[Analytics] Stumbling blocks to ASEAN-China smart city cooperation

At HCM City Urban Transport Management Centre (Photo: sggp.org.vn). Sketched by the Pan Pacific Agency.

China is moving full speed ahead in the race for global technology leadership having promoted artificial intelligence, expanded venture capital and funded start-ups worldwide. Melinda Martinus specially for the East Asia Forum.

ASEAN countries have seen a surge in Chinese capital flows through massive infrastructure projects that have significant smart city elements, including Forest City Johor Bahru, New Clark City, New Manila Bay City of Pearl and Thailand’s Eastern Economic Corridor. China has also shown a great interest in the region’s newly planned township projects, including the Indonesia’s new capital city in East Kalimantan and New Yangon City.

To promote its investments in the region, China has emphasised the opportunity to leverage solutions based on the Internet of Things (IoT) while advertising projects as ‘smart’, ‘green’, and ‘liveable’. This includes the use of sensors, networks and data to optimise public services and enhance liveability through automated energy management, integrated traffic control and faster internet connections in newly built towns. Chinese-owned technology platforms like digital wallet by Alipay, AI adoption and 5G networks by Huawei, and communication platforms by Tencent have also become essential solution providers to enhance public services.

The Chinese government frequently promotes smart city cooperation under its Digital Silk Road Initiative, a significant component of the Belt and Road Initiative (BRI). In ASEAN, cooperation is enhanced through the ASEAN–China Strategic Partnership Vision 2030 where China has pledged to support ASEAN’s technology transformation initiatives, including the ASEAN ICT Master Plan 2020 and the ASEAN Smart City Network.

Despite lofty ambitions and political buy-in from ASEAN leaders, China still faces technical challenges. Huawei’s failure to win the bid to provide Singapore’s main 5G network demonstrates how aware policymakers are of security and data protection issues. Huawei has frequently faced accusations of enabling espionage by the Chinese government. Huawei’s loss to Nokia and Ericsson also shows how competitive and rigorous the process of bidding for critical infrastructure is in Singapore.

The Jakarta–Bandung High-Speed Rail was delayed by land acquisition barriers that have revealed challenges China must overcome to execute large-scale projects in a country that embraces the rights of individual ownership and fully adheres to the land market economy. This experience has also shown the limit of China’s development model even with its extensive experience building large infrastructure projects domestically.

China is yet to create a ‘green’ and ‘sustainable’ image from its BRI projects. Chinese-backed investment projects like Forest City Johor Bahru have received criticism for their detrimental impacts on the surrounding ecosystem by destroying marine biodiversity and polluting waterways. Similarly, the ongoing New Manila Bay City of Pearl project has been criticised for the potentially harmful impacts caused by the loss of both mangrove biodiversity and livelihoods of fisher communities.

There is also concern over trust. Malaysian civil societies frequently raise the issue of equity, questioning how Forest City Johor Bahru will bring employment and affordable housing to local people. The appointment of China Harbour Engineering to conduct reclamation work in Manila Bay has also sparked concerns as the company was involved in a bribery scandal in Bangladesh.

China may also face fierce competition from other players. Although Japan has not yet signed significant deals on large-scale smart city projects, it has recently announced a US$2.4 billion fund to pave the way for companies seeking smart city projects, particularly projects that help ASEAN cities to decarbonise. South Korea has also recently increased funds for ASEAN infrastructure projects through the Korea–ASEAN Global Infra Fund, and the Construction, Plant and Smart City Policy Fund.

Non-Chinese private investors have also started smart city projects in the region. Japanese company Mitsubishi recently announced a joint venture with Singapore’s state-backed investor Temasek Holdings to build a 100-hectare smart city in Jakarta. Amata Corporation, a Thai industrial estate developer, has also started to expand capital in the Mekong countries. The company also sealed deals to build industrial complexes in Myanmar (which has been halted due to the coup) and Laos in addition to its extensive portfolio in Vietnam.

China’s urban development model under President Xi Jinping has changed tremendously. Unlike China’s notable urban development projects that embraced decentralisation, China’s current urban development plans are driven by a top-down approach where the central government is given the authority to develop rigid technology infrastructure, management of data and the operation of smart services. This contrasts with the global concerns of citizens who are increasingly cognisant of data privacy and excessive surveillance. China’s rigid urban planning will likely shape the discourse of future transnational cooperation.

China’s cooperation on smart cities with ASEAN countries should be a combination of genuine engagement for mutual benefits and high-quality projects that ensure socio-environmental protection. Most importantly, it requires locally conscious development, where the people of ASEAN countries can see themselves as direct beneficiaries of Chinese investment.

Melinda Martinus is Lead Researcher (Socio-cultural Affairs) in the ASEAN Studies Centre at the ISEAS–Yusof Ishak Institute, Singapore.

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