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What To Know About China’s Smart Cities and How They Use AI, 5G, and IoT


China is massively invested in the digital transformation of its cities. With the nation's top-down approach towards urban development, it has been able to efficiently rally its industries and resources to support its national goal of developing smart cities. By use of public-private partnerships and the promotion of targeted technological innovation, China has developed smart city infrastructure that has already been applied to many of its major metropolises and their industries.

Imagine a city where artificial intelligence monitors and directs traffic, buses and taxis drive themselves, and everyone is capable of engaging with the city’s government and infrastructure through smartphones as opposed to relying on inefficient bureaucracy. If these concepts were introduced 20 years ago, it may have been something out of a science fiction novel. However, these capabilities have either been in development or actively deployed throughout China since the nation began its push for smart cities and smart city infrastructure in 2011.

Innovations in blockchain technology, artificial intelligence and machine learning, 5G, and new energy vehicles over the past decade have inherently transformed many parts of China into smart cities already. These have been largely possible through China’s state-led initiatives in technological innovation as well as public-private enterprise involvement. Shanghai, Hangzhou, Shenzhen, and Beijing are among the earliest cities to have begun the transformation process, and their progress now provides a blueprint for smart city infrastructure for many of China’s lower-tiered cities.

Unlike Western-style smart cities which often have a bottom-up approach in development and implementation, Chinese smart cities are intended to be largely top-down, with the central government playing a vital role in the development and implementation of their smart cities. China’s domestic tech giants are also key players in the push to modernize city infrastructures, and companies such as Alibaba, Tencent, Didi Chuxing, Baidu, and Huawei have already begun implementing their technologies to progress towards China’s national goals of developing smart cities.

Modernizing the Chinese Economy

How Did China’s Smart Cities Begin?

The development concept of China’s smart cities can arguably be traced back to Zhou Enlai’s “Four Modernizations” in which he defined four areas that China should strive to modernize by the end of the century: agriculture, industry, science and technology, and national defense. These are mainstays of China’s overall economic growth and development and have remained at the forefront of Chinese domestic policy throughout these subsequent forty-five years. 

However, it was Deng Xiaoping during the reform and opening up period who accelerated the focus on science and technology modernization as a means to foster development. As a result, China has supported innovation with steadily rising investment over the past four decades. Now, central initiatives such as ‘Made in China 2025’ aim to utilize the industrial policies seen in countries like Germany to modernize the Chinese economy for the Fourth Industrial Revolution. It is this industrial policy that has largely led to the growth of smart cities throughout China.

What Are China’s Smart Cities?

In 2011, China’s 12th Five-Year Plan announced its intentions to develop “digital cities.” Within this plan, Beijing sought to accelerate the construction of new-generation IT infrastructure, mobile communication networks, internet infrastructures, digital and television broadcasting networks, satellite communication facilities, and an ultra high speed, large capacity and highly intelligent national trunk transmission network. The government also wanted to construct broadband connection throughout urban and rural areas to strengthen interconnectivity. 

This infrastructure now serves as the basis of China’s smart cities. Smart cities are urban areas that collect large amounts of data and use it to improve city operations. Developers can create technological applications based upon a city’s critical communications infrastructure, which then convert data into insights, and insights into tools. These applications in turn serve as a form of public-private partnerships, creating opportunities for government, companies, and the public. For example, in the case of public transit, bus riders could use a real-time traffic monitoring application to find the optimal time to travel with less traffic while reducing the overall strain on the public transportation system.

In subsequent five-year plans, Beijing’s gaze has narrowed in on smart city development. Policymakers have diverted significant resources towards furthering the technological innovation and public-private partnerships behind smart cities, including the development of 5G, artificial intelligence, new energy vehicles, cloud computing, blockchain technology, and internet of things (IoT), all of which serve a critical function in the infrastructure of many of China’s urban areas. In early 2020 alone, China’s governing National People’s Congress signed off on a US$1.4 trillion fiscal plan to support technological innovation in these fields.

How Are China’s Tech Giants Developing Smart Cities?

As new technologies emerge after decades of research and development, a handful of companies have taken the lead in the transformation of cities. These include Alibaba, Baidu, Didi Chuxing, Huawei, and Tencent, all of which have incorporated their individual technologies across Hangzhou, Suzhou, Shenzhen, Shanghai, and Beijing, among others. These technologies then form the building blocks for “digital brains,” which utilize cloud computing, AI, and IoT to create the foundations for smart city infrastructure.

Alibaba: City Brain

Alibaba’s City Brain uses artificial intelligence and network infrastructure to automate traffic systems, optimize public transportation routes, identify environmental issues, and allow for more efficient public resource management. It is largely associated with Hangzhou, the city in which it was piloted and home to Alibaba’s headquarters. Since the implementation of Alibaba’s City Brain, transit times in its pilot areas have been reduced by 15%, arrival times of ambulances were cut in half, and an AI surveillance system to monitor traffic violations has lowered overhead for law enforcement. 

City Brain has been deployed in many of Hangzhou’s parking lots, enabling a “park-first, pay later system” that aims to cut down congestion near major traffic centers. This same system is also applied to its hospitals where patients can receive treatment first and pay later. This is in conjunction with Alibaba’s Medical Brain that utilizes AI and big data to treat patients. It has already begun piloting in a few hospitals across Hangzhou. 

The success of Alibaba’s City Brain project in Hangzhou has attracted the attention of major cities across China. Beijing, Shanghai, Tianjin, Macao, and Lhasa have all begun pilot programs, and Kuala Lumpur, Malaysia, a hub for Alibaba’s Southeast Asian operations, has imported the technology. Despite regulatory changes and recent crackdowns on the company’s anti-competitive e-commerce practices, Alibaba’s other technologies are still deeply integrated into many Chinese cities’ infrastructures.

Huawei: 5G and the Internet of Things

Huawei has faced intense scrutiny in recent years over the 5G technologies that it exports around the globe. Considered one of China’s top national champions, Huawei has been pivotal to the overall expansion of IoT technologies and China’s 5G telecommunications network, both of which are key to the overall development of smart city infrastructures. The company is responsible for the interconnectivity of 200 million IoT-enabled devices around the world, with 90 million connected to China Telecom’s network alone. Huawei’s 5G technology is key to many smart city projects throughout China, and it seeks a much more comprehensive approach to smart city infrastructure, encompassing everything from airport management and traffic optimization to streamlined city governance and medical personnel assistance.

Although Huawei’s network spans throughout China, Shenzhen and Shanghai have been the primary focus as pilot cities for the company’s smart city technologies. For example, Shenzhen’s Bao’an International Airport signed an agreement with Huawei to upgrade airport infrastructure. Since, Shenzhen Bao’an International Airport has seen a 15% reduction in waiting queues and a 20% reduction in onboarding times due to Huawei’s infrastructure.

Other parts of Shenzhen have employed Huawei’s Smart Traffic Lights and Traffic Control systems that help optimize traffic patterns. As cars become increasingly integrated with cellular vehicle-to-everything (“C-V2X”) technologies that enable connectivity between cars and surrounding networks, Huawei’s systems will improve both the flow of traffic as well as allow for quickened response times for first responder emergency vehicles. These technologies function similar to Alibaba’s City Brain in employing AI with big data to manage traffic and assist police and other critical services to optimize the efficiency of their real-time decision making. The result of Huawei’s traffic brain has been a 15% increase in traffic speed. 

Tencent: WeChat and Net City

Tencent has been a key player in China’s tech industry for nearly two decades. The company is behind popular platforms like QQ, Weibo, and WeChat, and is a major driver behind social media and e-commerce. WeChat’s extremely high user penetration rates, coupled with its payment services and interoperability with other applications, have allowed it to become a versatile platform among both China’s digital infrastructure and population. Tencent is likely to continue dominating the social media landscape, providing it sufficient resources and reach to expand into other innovative projects such as its Net City project.

WeChat Pay, the digital payment system native to WeChat, has long been integrated within most city utilities and infrastructure across China. It provides services for vendors, consumers, and government bureaus, alike, and it would be difficult to find a shop, restaurant, or vendor anywhere in China that does not accept the service. Government services and hospitals will even allow you to use WeChat Pay if you need to pay a fee or a fine.

In addition to its payments services, WeChat’s ability to disseminate information has also proved invaluable over the years. This was demonstrated at the onset of the COVID-19 epidemic, in which WeChat allowed for continuous updates regarding quarantine measures and provided important statistics to local governmental officials. It later helped provide contact tracing capabilities that were critical to isolating COVID-19 clusters in certain areas. Among its most recent developments now include a digital vaccination certificate and a digital hospital picker which uses AI to help connect you with doctors that best suit your needs. WeChat’s services and innovations have allowed Tencent to not only grow exponentially but also become a key tool for social infrastructure over the past decade. 

Despite scrutiny over its anti-competitive practices, Tencent is still exploring different areas of innovation. Announced last year, Tencent and prominent architectural firm NBBJ jointly announced the creation of Net City, an area that will prioritize green sustainable living, pedestrian-focused infrastructure, and an underground self-driving vehicle network. Utilizing reclaimed land near Shenzhen, Net City plans to accommodate 80,000 people. It will primarily serve Tencent’s offices, providing a sustainable ecosystem that benefits the company’s employees and city residents. It aims to utilize renewable energies and reusable waste water in order to promote a more environmentally friendly living environment. Construction of this area started in 2020 and is estimated to be completed in 2027.

Baidu and Didi: Intelligent Driving and Autonomous Driving

Baidu and Didi Chuxing, two of China’s largest tech giants, are competing with each other to develop autonomous driving vehicles. With the development of 5G, C-V2X, and rapid transit technologies, Baidu and Didi both have launched partnerships with city officials in order to develop intelligent transportation at the city level.

Baidu’s Apollo aims to develop smart city digital transportation infrastructure that utilizes C-V2X technologies to integrate smart vehicles into a city’s wider traffic grid. According to Baidu, this includes smart signaling, smart parking, and smart buses. This technology has already been deployed in major cities like Changsha and Guangzhou and has already totaled hundreds of millions of dollars in contracts for the company.

Didi Chuxing, widely known for its ride sharing app, has developed both Didi Transportation Brain and an autonomous vehicle fleet that are highly synergistic with each other. The transportation brain has already been deployed across multiple cities across China, leveraging big data and AI to improve travel times for commuters. Its growing robo-taxi fleet works in tandem with its transportation brain, and self-driving autonomous vehicle pilot programs have been launched in Shanghai, Yangquan, and Hefei. 

Baidu and Didi Chuxing have been successful in utilizing the networks and technologies of other companies to rapidly develop and deploy their technologies. For example, both Baidu and Didi Chuxing leverage Huawei’s expanding 5G infrastructure, C-V2X protocols, and pre-existing transportation brains to compete in a young competitive market. Additionally, these offerings offer the potential for overseas expansion, with both companies aiming to develop self-driving vehicles as a mobility-as-a-service

Local Governments: Blockchain Technology

Blockchain technology has played an important function in the digitization of city services. Bringing these services onto a blockchain streamlines entire processes and creates immutable records. This is largely in line with Beijing’s goals regarding blockchain technology and cities such as Chengdu and Beijing have already released favorable regulation to help integrate blockchain technology into these cities.

Chengdu’s plans for the emerging technology includes incorporating blockchain into government services and urban governance. The Chengdu city government aims to harness blockchain technology to provide policy support, publish project details, and incorporate work promotion mechanisms.

Beijing’s “Government Services + Blockchain” policy aims to digitize certificates, licenses, and other government services. One of the most challenging barriers to business operations in China is navigating the bureaucracy.

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By incorporating blockchain technology into this process, governmental bureaus will be able to lower their workloads, save resources, and promote local business activity through streamlined systems and digitized records. The current traditional method of record keeping and data sharing is prone to lost documents, human error, duplicate or inefficient processes, and costly delays. Automating and digitizing this will lessen the reliance on government officials to input and store data. It will also creates significant intra-governmental synergies by allowing for data sharing between various departments. According to a press release from the Beijing city government, blockchain technology in the city has been applied to over 140,000 real estate registrations, shared over 60,000 governmental affairs data items, and 600 bank and enterprise data items, and streamlined customs enforcement in its airports.

Challenges To China’s Smart City Development

US Opposition

While China moves ahead developing its smart cities, the companies behind them could face headwinds should they try to export the technologies. In a report by the US-China Economic and Security Review Commission, it notes that China has become a global leader in smart cities initiatives and elevated the importance of smart cities to a national strategy. It poses a challenge to US-led smart city initiatives due to the sheer amount of support and capital surrounding Chinese-led projects. However, the US is unlikely to import Chinese technologies given its belief that their data sharing protocols could inadvertently expose core US infrastructure to backdoor vulnerabilities and aid Chinese intelligence.

Protecting Data While Building Cities of the Future

After decades of funneling capital into science and technology research, China is starting to see how transformative its investments in this industry can be. Between the capabilities of the national champions that it grew and Beijing’s own investments in smart city technologies, it is likely that the majority of China’s urban areas will become highly interconnected comparatively early. Additionally, the integration of AI and big data in transportation and government services will surely aid in the overall economic development of China’s cities.

However, while the Chinese government is likely to continue its public-private partnerships with domestic tech giants to keep technologies in the hands of the private sector, it is unlikely that many nations in the West will readily import them – a response likely to become a new focal point in regards to smart city technologies between the US and China.

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