China’s smart supercities powered by 5G to become new growth engine

The next phase of growth in China could come from developing smart supercities through 5G connectivity, smart grids, renewable energy and modern transportation, according to a report by Morgan Stanley.

It expects the country’s urbanization ratio to grow from the current 60 percent to 75 percent by 2030, bringing in 220 million new city residents.

Morgan Stanley defines smart tech supercities as regional clusters of giant hubs surrounded by large satellite cities.

“In our view, China is poised to be a global leader in smart city and city cluster development,” said Morgan Stanley's Chief China Economist Robin Xing.

In the long term, those smart urbanization trends will help sustain productivity growth and mitigate the structural growth headwinds from an aging population, he said.

According to the report, China has shifted its urbanization strategy focus over the past two years to primarily developing five city clusters in advanced regions, including the Yangtze River Delta, Jing-Jin-Ji Area, Greater Bay Area, Mid-Yangtze River Area, and the Chengdu-Chongqing Area.

It is estimated that the average population of the top five city clusters would reach 120 million by 2030, each close to the size of Japan's entire population.

The report has visualized the future life in a potentially smart supercity as daily commuting via high-speed rail and automated vehicles on smart grids, automated households with smart Internet of Things (IoT) appliances running on a next-generation 5G network, as well as better healthcare empowered by artificial intelligence and big data.

Such rapid development will push demand for telecommunications and utilities, spur investment in areas like public cloud, 5G infrastructure and IoT devices.

“Over the longer run, more advanced smart city features, such as driverless cars, auto-delivery drones, and fully interconnected and automated home appliances should take productivity to the next level,” said Shawn Kim, head of Morgan Stanley's Asia Technology research team.

The research suggested that China's transition to tech-driven supercities would create numerous opportunities for global investment. Smart cities will emerge as an early pilot project for telecom operators to monetize 5G investments, Morgan Stanley said.

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