City have splashed more than #150million on the likes of Raheem Sterling and Kevin De Bruyne since they were stunned 2-1 by the Eagles at Selhurst Park last April.
The results have been impressive so far with City boasting four wins out of four, without conceding a goal, to sit top of the table ahead of Saturday's rematch.
But Palace moved up to second on the back of their win at champions Chelsea a fortnight ago and Pardew, whose biggest summer outlay was #10million midfielder Yohan Cabaye, feels they have an even better chance of beating City's all stars this time around.
"Only a handful of Premier League clubs can spend that money, but we are in that next batch and we are all fighting to catch up," said the Eagles boss.
"You can only play 11 players. That's one good thing about this game. If we were coming up against City and it was 20 players each then they'd definitely win. But they can only play 11 and our 11 is getting closer to Man City's, as is Stoke's and West Ham's.
"Beating Chelsea must enhance our confidence. Our technical ability is now matching our work rate and that makes us a good team. Manchester City will be approaching this game knowing they are up against a good side.
"They will be favourites to win and you would expect them to win, but I think they will know we are a bit closer to them than last year.
"We won last year, but by the seat of our pants a little bit. At Chelsea we were much more in control and that's why I think we are in a better place to get a result against City, even though we won against them last year."