Smart city, digital economy and government's involvement

1. Introduction

This paper aims to analyze the role of central governments in smart city projects in Russia and China. The involvement of central governments is critical both theoretically and practically. From a theoretical perspective, this research helps advance understanding of how different government models and policies shape smart city development. Comparing Russia and China provides an empirical basis to refine conceptual frameworks on the role of the state in smart cities. Practically, the analysis offers insights to guide policymakers in crafting effective smart city programs suited to their national contexts. As major emerging economies undertaking extensive smart city initiatives, the cases of China and Russia have important practical lessons for other countries. The objectives are to:

l Compare the characteristics of central government involvement in smart city projects across China and Russia, and present examples to illustrate the scale of smart city projects.

l Highlight key achievements and failures of China and Russia in smart city projects and assess the impact of central governments on them through comparative analysis.

l Combine various concepts and approaches used in smart city projects with examples from different countries and propose improvements for global smart city projects.

The study is structured as follows. Section 2 introduces the materials and methods applied today, and reviews different smart city approaches worldwide, and rationale for choosing China and Russia. Section 3 establishes the linkage between smart cities and the digital economy. Section 4 discusses the impact of urbanization and emerging challenges that smart cities can help address. Section 5 analyzes the role of central governments, drawing on China and Russia as case studies. Section 6 highlights key findings and insights for policymakers. Section 7 concludes with limitations and directions for future research.

2. Background and methods

Smart cities have emerged as a major trend in global urbanization, with integration of digital technologies like internet-of-things (IoT), big data analytics, artificial intelligence (AI) and cloud computing to optimize city operations, services and sustainability (Dameri & Cocchia, 2013 [1]). The rapid development of smart cities has significant economic and social implications. Estimates suggest the smart city market will grow from $1,428 billion in 2020 to over $2500 billion by 2025 (Figure1, White & Case, 2020 [2]). Connected IoT devices in smart city infrastructure are projected to increase from 1.6 billion in 2020 to 4.1 billion by 2025 (Statista, 2021 [3]). The transformation of cities through smart technologies impacts key sectors including transportation, energy, healthcare, education and governance (Neirotti et al., 2014 [4]). As such, smart cities are an integral driver of the digital economy (Lee & Hancock, 2012 [5]).

Figure 1. Projected smart city market growth (White & Case LLP, 2020), compiled in accordance with [2].

While existing literature has examined smart city concepts, evaluation frameworks, and implementation models (Chourabi et al., 2012 [6]; Giffinger et al., 2007 [7]; Komninos, 2002 [8]), there has been limited focus on the role of central governments. Governments shape economic policies, provide legislative direction and allocate resources for technology infrastructure and R&D (Meijer & Bolívar, 2016 [9]; Mosannenzadeh &Vettorato, 2014 [10]). Their strategic priorities and support mechanisms significantly influence smart city programs within their jurisdictions. This paper aims to address this research gap by analyzing and comparing the involvement of central governments in smart city initiatives, taking China and Russia as illustrative examples.

This paper conducts a thorough investigation of the role and function of the central government using comparative analysis and institutional analysis. Using China and Russia as examples, we first qualitatively assess the traits of the two governments' roles before empirically scoring the national role on many aspects to sharpen the fundamental traits.

l A qualitative analysis is conducted to outline and contrast the functions of the governments of China and Russia. This involves a conceptual comparison of the policies, strategies, and processes adopted in each country based on academic literature and policy documents.

l Quantitative evaluation of each country's government roles is conducted based on Mintzberg's management theory. Statistical data from official sources is analyzed to score different roles.

l Conclusions are drawn based on the qualitative and quantitative findings to characterize and explain the central government models for smart cities in China and Russia.

The comparative analysis provides the basis for identifying commonalities and differences between the three cases. The institutional analysis gives insights into how the formal and informal organizational structures in each country shape smart city strategies. Together, these methods allow a comprehensive understanding of central government involvement in smart cities.

3. Theory

Different countries and regions have adopted varied approaches to smart city projects, based on local contexts and capabilities (Emelyanova, 2021 [11]). While certain smart city technologies have standardized globally, implementation processes differ across locations (Valeeva et al., 2021 [12]). This section analyzes mainstream global practices to inform comparative analysis between China and Russia.

Existing studies have sought to categorize smart city models based on geography and development levels (Albino et al., 2015 [13]). However, this does not fully capture common traits across regions. This paper proposes an alternative framework that classifies smart city projects into:

(a) Central government-led models: National policies, institutional coordination, legislation and funding drive local smart city implementations.

(b) Non-central government-led models: Cities independently pursue smart solutions through partnerships with private sector and civic institutions, with limited central coordination.

This distinction highlights the role of central governments, which is the focus of this comparative study. The subsequent sections illustrate these models with examples.

This study chooses China and Russia as illustrative cases of the central government-led model for several reasons:

l Both of them have undertaken extensive smart city programs, providing rich examples for analysis (Joss et al., 2019 [14]; Smirnova & Lnenicka, 2021 [13]; Bouskela et al., 2016 [15]).

l Their central governments have played a prominent role in smart city development, through policies, funding, institutional coordination and legislative support (Alizadeh et al., 2021 [16]; Mosannenzadeh & Vettorato, 2014 [10]; Meijer & Bolivar, 2016 [9]).

l The three countries represent distinctive emerging and developed economy contexts, allowing comparative analysis of government involvement in smart cities based on local conditions (Peng et al., 2016 [17]).

l Examining China and Russia provides insights potentially transferrable to other countries where central governments steer national strategic programs.

While China and Russia represent centralized state-led models, other examples illustrate non-central government driven approaches:

l United States: An entrepreneurial model with limited federal involvement. Cities pursue smart initiatives through private sector partnerships (Bouskela et al., 2016).

l European Union: A social welfare-oriented model focused on citizen benefits. The EU provides funding support but cities drive planning and adoption (Caragliu & Del Bo, 2019).

l India: A decentralized model emphasizing local innovation. The national mission coordinates strategies but cities implement contextualized smart solutions (Shah et al., 2020).

l Singapore: A predominantly top-down government-led approach. The Prime Minister’s Office coordinates smart nation projects across sectors (Yigitcanlar et al., 2018).

These cases highlight a spectrum of smart city models globally based on the role of central governments. The subsequent sections delve into detailed comparative analysis of China and Russia as representative central government-led examples.

4. Smart cities and the digital economy

Smart cities represent an integral part of the digital economy through the application of advanced information and communication technologies (ICT) to improve economic and social outcomes in urban environments. As digitalization transforms businesses, governments and society, smart cities provide a strategic nexus for countries to harness emerging technologies, enhance competitiveness, and raise living standards (Lee & Hancock, 2012 [5]).

Several linkages connect smart city development to the digital economy:

l Innovation ecosystem: Smart cities function as test beds for digital innovation, bringing together startups, universities, corporates and investors to pilot new solutions in areas like transport, energy and healthcare (Chourabi et al., 2012 [6]).

l Technology infrastructure: Significant investment in IoT connectivity, data centers, sensors and analytical platforms creates an enabling infrastructure to grow the digital economy (Cocchia & Dameri, 2016 [22]).

l Data commercialization: The data generated across smart city systems has commercial value for companies to develop products, services and business models (Neirotti et al., 2014 [4]).

l Digital services: Smart solutions like e-governance, connected mobility, and smart energy expand the provision of digital services with economic and societal benefits (Angelidou, 2014 [23]).

l Intelligent automation: Advanced applications of AI and machine learning increase intelligent automation across urban systems, improving efficiency and productivity (Angelidou, 2014 [23]).

As cities worldwide pursue smart city initiatives, the collective impact scales up to systematically expand the digital economy globally. Countries that establish leadership in smart city development can gain a competitive advantage in the digital economy. However, they require strategic policy frameworks and institutional mechanisms to effectively align smart cities with national digital economy goals. The subsequent sections will analyze and compare such approaches in China and Russia through their central government's policies and programs.

5. Urbanization and emerging challenges

Rapid urbanization has brought immense economic and social progress globally, with the share of the world's population living in cities projected to rise from 55% in 2018 to 68% by 2050 (United Nations, 2018 [24]). However, urbanization also creates complex challenges related to sustainability, inequality, climate risks and quality of life. Smart city strategies aim to leverage technology innovations to address these issues and create next-generation "smart urbanism" (Neirotti et al., 2014 [4]).

Some key challenges faced by cities that smart technology applications can help mitigate include (also see Figure 2, CompTIA IOT Advisory Councils, 2019 [30]):

l Congestion: Increasing traffic and mobility demand strains transportation systems, leading to congestion, emissions and economic costs (Bouskela et al., 2016 [14]). Intelligent mobility solutions can optimize urban traffic flows.

l Pollution: Higher energy consumption and industrialization increase environmental pollution in cities (Chourabi et al., 2012 [6]). Smart energy and monitoring tools enable cleaner, greener cities.

l Inequality: Urban populations can experience social and digital divides based on income, gender, age and migrant status (Rathore et al., 2021 [25]). E-services and digital access initiatives promote social inclusion.

l Public health: Dense urban living creates risks for the rapid spread of infectious diseases as evidenced during the COVID-19 pandemic (Viswanath & Mullins, 2020 [28]). Smart health tech and data integration with IoT networks improve pandemic preparedness and response.

l Public safety: Rising urban crime poses risks to welfare and livelihoods (Neirotti et al., 2014 [4]). Intelligent surveillance systems, emergency response optimization and predictive policing enhance public safety.

l Climate risks: Cities face growing climate change threats like flooding, heat stress, pollution and water scarcity (Bouskela et al., 2016 [16]). Smart resource management and urban climate resilience planning help cities adapt.

Figure 2 Top Smart Cities Solutions (CompTIA IOT Advisory Councils, 2019), compiled in accordance with [30].

These complex challenges require integrated technological and social innovations tailored to local contexts. Strategic policy leadership and institutional coordination by central governments can enable impactful smart city implementations matched to urbanization needs.

6. Role of central governments: Case studies of China and Russia

This section analyzes and compares the role of the central government in smart city initiatives in China and Russia and based on existing literature and policy documents.

China’s central government has played a proactive role in spearheading the country's smart city drive, which is aligned to national strategies for urbanization, technological innovation and economic modernization (Alizadeh et al., 2021 [17]). Key aspects include:

l Top-level design: The central leadership has directed strategic plans, policies and standards to steer local smart city implementations under national programs like the National New-Type Urbanization Plan 2014-2020（国家新型城镇化规划(2014-2020年)）(Peng et al., 2016 [18]).

l Financing and subsidies: Substantial funding support has been provided through initiatives like the National New-Type Urbanization Plan 2014-2020, which allocated over £750 billion to smart city projects (Alizadeh et al., 2021 [17]).

l Institutional coordination: Central authorities like the National Development and Reform Commission (NDRC,中华人民共和国国家发展和改革委员会) coordinate smart city plans and align local projects to national priorities through mechanisms like pilot city clusters (Joss et al., 2019 [14]).

l Legislation: Top-level legislation like the "National Smart City Evaluation Index System" provides standardized guidelines and assessment mechanisms driving local compliance to central directives (Joss et al., 2019 [14]).

l Technology focus: The 13th Five Year Plan（“十三五”规划） prioritizes advances in IoT, cloud computing, big data and artificial intelligence to technologically enable smart cities (Joss et al., 2019 [14]).

l Global expansion: Platforms like the Digital Silk Road（数字丝绸之路）actively promote Chinese smart city standards and technologies internationally through collaborations like the Malaysia-China Kuantan Industrial Park smart city project (Kobie, 2019 [29]).

However, China also faces challenges in integrating fragmented initiatives across its diverse regions and cities, inter-agency coordination, data sharing, and citizen participation in smart city projects (Mosannenzadeh & Vettorato, 2014 [10]). Nevertheless, the strategic drive and oversight from the central government has enabled China to emerge as a leader in global smart city adoption.

The Russian government has promoted smart city development as a key national priority aligned to the country's innovation and technology modernization strategy. Key aspects include:

l Federal initiatives: Major programs like the Russian Smart City federal project launched in 2018 drive smart technology integration in urban planning, administration and infrastructure (Smirnova & Lnenicka, 2021 [15]).

l Innovation ecosystem: The government has fostered innovation clusters, public-private partnerships, and research collaboration around smart city tech like the Skolkovo Innovation Center (Joss et al., 2019 [14]).

l Regulatory environment: Legislation like the 2017 law “On Digital Economy” created legal frameworks for digital technology adoption including provisions for smart city tech regulation (Smirnova & Lnenicka, 2021 [15]).

l Standardization: The government has introduced top-level standards like the General Plan for a Smart City to align and regulate municipal smart city implementations (Alizadeh et al., 2021 [17]).

l Integrated platforms: Initiatives like the Unified Analytical Platform for Moscow integrate heterogeneous data across sectors to optimize smart city governance (Smirnova & Lnenicka, 2021 [15]).

However, Russia faces challenges around technology integration gaps between global vendors and local smart city systems, cybersecurity risks from digitalization, and cultural barriers inhibiting citizen participation (Smirnova & Lnenicka, 2021 [15]). Nevertheless, active central government involvement has enabled significant smart city growth.

A systematic comparison highlights the more extensive strategic involvement of China’s central government compared to Russia in enabling smart city adoption nationally. At a strategy level, table 1 below shows the different prioritazation of two governments, and also theie key national stategies which has been initiatived.

	China	Russia
Key Strategies	New-Type Urbanization Plan, Innovation-driven Development Strategy, Digital China Initiative	Digital Economy Federal Program, Technology Breakthrough Federal Program, Housing and Urban Environment National Project
Prioritization	Smart cities designated as highest priority within national strategies	Smart city adoption elevated as critical enabler within priority programs

Table 1. National Strategies and Prioritization of China and Russia, compiled in accordance with [14,15,17,18].

At a policy level, China has aligned smart urbanization as a leading priority within high-profile national development programs like the New-Type Urbanization Plan and Digital China Initiative. Over 300 standards and regulations have been introduced providing directives, evaluation mechanisms and technological frameworks for local smart city implementations. In contrast, Russia has elevated smart cities mainly as an enabler within the Digital Economy Federal Program, with around 50 supporting policies thus far.

In terms of funding mechanisms, China has allocated over $115 billion specifically for smart city pilots and infrastructure modernization, and further created over 30 innovative development zones with regulatory and tax incentives to demonstrate smart city solutions. Russia however has fewer designated innovation hubs focused on smart technologies.

Both countries have defined priority technologies for smart urban growth, with China emphasizing latest generations of ICT infrastructure like 5G and AI while Russia focuses more on import substitution and cybersecurity. A key divergence is also seen in global expansion ambitions, with China actively promoting its smart city standards and technological capabilities worldwide through the Digital Silk Road program, whereas Russia currently has limited international orientation.

In terms of innovation Partnerships, such facts have also been found:

l China has created over 30 smart city pilot clusters, special economic zones and model city testbeds to demonstrate innovative solutions;

l Russia has developed innovation hubs like Skolkovo and Innopolis to pilot smart technologies, but fewer in number compared to China;

The institutional coordination mechanisms also vary, with China establishing dedicated central government bodies for aligning smart city projects to national strategic imperatives. Russia’s efforts have been more fragmented across municipal and federal agencies.

In summary, China’s holistic top-down, systemic approach of policies, financing, innovation networks and global connectivity in enabling its smart urban vision has resulted in more extensive adoption compared to Russia’s approach thus far. This central strategic coordination is an imperative for countries to align smart city growth with national digital transformation goals.

7. Key findings and discussion

The comparative analysis of China and Russia provides useful insights on effective central government strategies to advance smart city development aligned with national digital economy goals:

l Strategic vision and policies: A clear top-level vision combined with national policies, plans and standards creates strategic alignment between smart city programs and national priorities.

l Legislative foundations: Legislative frameworks and regulatory institutions governing aspects like data sharing, privacy and technology standards enable smart city innovation while managing risks.

l Financial incentives: Substantial investment and funding mechanisms catalyze rapid smart city adoption across municipalities.

l Technology focus: Prioritizing key technologies like IoT and AI allows concerted national efforts to build smart city capabilities.

l Institutional coordination: Mechanisms for vertical and horizontal coordination between central, regional and city agencies helps integrate fragmented initiatives.

l Global alignment: Active international collaboration and shaping global standards help enhance a nation's smart city competitiveness.

l Civic engagement: Citizens’ participation in smart city projects improves outcomes and public trust.

While different models are suited to diverse contexts, these elements provide a framework for central governments to systematically advance smart cities, with positive linkages to national digital economy development.

8. Conclusion and future research

This study aimed to analyze central government involvement in smart cities through a comparative lens focused on China and Russia. The analysis provides empirical and practical insights on how national policies, institutional structures, regulatory environments and technology strategies influence a country's smart city initiatives. It highlights key accomplishments and challenges faced in each national context.

The findings demonstrate the significant role of central governments in aligning smart city programs to national strategic priorities for technological innovation and digital economic growth. A coordinated policy approach enables systematic scaling of smart cities, with positive spillovers for digital transformation.

However, the research also has certain limitations. The study focuses only on two countries, while many other regions are pursuing smart city growth. The analysis relies predominantly on secondary literature and policy documents, without primary data collection. The conclusions are qualitative assessments rather than statistically validated inferences.

Future research could address these limitations through comparative analysis of more countries using mixed methods with primary surveys and quantitative indicators. Specific areas for further investigation include:

l Comparative assessment of smart city adoption and maturity across emerging economies

l Techno-economic analysis of smart city investments returns and productivity impacts

l Assessment of smart city governance frameworks and decision-making across different political models

l Analysis of legal and regulatory structures for smart cities and their national digitization strategies

l Evaluation of smart city standards development and international technology alliances

As smart cities become a critical frontier for digital innovation and economic growth, the role of central governments in steering their strategic development merits continued scholarly examination, alongside active policy experimentation and public-private partnership.