The COVID-19 pandemic has given China's economy a heavy punch. Last Friday, data from the National Bureau of Statistics unveiled that the country's GDP shrank 6.8% in the first quarter of 2020.
To revitalize the economy, China is going to speed up the development of "new infrastructure," especially in the smart city sectors, said the National Development and Reform Commission.
Relying on increasing investment in the infrastructure sector to improve economic indicators has been an old trick for China. When the 2008 financial crisis broke out around the world, the Chinese government launched a "Four Trillion Yuan" investment plan and injected an immense amount of capital into infrastructure to boost the economy. Despite maintaining an impressive GDP growth in the short-term, China's government debt has surged, and overcapacity has intensified. The measure of infrastructure investment has long been criticized by economists as seeking temporary relief without exploring potential aftermath.
"Instead of simply turning to the old playbook of investment stimulus, the country should promote a new round of infrastructure construction through reform and innovation," said Ren Zeping, chief economist of Chinese real estate company Evergrande, in an interview with Xinhua News Agency.
This time, the concept of "new infrastructures," which is different from the traditional infrastructure construction represented by railway, subway, airport, etc., is put on the table. The new plan combines technology and construction to provide technical support to the transformation of urban infrastructure, with the use of 5G communications, internet of things, artificial intelligence, industrial internet, and other emerging technologies.
A Hubei government official, who works for a local smart city project, told PingWest that some cities hire experts to build their own technology stacks, while most would partner with tech giants like Huawei, Tencent, and Alibaba. In fact, smart cities are being vigorously promoted across China as a political task, according to the official, "we will do whatever it takes to get this work done."
Due to the COVID-19 pandemic, local governments increased their financial expenditures for disease prevention and control. Meanwhile, the lockdowns have led to a reduction in fiscal revenue, and local governments have to confront a greater financial burden, especially for those in Hubei Province, the epicenter of the pandemic in China. "Even so, our local government has allocated a considerable amount of funds to support the smart city project," the official told PingWest.
Private industries are also keeping up with the trend of building smart cities. According to business data insight provider Tianyancha, on April 17, Tencent and a state-owned company under the control of Chengdu municipal government established a joint venture, with a registered capital of 50 million RMB, dedicated to the western Chinese city's transformation into a smart city, with its business scopes including charging stations for electric vehicles, smart management of parking lots, etc.
In a meeting on April 18, Jinzhou, a city in northeast China, announced that it is working with Huawei to build a smart city platform that includes 5G communications and using the company's cloud services to transform the city's municipal information system. Meanwhile, Alibaba joined hands with Guangzhou, the capital city of Guangdong Province in south China.
The smart city plan transformation, taking over China by storm, is also expected to provide short term benefits in disease control, as medical experts predict that the COVID-19 isn't likely going away soon.
Zhong Shan, a member of the Chinese Academy of Engineering, told People's Daily that local governments could better deal with the pandemic and facilitate needed policies when needed with the help of smart city management.