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."
Injuries to Connor Wickham and Marouane Chamakh, and Glenn Murray's move to Bournemouth, are likely to mean an opportunity in attack for either Patrick Bamford or Dwight Gayle.
Gayle appeared to be on the verge of leaving Selhurst Park last month but Murray's departure has given him a second chance, and Pardew urged the 24-year-old striker to grab it with both hands
"Glenn leaving gives Dwight an opportunity and he is now in the process of trying to take that," added Pardew.
"He's trained very well
Dwight's very much a part of our family and hopefully we can give him more game time because that's been part of the frustration
It's not like we wanted to move him on, the frustration came from the player himself
"But with Glenn going, the opportunity has come for him to make a statement."
The Eagles will also be without right-back Joel Ward, who faces a month on the sidelines with a knee injury.
Source : PA
Source: PA