Developing Smart Cities in China An Empirical Analysis

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Developing Smart Cities in China: An Empirical Analysis
Article · April 2018

DOI: 10.4018/IJPADA.2018070106
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International Journal of Public Administration in the Digital Age
Volume 5 • Issue 3 • July-September 2018
Developing Smart Cities in China:

An Empirical Analysis
Wenxuan Yu, Nanyang Technological University, Singapore
Chengwei Xu, Nanyang Technological University, Singapore
ABSTRACT
This article describes how being pushed and pulled by a variety of external and internal factors,
the Chinese government had begun to adopt and implement its smart city initiatives. Despite the
strong financial and institutional supports from the central government, the performances of smart
city initiatives significantly vary across pilot sites. Considering smart city initiatives as government
innovation and drawing on the government innovation diffusion theories, an explanatory model has
been developed to examine their variance and test it with a cross-sectional dataset using multiple
regression methods. It was found that although environmental pollution was a key driver for the
development of smart city in China, such environmental pollution like air pollution in particular
had a curvilinear relationship (bell-shaped) with smart city development. In addition, smart cities
initiatives in China were driven not only by technical rationalities but also political rationalities.
Political supports from local ruling party sectaries made a difference.
Keywords
Government Innovation, Government Innovation in China, Innovation Diffusion, Modelling Smarty City
Development, Smart City, Smart City in China, Urban Management, Urban Innovation
INTRODUCTION
Although “smart city” as a theoretical and practical concept is a very recent phenomenon, it has
been considered an ideal model for future city development and management by urban planners and
urban managers worldwide. Cities in America, Europe and Asia have developed their own smart city
initiatives and have made impressive progress and achievements (Alawadhi 2012; Caraguiu, Del Bo
& Nijkamp 2011; Toh & Low 1993)
This trend is a natural response to the unprecedented urbanization worldwide. In the 21st century,
the global urbanization process is accelerating. According to a recent report by United Nations, 54% of
the global population lived in cities and this number would be growing to 66% by 2050 (United States,
2014). Although urbanization advances economic and technological developments, urbanization also
imposes unprecedented challenges on the humankind. For example in 2012, although cities occupied
only 3% of the global land area, they consumed 75% of natural resources and produced 60%-80% of
all greenhouse gas (GHG) emissions (UNEP, 2012). In addition to energy consumption and global
warming, urban illnesses such as diminishing biological diversity, environmental pollution, traffic
DOI: 10.4018/IJPADA.2018070106

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jam, food security, economic disparity and social risks including low fertility and aging population
threaten the economic sustainability and people’s quality of life (United States, 2014).
In 1990s scholars began to talk about smart governance and smart growth in order to address
environmental and social substantiality issues caused by the unstoppable trend of industrialization
and urbanization (Griffith, 2000). With the development and advances in IT-enabled technologies
and the Internet, scholars and practitioners in urban planning and management began to propose the
idea of taking advantages of these technologies to capture, analyze and share spontaneous information
about every aspect of urban life and integrate them into the urban planning. Beyond E-government
services, these include the management process for reducing energy consumption, streamlining city
management, improving the accuracy and quality of decision making, providing customized services
to city residents with diverse interest in a more efficient manner, addressing urban problems and
improving the quality of life (Oberti & Pavesi, 2013). Capturing this new growth opportunity, savvy
IT companies such as IBM began to promote the idea of smart cities and sell their smart city solution
packages to cities worldwide since 2008. According to ABI Research, while in 2010 $8.1 billion was
spent on smart city technologies, in 2016, that number would reach $39.5 billion (ABI Research, 2011).
In 2009, pushed and pulled by a variety of external and internal factors, Chinese local governments
such as in Ningbo City, Zhejiang Province, had begun to embrace the idea of a smart city and initiate
their own smart city projects. Since 2013, to further promote and regulate the development of smart
city initiatives, China’s Ministry of Housing and Urban-Rural Development (MOHURD), which is
the main authority in charge of the urbanization, urban planning, urban management, and public
housing in China has been selecting cities to experiment and implement smart city initiatives. The
MOHURD provides selected pilot cities with funding and technical support, as well as monitoring
and evaluating their progress in smart city development (Johnson, 2014). Up to 2015, China has 296
localities including cities, districts, counties and townships having their own smart city initiatives
(MOHURD, 2015).
Due to China’s unique political system and central-local government relationship, smart city
development in China exhibits different features and developmental paths. Different from the
Western development model of bottom-up, local autonomy and inter-sectoral collaboration (Dameri
& Rosenthal-Sabroux, 2014), current smart city initiatives in China are primarily pushed forward by
a top-down approach controlled by the central government. While smart city initiatives are guided,
monitored and evaluated by the central government ministries, after several years of development the
performances of smart city initiatives vary significantly across localities in China (Chinese Academy
of Social Sciences and Beijing Govmade Smart City Research Centre, 2015, Zhang, Chen & Song,
2015). In this article, drawing on government innovation diffusion theories, we developed a model
to explain the variance in the performance of smart city development in China and empirically test
the model to explore its determinants through multiple linear regressions.
Current literature on smart cities mainly focuses on the definitions and dimensions of smart cities
(Alawadhi et al., 2012; Chourabi et al., 2011; Jucevičius, Patašienė, &Patašius, 2014), evaluation
framework of smart cities (Albino, 2015), rankings of smart cities (Giffinger, Fertner, Kramar et.al
(2007) and the status quo and challenges of smart city development (Kogan, & Lee, 2014). Literature
review, conceptual analysis and case studies dominated the research methods in these smart city
studies (e.g. Albino, 2015; Dameri & Rosenthal-Sabroux, 2014; Oberti & Pavesi, 2013). With few
exceptions (Lombardi, Giordano, Farouh & Yousef, 2012), there is a lack of quantitative empirical
studies. Therefore, this article provides significant theoretical and practical implications in enriching
our understanding of smart cities, the rationales and logic underneath the development of smart city
initiatives in China, and providing practitioners with ideas to further improve their management of
smart cities initiatives.
The rest of this article has five sections. In the first section below, we review the literature on
smart city and smart city development in China, providing background information for the later
sections. In the second section, drawing on government innovation diffusion theories, we develop a
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model to explain the performances of smart city initiatives in China. In the third section, we report our
data and research methods. In the fourth section, we present our findings and discussion. In the fifth
section, we conclude, discussing the limitation of this study and point out future research directions.
SMART CITY AND SMART CITY DEVELOPMENT IN CHINA
As mentioned in the introduction, the smart city is a holy grail urban planners and managers are
chasing worldwide and touted as an effective solution to make cities healthier, greener, safer and
better places to live and work (Dameri & Rosenthal-Sabroux, 2014). However, a smart city is an
elusive concept. In the last 10 years, significant efforts had been made by scholars to define and
clarify what a smart city actually is (Cocchia, 2014; Nam & Pardo, 2011). After conducting a time
analysis on a comprehensive collection of articles published between 1993 and 2002, Cocchia found
out that the emergence and development of the concept of smart cities was in commitment with the
increasing international concerns of CO2 emissions, environmental sustainability and advances in the
Internet and IT-enabled technology. Nam & Pardo (2011) explained that the meanings of “Smart,”
influenced by ideas in marketing, urban planning and IT technology, highlight customer-oriented
responsiveness, automatic intelligence of technology and the strategic vision of urban management
in using all resources effectively to tackle economic and social sustainability problems.
After analyzing a myriad of definitions of smart cities and clarifying the commonalities and
differences between smart city and other adjacent concepts such as digital city, intelligent city,
ubiquitous city, leaning city, human city and smart community, scholars have roughly agreed
that the smart city is an overarching concept integrating all aforementioned concepts. On one
hand, the smart city concept is about taking advantage of advanced IT enabled technologies to
effectively and efficiently address urban problems. Harrison et al. (2010) pointed out that a smart
city is an “instrumented, interconnected and intelligent city.” The city is able to capture live real-
world data on the environment, urban life and public service delivery through the use of sensors,
meters, cameras, personal devices for conducting complex analysis, modeling, optimization, and
visualization to facilitate effective and efficient decision and public policy making. On the other
hand, smart cities have their human sides, with an emphasis on preserving history, cultivating
social capital, encouraging creativity and social learning, encouraging healthy life style, citizen
participation in public life and cross-sectoral collaborations. Governments play a very important
role in providing enabling platforms and institutional support in providing visions, designing
initiatives and encouraging collaboration (Kogan & Lee, 2014). Giffinger and his colleagues (2007)
provided one of the most widely cited definition of a smart city, which included 6 components:
“Smart Economy” “Smart People”, “Smart Governance”, “Smart Mobility”, “Smart Environment”
and “Smart Living”. (See Table 1 for more details)
Although the emergence of smart city initiatives in China shares many similarities with Western
developed countries such as being policy solutions to urban pathologies and taking place almost at
the same time, the development of smart city initiatives in China is pushed and pulled by different
political, economic and social forces and rationales. After 30 years of fast economic development,
industrialization and urbanization, China has begun to experience a variety of economic and social
problems. The traditional economic development model that heavily relied on population dividends,
cheap labor force and abuse of natural resources is obsolete. It causes economic slowdown, increasing
unemployment, huge regional and individual economic and social disparities, terrible environment
pollution, inferior public service deliveries and social security net, rampant political corruption, as
well as prevalent urban pathologies such as traffic jam, food security and social safety. “Smart city”
is considered as a supply-side policy solution to reshape economic structures, transform economic
development modes, upgrade industrial technologies, re-educate and enhance the competiveness of
the workforce, stimulate domestic demands and government expenditure. Advocates of smart city
projects also believe that “Smart city” can also improve government capacity and efficiency, fight
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Table 1. Characteristics of a smart city
SMART ECONOMY SMART PEOPLE SMART GOVERNANCE

(Competitiveness) (Social and Human Capital) (Participation)
Innovative spirit Level of qualification Participation in decision-making
Entrepreneurship Affinity to life-long learning Public and social services
Economic image & trademarks Social and ethnic plurality Transparent governance
Productivity Flexibility Political strategies & perspectives
Flexibility of labor market Creativity
International embeddedness Cosmopolitanism/Open-mindedness
Ability to transform Participation in public life
SMART MOBILITY (Transport SMART ENVIRONMENT
SMART LIVING (Quality of life)
and ICT) (Natural resources)
Cultural facilities
Local accessibility Health conditions
Attractivity of natural conditions
(Inter-)national accessibility Individual safety
Pollution
Availability of ICT-infrastructure Housing quality
Environmental protection
Sustainable, innovative and safe Education facilities
Sustainable resource management
transport systems Touristic attractivity
Social cohesion
Source: Giffinger, Fertner, Kramar, Kalasek, Pichler-Milanovic & Meijers (2007).
against corruption, and mitigate energy crisis and environmental pollution. “Smart city” is considered
as a panacea to address urbanization problems and finally contribute to build up a harmonious society
and maintain political stability (Deng & Zhang, 2013; Gu, Yang & Liu, 2013).
Against this backdrop, encouraged by international experiences as well as by international
IT businesses such as IBM and Cisco, the concept of “Smart City” was quickly embraced by the
Chinese government. In 2010, the Chinese government published the 12th Five-Year Plan, specifically
encouraging and strengthening the development of information technology, information industry and
smart cities. In the same year, Ningbo city, Zhejiang Province published the first municipal smart
city development plan in China and many cities followed suit. To further regulate and promote the
development of smart cities, starting from 2012, three government agencies related to smart city
development, the Ministry of Science and Technology (MOST), the National Development and Reform
Commission (NDRC) and the Ministry of Industry and Information Technology (MIIT) have begun
to form their own smart city industrial alliance. Some functions include funding smart city research
and projects, developing smart city technologies, developing industry standards and providing smart
city solutions to local governments.
In 2012, in order to lead and regulate the smart city industry and practice, MOHURD started
to select cities, districts and counties as official pilot sites. They will be funded from a ¥ 80 billion
($15 billion) investment fund from the China Development Bank. Up to now, 296 cities, districts,
counties and townships have been selected as pilot localities to implement smart city initiatives. In
order to further coordinate different ministries and government agencies in overseeing and managing
the nationwide smart city development, the NDRC issued the Guidance on Promoting Healthy Smart
City Development in 2014. The Guidance defines “smart city” as a “new concept and model which
utilizes the next generation of information technology, such as the Internet of Things (IoTs), cloud
computing, big data, to promote smart urban planning, construction, management and services for
cities.” It provides basic principles, objectives and action plans for the smart city development in
China (National Development and Reform Commission, 2014).
In the 2015 Report on the Work of the Government of the State Council, current Premier Li
Keqiang highlighted smart technologies and smart cities as two priorities in his administration. The
report emphasized that China will promote extensive applications of information technologies in
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industrialization and will make breakthroughs in areas such as digitalization and smart technologies.
The report also announced the development of The Internet Plus Action Plan to promote the
development of e-commerce, industrial networks, Internet banking, and Internet-based companies.
This is specially meant “to integrate mobile Internet, cloud computing, big data, and the Internet of
Things with modern manufacturing” (State Council, 2015)
Although smart city initiatives are strongly supported technologically, financially and
institutionally by the Chinese central government and leaders, scholars through a series of annual
smart city development evaluations found out that there exists a huge variance across Chinese cities
in smart city development. This article aims to examine the imbalance of the development of smart
city initiatives across China and to uncover reasons why.
GOVERNMENT INNOVATION DIFFUSION THEORIES

AND SMART CITY DEVELOPMENT IN CHINA
Government innovation diffusion theories aim to explain why and how public management and
public policy innovations are adopted and implemented across jurisdictions and agencies (Berry &
Berry, 2014). Scholars have explored and empirically tested factors and mechanisms of policy and
management innovation diffusion across different jurisdictions and levels of government. Studies have
shown that external factors such as political and economic environment, culture, industrialization,
party politics and internal factors such as organizational resources, leadership and learning capacity
all influence government innovation diffusion (Berry & Berry 1990 1992; Graham, Shipan &Volden,
2013; Rogers, 1983). Studies have also discussed that horizontal and vertical mechanisms such as
organizational similarity, organizational isomorphism, competition and learning, top-down coercion
and bottom-up pressures can explain why governments and their agencies adopt and implement policy
innovations (Berry & Berry, 2014; Elkins & Simmons, 2004; Gary, 1994; Shipan &Volden, 2006;
Walker, Avellaneda & Berry, 2011).
Government innovation diffusion theories have been applied to analyze policy diffusion in China
in areas such as pro-business administrative licensing reform (Zhu & Zhang, 2015), E-government
and government micro-blog (Ma, 2013), urban land finance reform (Zhang, 2012) and city grid
management innovation (Zhou & Li, 2014). Ma (2015) examined the horizontal diffusion of public
bicycle projects in Chinese municipal governments, and found that internal factors such as government
fiscal resources, traffic conditions, education and income of city residents, government’s willingness
and capability as well as external factors such as pressures from upper level government, inter-
governmental learning and competition, media influence and bottom-up pressures could influence the
adoption and sustainability of public bicycle projects in Chinese cities. Zhu and Zhang (2015) analyzed
the effects of personal characteristics such as tenure, age, working experience and the opportunities
for future promotion of the party sectary and mayor, on the adoption and implementation of the pro-
business administrative reforms in China.
It is of no doubt that the smart city is a government innovation. Government innovation diffusion
theories and existing research on policy diffusion in China shed light on our questions on the
development of smart city initiatives in China. Based on the literature on smart city and government
innovation theories in general and in China in particular, we propose that five factors may explain
the variance of smart city development across Chinese cities (see Figure 1).
Resources
Government innovation and diffusion theories emphasize the importance of organizational resources.
Slack resource theories show that organizations with sufficient resources and even redundant resources
are more likely to invest in research and development (R&D) activities or adopt innovation (Huang
& Chen, 2010; Nohria & Gulati, 1996). Adopting innovation more often than not means taking risks,
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Figure 1. An explanatory model of the performance of smart city initiatives in China
which requires commitments and financial and human resource investments. Only organizations
with rich financial resources and human capitals are willing to and capable to adopt and implement
innovations. IT technologies and IT-enabled smart infrastructures require not only tremendous amounts
of financial investment, but also human resources (Dameri & Rosenthal-Sabroux, 2014; Kogan& Lee,
2014; Neirotti, De Marco, Cagliano, Mangano, & Scorrano, 2014). Therefore, we hypothesize that:
H1a: The more financial resources a city has, the better the smart city initiatives developed in
its locality.
H1b: The more human capital a city has, the better the smart city initiatives developed in its locality.
Local Culture
Innovations break down stereotypes and existing routines and standard operating procedures (SOP)
(Rogers, 1983). Adopting innovation requires the willingness to change, to think out of the box and
take risks (Martins &Terblanche, 2003) Research has shown that a creative culture has long-lasting
effects on national innovation and innovation adoption (Jones & Davis, 2000). In the literature of public
management, local political cultures, liberal or conservative, significantly influence policy adoption.
Price and Riccucci (2005) found that in the United States, state political culture had significant
impacts on the adoption of private prisons. Innovation adoption requires an open, risk-taking culture.
H2: The more open the culture of a city is, the better the smart city initiatives developed in its locality.
Government Leadership
“Smart government” is an essential component of smart city initiatives. Building up a smart city
is a very challenging process with full of uncertainties. The leaders’ education, learning capacities,
vision and strong support in developing smart city initiatives are crucial. Smart city is a complex
ecosystem emphasizing system integration and collaboration among government, private sector and
civil society (Nam & Pardo, 2011). In China, the development of smart city initiatives takes a top-
down approach, led and carried out by local governments, through their agencies and state-owned
businesses. Government innovation theories and collaboration theories all emphasized the important
roles government executives play in leading and coordinating innovation adoption and collaboration.
In Chinese cities, the city mayor is the administrative executive in charge of managing the daily
operation of the city government and public service delivery. Hence the leadership of city mayors
matter. Therefore, we hypothesize that:
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H3: The stronger the executive leadership a city has, the better the smart city initiatives developed
in its locality.
Institutional Support
A “smart government” is the essential component, core implementer and enabler of smart city
developments (Nam & Pardo, 2011; Kogan & Lee, 2014). A smart city needs the government to
play a vital role in guiding and deploying IT technology, integrating system components, sharing
information and take actions to address problems that arises. Therefore, smart city initiatives require
“smart governments” (Giffinger et.al, 2007; Nam & Pardo, 2011), to provide visions, goals, priorities
and strategic plans, to coordinate relevant government agencies, to deploy financial and human
resources, and to collaborate with all stakeholders. Smart cities need strong institutional support.
Therefore, in every pilot city, the Chinese municipal government would establish its smart city leading
group by including party secretaries or mayors and directors of relevant government agencies to lead,
coordinate and manage smart city initiatives.
H4: The stronger the institutional support a city has, the better the smart city initiatives developed
in its locality.
Policy Demands
Smart city is a problem-oriented policy initiative (Albino, 2015; Dameri& Rosenthal-Sabroux, 2014;
Oberti & Pavesi, 2013). Its popularity resides in its technological promise to address wicked urban
problems in traffic, public transportation, energy consumption, environment, public health, food safety
and social and economic disparities. It is obvious that cities with more serious urban pathologies are
more likely to adopt and implement smart city initiatives. Therefore, we hypothesize that:
H5: The more serious the urban challenges a city is facing, the better the smart city initiatives
developed in its locality.
DATA AND RESEARCH METHODS
Considering the comparability and availability of data, we chose cities at the prefecture level as
our research subject. Although the pilot sites of smart city in China include cities at the prefecture
level, districts, counties and townships, due to their size, population, history, functions and policy
demands, cities at the prefecture levels are the most suitable research targets. In addition, statistical
data collected of cities at the prefecture level are relatively comparable and accessible. Our data are
obtained from the 2015 smart city evaluation project on 151 Chinese cities at the prefecture level
by Chinese Academy of Social Sciences and Beijing Govmade Smart City Research Centre and the
respective 2014 city statistical year book. Other statistical data were manually collected from relevant
government websites.
Variables and Measurements

Dependent Variable
The dependent variable of this analysis is the performances of smart city initiatives in 151 Chinese
cities. The variable is measured by a performance index of smart city initiatives developed by a national
smart city development evaluation project. The evaluation project has been conducted annually since
2011 by the Chinese Academy of Social Sciences and Beijing Govmade Smart City Research Centre.
Drawing on international smart city research, policy guidelines, official guidelines and documents of
Chinese government and local practices, this project developed an evaluation scheme with 6 dimensions
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including smart infrastructure, smart management, smart services, smart economy, smart people and
smart government. According to its metrics, the evaluation project calculates a performance score
for each city, ranging from 0 to 105.
Independent Variables
Due to various limitations, the operationalization of independent variables would follow our literature
review. If direct indicators are not available, we choose proxies widely adopted in literature. Table 2
provides a summary of the variable operationalization, measurements and their data sources.
Resources
This variable has two dimensions, financial resources and human capital. We measure financial
resources by the local budget revenue, while human capital is measured by the number of students
enrolled in higher education institutions per 1000 city residents in that city. Both data are retrieved
from respective cities’ 2014 city statistical year book.
Local Culture
We use foreign direct investment (FDI) per capita as a proxy to measure the culture of Chinese
cities. In China, cities with more FDI investment are considered to have more open and risk-taking
cultures. These cities that are more open and creative can attract more FDI investment. Therefore,
FDI is widely adopted as an indicator of openness of a city (Ma, 2013). This data is obtained from
the 2014 city statistical year book.
Leadership
According to the literature, we utilized two proxies to measure leadership, the incumbent mayor’s
age and education. We obtained these data from respective city government websites.
To push forward the development of smart city initiatives, all pilot cities have their own Smart
City Development Leading Groups to lead, coordinate and support the development of smart city
initiatives. In the Chinese policy system characteristic of fiscal semi-decentralization, administrative
semi-authoritarianism, and nomenklatura-style personnel system (Zhu and Zhang, 2015), the pure fact
of who the chief of the leading groups is indicates how strong the institutional support the smart city
initiatives receive. Therefore, according to the official post of the Chief of the Smart City Development
Leading Group, we designed four dummy variables, Party Secretary, Mayor, Vice Mayor or a Head
of relevant government agencies or others to measure institutional support for smart city initiatives.
We collected the data from respective city government websites.
Policy Demands
Two indicators, city population and PM2.5 density, are selected to measure the policy demands for
smart city initiatives in Chinese cities. Cities with more population have more serious urban problems
and environmental pollution is one of the most serious urban challenges Chinese cities are currently
experiencing. Table 2 summarizes the operationalizations of the dependent and independent variables,
measurements and data sources.
Model Specification and Data Analysis

Following guidelines provided by econometricians such as Wooldridge (2013), we first explored the
bivariate relationships between dependent variables by running Pearson pairwise correlation between
and among dependent and independent variables. Next, we explored potential nonlinearity between
dependent and independent variables by data visualization. As shown in Figure 2, we found that the
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Table 2. Variables, measurements and data sources
Variables Measurement Source

Dependent Variable
2015 Smart City Evaluation report by
Evaluation Score of 151 Smart City
Smart City Development (SCD) Beijing Govmade Information Consulting
Development in China
Co. Ltd. 2015
Independent Variables
Resource
Financial Resource (FRES) City Budget Revenue per capita China City Statistical Yearbook 2014
The ratio of the number of
Human Capital (HCAP) students enrolled in high education China City Statistical Yearbook 2014
institutions to the total population
Culture
Foreign Direct Investment (FDI) Foreign Direct Investment per capita China City Statistical Yearbook 2014
Leadership
Age (AGE) Incumbent Mayor’s Age City Websites
Education (EDU) Incumbent Mayor’s Education
A dummy variable If the leader of
Party Sectary (PSEC) the SC leading group is the Party Respective City Websites
Sectary, it is 1, otherwise)
Mayor (Mayor) the SC leading group is the Mayor, it Respective City Websites
is 1, otherwise)
Vice mayor or agency head
the SC leading group is a vice mayor Respective City Websites
(VAHEAD)
or agency head, it is 1, otherwise)
A dummy variable if the leader
Other of the SC leading group is not
indicated
Policy Demands
Population (POP) Total Population within a city China City Statistical Yearbook 2014
PM2.5 Density in every 10
Pollution (POLL) http://www.pm25.in/rank
micrograms per cubic meter (μg/m3)
relationship between smart city development (SCD) and environmental pollution (POLL) seems to
be a curvilinear relationship with a bell shape.
Next, we regressed the dependent variables on all independent variables including dummy
variables for institutional support using STATA 14.0 statistical package. Results are shown in Table
3. To test whether the model suffers from multicollinearity and heteroscedasticity problems, we ran
the post-estimation test VIF, Breusch-Pagan test and White test. Results show that although this linear
model does not have a multicollinearity issue, statistical tests show that this model does indeed have
heteroscedasticity issue, which is normal for a cross-sectional dataset. Next, we ran Ramsey Reset
test and Linktest to check on model specification, i.e. if this model has missing variables and if the
model is linear. Test results show that this model does not miss out important variables but is not
linear. We had to re-specify the model.
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Figure 2. The scatter plot of the relationship between the dependent variable and independent variables
Table 3. Regression Model I without POLL2
Independent Variables Coef. Std.Err t P>|t|

FRES 3.22 1.15 2.80 0.01**
HCAP 0.01 0.02 0.91 0.36
FDI 0.29 0.20 1.45 0.15
AGE -0.02 0.27 -0.08 0.93
EDU 0.08 1.49 0.05 0.96
PSEC 12.30 3.49 3.52 0.00***
MAYOR 3.06 2.01 1.52 0.13
AHEAD 3.77 2.83 1.33 0.19
POP 2.20 0.41 5.39 0.00***
POLL -0.12 0.05 -2.56 0.01**
Cons 35.33 14.64 2.41 0.02
No of obs = 139, F(10, 128)= 11.10, Prob> F = 0.00
R-squared = 0.46, Adjusted R-Squared 0.4226
*= Significant at 0.1 level, ** =Significant at 0.05 level, **=Significant at 0.01 level
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Based on the information above and the data visualization we did on the correlation between the
dependent variable and independent variables, we speculated that pollution may have a curvilinear
bell shape relationship with the dependent variable. Therefore, we generated a new variable, Pollution
Squared (POLL2) and regressed the dependent variable on all independent variables including the
newly created squared pollution variables. Fortunately, this model pass the Ramsey reset test and
Linktest. Due to the heteroskedasticity issue of the cross-sectional dataset, we ran the regression
again with a robust standard error option. Table 3 exhibits our findings.
FINDINGS AND DISCUSSIONS
Table 4 indicates that this model can explain 52.6% of variance of the dependent variable (R-squared =
0.53) and the model is significant (F(11, 127) = 12.83 Prob > F = 0.000), which shows improvement
from Model 1. Both models show the same statistically significant independent variables with the
same sign, which to some extent illustrates the robustness of the analysis. Finance Resources (FRES)
is significant at 0.05 level with a positive sign, hence supporting Hypothesis 1a. It indicates that
cities with more financial resources have more successful smart city initiatives. Developing and
implementing smart city initiatives do require sufficient financial investment.
Both policy demand variables, Population (POP) and Pollution (POLL), are statistically significant
at 0.01 level, which fully support the policy demands hypothesis that smart city initiatives are problem-
oriented and are driven by practical needs. Thus, H5 is supported. However, the surprisingly significant
curvilinear relationship between smart city development and pollution indicates that the relationship
between smart city development and pollution is not linear. The bell shape of the relationship (POLL2<
0) implies that cities develop smart city initiatives to address their environmental pollution problems
up to a point. After that, as pollution gets more serious, smart city development slows down. It makes
sense that smart city is a holistic solution to address many urban problems. Smart city development
requires tremendous commitments and financial and human capital investments. For cities suffering
serious pollutions, developing smart city initiatives may not their top priority.
Table 4. Regression Model II with POLL2
Independent Variables Coef. Std. Err. t P>t

FRES 3.12 1.09 2.87 0.01**
HCAP 0.01 0.02 0.53 0.60
FDI 0.12 0.20 0.61 0.55
AGE 0.14 0.26 0.54 0.59
EDU 0.31 1.41 0.22 0.83
PSEC 11.63 3.30 3.52 0.00***
MAYOR 2.45 1.90 1.29 0.20
VAHEAD 3.14 2.68 1.17 0.24
POP 5.62 0.92 6.08 0.00***
POLL -0.17 0.05 -3.52 0.00***
POLL2 -0.26 0.06 -4.07 0.00***
_Cons 25.48 14.03 1.82 0.07
No of obs =139F(11, 127) =12.83 Prob> F = 0.000
R-squared = 0.5263Adj R-squared =0.4852
*= Significant at 0.1 level, ** =Significant at 0.05 level, **=Significant at 0.01 level
86
Another interesting finding was that the party secretary as the Chief of the Smart City
Leading Group (PSEC) is significant at 0.01 level, it shows that institutional support is crucial for
the success of smart city initiatives. Thus, H4 is supported. In government innovation diffusion
theories, political rationalities, aside from technical rationality, such as political culture and party
politics are also very important. Zhu and Zhang (2015) who studied the policy diffusion of pro-
business administrative licensing system in China, found that different reasons dominated policy
diffusion process at different stages of policy development. At the beginning, local governments
embarked the pro-business administrative reform mainly due to economic reasons for attracting
business investment and developing the local economy. After the enactment of the Administrative
Permission Law in China, pro-business administrative reform became a national policy. From
then, political reasons such as the potential political career promotion opportunities (Political
mobility), of local leaders (Party Sectary and Mayor) dominated policy diffusion process. Tingjin
Lin’s study on the public education disparity within provinces in China also revealed that different
political mobility potentials between party secretaries and mayors determined policy choices of
local governments (Lin, 2009).
However, both quantitative studies do not reveal the differences between party secretaries and
mayors. In China, the ruling Chinese Communist Party dominate and control the executive branch
largely through its cadre personnel system. In the cadre personnel system, although local party
sectaries and mayors have the same administrative rank, mayors are a lower leadership position
than party secretaries. Party secretaries are not only in-charge of party affairs. Due to their political
responsibilities, they are also the final decision makers of local public policies, often intervening
the mayors’ executive and administrative businesses (Edin, 2003; Lin, 2012). Since 2012, smart city
initiatives have been strongly promoted by the Chinese central government, being highlighted in the
12th 5-years plan and the 13th 5-years plan. Developing smart cities are already a political mission.
Our findings show that party secretary’s political support matters for smart city development. It also
supports the literature on smart cities that strong leadership and institutional support are crucial for
smart city development.
CONCLUSION
Drawing on government innovation diffusion theories, and the literature on smart city
development, we constructed an explanatory model to explain the variance in the development
of smart city initiatives in Chinese cities. We found out that the diffusion and implementation of
smart city initiatives are determined by both technological and political rationalities. Large cities
are more likely to adopt and implement smart city initiatives to address thorny urban pathologies.
In addition, while in the first place, cities with more serious environmental pollution are more
likely to implement smart city initiatives, the development of smart city initiatives in cities with
very serious environmental pollutions is less satisfactory, because smart city initiatives would
not be their top policy priority. In this article, we also reveal the political rationality behind the
smart city development in China. Smart city initiatives are not only a technical policy solution,
but also a political mission. Political and institutional supports from party secretaries are crucial
for smart city development in China.
We acknowledge that this study is a preliminary study with many limitations. In future studies,
we will continue to address these limitations. First, the dependent variable, Smart City Development
(SCD), is measured by a performance index obtained from a national performance evaluation project.
Although the project has been carried out for 5 years, a thorough examination of the metrics it used
would be required. The project’s definitions and dimensions of smart cities and its adoption of
indicators need to be further improved. Therefore, the internal validity and external validity of the
87
performance indicators need to be further tested. Second, due to the limitation of data availability
and the cross-sectional nature of the dataset we used, we should have integrated more explanatory
variables in the model. Third, the mainstream methodology to study policy diffusion is event-history
analysis, which requires a panel dataset. With a panel dataset, more explanatory variables could be
included and fixed effects and random effects could be captured and controlled, which would lead
to more stable and robust statistical results.
88
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Chengwei Xu currently is a PhD candidate in the Public Policy and Global Affairs Division, Nanyang Technological
University. His research interests include motivational bases for public service, public service performance, and
city management.
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Developing Smart Cities in China:

SMART CITY AND SMART CITY DEVELOPMENT IN CHINA

Table 1. Characteristics of a smart city

SMART ECONOMY SMART PEOPLE SMART GOVERNANCE

GOVERNMENT INNOVATION DIFFUSION THEORIES

Figure 1. An explanatory model of the performance of smart city initiatives in China

DATA AND RESEARCH METHODS

Variables and Measurements

Model Specification and Data Analysis

Table 2. Variables, measurements and data sources

Variables Measurement Source

Table 3. Regression Model I without POLL2

Independent Variables Coef. Std.Err t P>|t|

FINDINGS AND DISCUSSIONS

Table 4. Regression Model II with POLL2

Independent Variables Coef. Std. Err. t P>t

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