Smart city investment set to top 2 trillion yuan by 2025

Updated: 2014-03-27 08:33

By Gao Yuan (China Daily USA)

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The accumulated investment in China's "smart city" effort is on track to exceed 2 trillion yuan ($322 billion) by 2025, fueled by a massive State-sponsored urbanization project, an industry report found on Wednesday.

China has the most ambitious digital-powered urbanization plan on the planet, but it should also be cautious of possible "resource waste" during the process, analysts warned.

The country's gross domestic product will be five times bigger than today's in 10 years, and more than 4 million jobs will be added because of smart city-related projects, said the white paper co-authored by IBM Corp and research firm IDC.

"The new forms of urbanization, with the help of emerging technologies such as mobile Internet and cloud computing, are the foundation of the nation's economic development," said Wu Lianfeng, associate vice-president of IDC China.

About 300 million Chinese will move from rural areas to the cities over the next decade, pushing the urban population to 1 billion by 2025, according to the IBM/IDC report.

The number of cities with more than 1 million residents will be 220 by then. There are only 35 cities in Europe on a similar scale, it said.

Heavy pressure has been put on city infrastructure, including transportation, healthcare, power supply and social security, as people pour into urban areas.

"The government has to rely on technology to solve most of the city problems," said Wu. He added that a cross-industry information-sharing platform based on cloud technology could help city managers to better allocate resources and provide services.

The central government started to push the smart-city project last year, trying to find a fresh economic boost from the massive urbanization wave.

China appointed nearly 200 cities, including metropolises such as Beijing and county-level urban areas, to trial smart-city projects in 2013.

Notable pilot sectors include transportation and government information disclosure. But only a few have put the concept into actual use and are performing well.

Industry observers highlighted potential risks in China's ambitious smart-city investment.

"Chinese cities have distinct differences compared with their Western counterparts in many ways. Because of that, we have very limited models to study when drawing up our blueprints," said Li Tie, director-general of the China Center for Urban Development under the National Development and Reform Commission.

A large number of Chinese city governments are heavily dependent on selling land for income and city officials' tenures are too short to finish a comprehensive development plan, said Li.

"When a mayor steps down, his or her successor is very likely to change the development course, so previous investments will be left unattended, and infrastructure projects will be abandoned. We face a serious issue," said Li.

Wu, from IDC, said Chinese cities only focus on hardware investments despite the fact that service and software are also critical drivers for smart-city projects.

Roughly 70 percent of government investments went to hardware installation in China, way higher than the global average of 16 percent, according to IDC.

(China Daily USA 03/27/2014 page14)