China prepares for smart city construction boom

HAIKOU -- Li Wei, who took a vacation to escape her big city life, did not expect her short stay in the small coastal city of Wanning on China's tropical island of Hainan province, to be so "digital".

"Download a film within two minutes, scan two-dimensional codes with phones to learn about tropical plants, and make a body-building plan at the hotel's smart health room -- It totally threw me," Li said.

Wanning, which strives to boost its tourist industry by investing in making itself "smarter," is among 193 trial cities that have been approved by China's urban planning authorities to develop into "smart cities."

The smart city program, initiated last November, is part of the country's efforts to explore ways to foster a new type of urbanization.

Analysts believe that the program has presented a beautiful picture for both the country's future urban life and the potential of its economic growth.

First created by IBM, the "smart cities" concept promotes the use of new technologies such as the "Internet of Things," which allows users to control and manipulate objects through computers and cloud computing to boost information sharing and coordination within a city.

Such a concept is expected to generate changes in fields ranging from transportation to the financial sector. With the help of data analysis, big cities will be able to calculate traffic and make rational transportation routes to ease any gridlock.

In Beijing, a network based on the "Internet of Things" will be completed by 2015 to facilitate the operation of transportation, tele-medicine and a smart home. While Shanghai will focus on developing wireless broadband technology and boosting the application of intelligent technology.

"The construction of smart cities will facilitate the transformation of China's urban industries, innovate social management, improve the ecological environment and promote the public services system," said Guo Liqiao, deputy director of the department of science and technology at the Ministry of Housing and Urban-Rural Development (MHURD).

According to Guo, aside from the current 193 trial cities, many other places have submitted applications for the smart city program, indicating that more local governments have realized that the old path of urbanization can not support sustainable development of the local economy.

More than 80 of the trial cities have signed smart city design plans with the MHURD, which describe the tasks of local authorities regarding the building of smart cities over the next three to five years. The signing signals the start of actual construction.

A report conducted by McKinsey Global Institute showed that China's urban population will grow from 63 million in 2010 to reach 990 million in 2030, and cities with a population exceeding 1 million are likely to increase from 153 to 226 in the period.

"The transfer of such a huge urban population means that many small towns and villages will become cities, which requires local governments to increase efforts in boosting city construction," said Wang Yukai, a professor at the Chinese Academy of Governance.

Official data showed that a few financial institutes, including China Development Bank, the country's policy bank, have promised to loan no less than 440 billion yuan ($72 billion) to fund the construction of smart cities since the launch of the program.

The program came as China's growth got stuck in a protracted slowdown. Growth in the world's second largest economy declined to 7.7 percent in the first quarter and 7.5 percent in the second quarter.

"The investment in the sector will be huge," Wang said. He said that many industries, especially smart technology and digital companies, will benefit from the program, but it is still early to estimate the overall market size as the smart city concept is quite new.

Although the market generally viewed the program as a boost to the economy, many worried that the rush may lead to blind construction.

Wang suggested that the government should make an overall plan and gradually establish standards for smart city construction.

"Rome wasn't built in a day. The construction of smart cities should be a gradual process," he said.