China's second-tier urban areas and below can take heart, despite talent and technology challenges for communities of the future

The smart city, a technology frontier in public services, has been one of the hot areas of government concern in the past decade worldwide. Since it is still in its early stage, and there are no widely acknowledged best practices, different cities are facing different challenges in the process of getting smart.

The smart strategies of 87 cities around the world were recently examined by global consultancy Roland Berger, which found that developed countries show more interest in building green and innovative cities, while developing countries are more concerned about how to develop a differentiated model.

With different focuses and challenges, though, the smart city is far from being exclusive to rich metropolises in developed countries. According to the study, top-performing cities come in all shapes and sizes. Smart cities don't have to be big or beautiful - or even excessively smart.

Smaller cities such as Santander, Spain, and Parramatta, a suburb of Sydney, Australia, have exemplary, well-balanced strategies despite their size: Both have fewer than 200,000 inhabitants but are in the top 10 in the study's rankings.

Generally speaking, wealthier cities do come up with better strategies: A positive correlation exists between the economic performance of a city and its position in the ranking. But being rich is not a prerequisite for success. Some cities with more modest per capita GDPs have also published very good strategies, such as Rio de Janeiro, Brazil, and Bhubaneswar, the capital of the eastern India state of Odisha.

This could be good news for the subordinate cities in China, especially second-tier cities and below.

Since the beginning of 2012, the development of the smart city in China has sped up rapidly. China now has nearly 300 pilot smart cities, most of which are second-tier cities and below. With this rapid progress, we can see the effectiveness and convenience that the smart city has brought, as well as the necessity to improve the innovation of the top-level design, talent and technology, and financing model.

China's smart cities often put infrastructure and hardware before top-level design and integrated planning in the process of module building. Limited coordination and forward-looking management will lead to repeated construction issues and information islands with no network connection. As a smart city's construction goes deeper, in areas like smart healthcare and smart education, software and application construction gradually play a more important role.

The insufficient unified information system standard of various modules, limited connection between different information systems built by different sectors, the information islands with no shared city data and no comprehensive effect are the direct reflection of weak top-level design.

The ideal top-level design of the smart strategy of a medium-sized city is able to reduce the budget by 60 million yuan ($9 million; 7.5 million euros; ￡7 million), by avoiding repeated construction between sectors. The synergies among different modules in a smart city and the comprehensive connected platform built by top-level design can further the function and definition of each application module.

Benxi, a small city in Northeast China's Liaoning province, has set up a smart city management group, and a general office led by the mayor and deputy mayor is assigned to take charge of detailed works. It provides an institutional guarantee to smart city development by overall coordination and plans to avoid interest conflicts between sectors.

Focusing on citizens' benefits during its smart city development, Benxi optimizes access to public information and the service experience by building up the platform that integrates each application module. It is the only small city that was granted national support funding in Northeast China.

China's leading technology and talent teams concentrated on first-tier cities, or first-tier-cities-to-be, which control more than half of the information and communication technology and internet talent resources for a competitive edge, leaving second-tier cities and below far behind in these regards.

Over half of China's internet talent and nearly 70 percent of the cloud computing capabilities are in Beijing, Shanghai, Guangzhou, Shenzhen and Hangzhou. The second-tier cities, with limited technology and talent, face difficulties in their smart city planning, development and operation.

That means second-tier cites and below should pay attention not only to smart city development, but also to the whole environment to attract talent by providing accommodations, healthcare and next-generation education, and to build up an ecosystem to encourage innovation, communication and talent growth.

In terms of technology, more importance should be attached to the top-level design to make smart city planning increasingly predictive and integral. Meanwhile, the level of a smart city can be improved by applying advanced technologies, such as artificial intelligence and the internet of things, to cut down management and maintenance costs and to catch up.

Take Yinchuan, the capital of Northwest China's Ningxia Hui autonomous region, as an example. At the very beginning of its smart city development, Yinchuan grasped the opportunity by focusing on big data. Based on excellent connectivity, the emphasis on the integration and interconnection of big data and its open system have helped to systematically integrate decentralized data as well as realize in-depth data analysis and application.

In terms of data collection, Yinchuan further applies the technology of the internet of things, with sensors covering such aspects as healthcare, transportation and safety.

Additionally, Yinchuan has in recent years held the Global Smart City Summit, which attracted officials as well as commercial and technology experts from around the world.

The content of a smart city covers a wide spectrum, including city operation and economic and social development, which creates a huge demand for capital. Since it has a long life cycle of development, from several years to 10 to 20 years, the traditional uni-finance model supported by the government could not be sustainable. Some local governments have already put into practice the innovation of the financing operating model that includes public-private partnerships to introduce social capital.

The municipal government of Yinchuan founded ZhongXing (Yinchuan) Intellectual Industry Co in cooperation with ZTE in 2014, introducing a public-private partnership mode into the smart city development for the first time. The smart city program in Yinchuan is divided into three phases, with 10 systems and 13 submodules in the first phase. The PPP mode of this program is highly favored by the Ministry of Finance.

When the entire program is finished, the government will purchase the information from the joint venture for 50 years, which will contribute to a stable cash flow. The innovation of the PPP mode assists the government in solving the medium-and short-term financing problems with the help of social capital, which is a principal underpinning for the smooth and successful smart city development of Yinchuan.

By overcoming the challenges of talent, technology and financing, and further enhancing the importance attached to the top design of the smart city and formulating differentiated strategies, national or even global differentiated smart city benchmarks will arise from second-tier cities and below in China.

The author is a Shanghai-based partner of Roland Berger. The views do not necessarily reflect those of China Daily.

(China Daily European Weekly 09/01/2017 page12)