.
• This year, Hangzhou, the capital of eastern Zhejiang province and known for housing tech giants such as Alibaba, topped the rankings.
• Real estate slump caused Zhuhai, once a top city, to drop in rankings.

Despite the challenges faced by some Chinese cities due to property struggles and U.S. sanctions, others are thriving thanks to Beijing's tech push, according to the Milken Institute's best performing cities China index.

The index has been studying China's large- and mid-sized cities for their economic vibrancy and growth prospects since 2015. However, the latest version of the report generally compares data for 2023 with that of 2021. Unfortunately, the institute did not publish a report last year due to a reassessment of its methodology.

This year, Hangzhou, the capital of eastern Zhejiang province and known for housing tech giants such as Alibaba, topped the rankings.

Other cities, such as Zhuhai, which was once a "rising star," experienced a decline in rankings due to the slump in real estate.

In the southern province of Guangdong, near Hong Kong, the city dropped 32 places from its previous ranking in 2022 to 157th place. As a result, no one bought houses.

According to Perry Wong, managing director of research at the institute, builders lacked sufficient funds to finish their projects.

In 2020, Chinese authorities began to curb real estate developers' heavy reliance on debt, which once made property and related sectors account for more than a quarter of the country's GDP.

Real estate negatively impacted the growth of several major cities in the region, except for Dongguan. Despite being known as the city of factories and housing Huawei's massive European-style campus, Dongguan was hit by U.S. sanctions. As a result, Dongguan fell 15 spots in the Milken index rankings to 199th place.

Despite Shenzhen's rise in rankings, the city finished in 9th place, below Beijing. Most of the Chinese companies blacklisted by the U.S. were located in Shenzhen or Beijing, according to Wong in an interview with CNBC.

"Zhuhai is an excellent location for both service and production jobs, including high-end production jobs in biotech. Therefore, it has a promising future, excluding the impact of real estate."

The iPhone manufacturer Foxconn's hometown, Zhengzhou, fell from 3rd to 22nd place due to the geopolitical drag on exports.

To ensure control of the country, historically, Wong emphasized the importance of having control over Zhengzhou, Hefei, and Wuhan.

In terms of the latest economic index, Hefei in Anhui province and Wuhan in Hubei province performed better.

Wuhan jumped from 30th to second place, while Hefei remained in the top ten. Wong attributed Wuhan's success to its efforts to keep factories operational during the pandemic, which allowed the city to recover quickly. In contrast, a university in Hefei received direct government support for technological advancement.

The institute's research highlighted Hangzhou's growth as a hub for e-commerce, manufacturing, and finance.

Wong stated on CNBC's "Squawk Box Asia" that replicating Hangzhou's success would be challenging, as the local property sector's exceptional performance has led to an increase in living costs.