China will be the world’s largest testbed for the use of 5G technology. The country is racing to deploy ultra-high-speed cellular networks—and to be the first to develop applications for it. The approach is classic China: bidding for technological leadership with extensive support for research programs, huge infrastructure investments, and fierce competition between regional and local governments.
In 2019, China moved from research and testing to the pre-commercial phase, state planning documents. For this round, 2020 is the deadline. Cities are mobilizing their resources to achieve the widest 5G network coverage possible by this date and are chasing the most advanced applications they can before the commercial rollout.
Politech’s research suggests that Shanghai will be the first city in China to reach full 5G coverage followed, by other Tier 1 cities. Tier 2 cities will take longer to reach this stage, but will first provide coverage in key industrial and commercial areas. China is developing a rich environment for the development of 5G applications, and regional competition creates powerful incentives for new business to exploit the multiple funding systems.
Opportunities: China’s 5G development is a whole of government priority, topping the research agenda for both the public and private sectors. This system tends to favor big projects and companies.
Nevertheless, most major cities provide incentives for foreign talent and enterprises to settle down and contribute to the development of the technology. Some cities, such Shenzhen or Wuhan, are more receptive to well-established large companies, while others, such as Beijing and Hangzhou, have abundant resources for start-ups and adventurous entrepreneurs. For smaller companies, district governments and zones in these cities can offer substantial support. For foreign investors, partnering local companies is the most secure way to access the market.
Local varieties: Chinese regional and local governments are, as usual, pursuing cooperative yet competitive dynamics, with different strategies to gain a head start on 5G. Each region is trying to exploit its own comparative advantages and mobilize local resources to differentiate itself from others and innovate in different application areas. Below, we have selected five of the biggest plans to analyze the efforts of the local policymakers in dealing with technological development.
Shenzhen: Global lab
R&D: Shenzhen is the spearhead of 5G development in China and probably in the world. The headquarters of national champion Huawei, it is also home to a huge electronics industry cluster. ZTE is also present in city management, as well as 5G development. The company provides 4G coverage for the recently opened Hong Kong-Zhuhai-Macao bridge and vows to upgrade to 5G soon. In tight cooperation with these two technological giants, the city government mobilized its resources to develop industrial applications and standards for the use of the technology.
Shenzhen’s Emerging High-Tech Industry Development Leading Group is one of the most transparent 5G authorities for fund allocation and delegation of responsibilities. 5G mobile communication appears third in Shenzhen research promotion plans (in Chinese), just after integrated circuits and artificial intelligence. The three areas are densely interconnected, even occasionally overlapping. US trade frictions have spurred efforts for domestic integrated circuit (IC) production, especially to produce 5G base stations. AI applications rely on high-speed connections and low latency data transfer, both enhanced by 5G connections.
Infrastructure:
• End 2019: 8,500 5G base stations (mainly in Nanshan and Pingshan districts).
• End 2022: Full coverage
Priority sectors: IC, AI, autonomous vehicles, drones, industrial applications, international standards.
Shanghai: Smart city of the future
Applications: 5G is an integral part of Shanghai’s urban master plan. The city hopes to create a new kind of “smart city” relying on enhanced connectivity and access to high-speed networks. The city plans to automatize key infrastructure tasks such as street lighting, sewer monitoring, and public surveillance. The plan envisions technical solutions to key urban challenges such as energy efficiency and readiness for emergencies. Shanghai’s leadership in the area has been recognized by China’s chief macroeconomic planner, the National Development and Reform Commission, and downtown Jing’an district has been selected to conduct application trials for the NDRC-backed “Big Data and Urban Management Project.”
R&D: Responding to the US ban on Huawei products, the city recently announced plans to give further tax benefits to semiconductor chips manufacturing and research companies. Local authorities have pegged integrated circuits, artificial intelligence and biotech as the three pillars for the city’s research promotion.
Infrastructure:
- 2018: Pilot coverage at international expos and conferences
- 2019: 5G commercial trials, demonstration areas for 5G applications
- 2020: Deploy 10,000 base stations. Target 1,000Mbps fix broadband network access capacity, user perceived speed 50Mbps.
Priority sectors: Healthcare, urban design, cloud computing, video broadcasting, IC
Beijing: The Olympics and showcase for the world
Applications: Beijing is set to host the 2022 Winter Olympics, and aims to showcase China’s achievements in 5G in event areas and other core areas of the city. It will also set up dedicated lanes for self-driving cars and 5G coverage for Olympic use on the full length of the Beijing-Zhangjiakou and Beijing-Yanjing highways.
Beijing was the last city in 2019 to issue 5G accelerating documents, but its plans mentioned one unique area: cybersecurity. Beijing is the capital of the country and the role as the political core probably enhanced the perception of threats that new technologies would bring and provide incentive for companies in this field to `settle in the city.
R&D: The latest plan sets an ambitious target for 2022: by that year, it says, scientific research institutes and enterprises in Beijing will possess more than 5% of the basic patents in international 5G standards, and the city become an important contributor to the 5G technical standard, while making a few breakthroughs in key technologies and manufacturing processes for large-scale production of medium-frequency and high-frequency components above 6 GHz.
Districts and industrial zones are working on other areas. Fangshan district and China Mobile have signed an agreement to create an experimental area for self-driving vehicles. The Zhongguancun tech zone in Haidian district is one of the most important and most profitable technology hubs in China, ripe for the introduction of disruptive new technology.
Infrastructure: Beijing plans 5G coverage for its core districts, Tongzhou, and the city’s most important zones and sites by 2022. District actions and agreements with the providers will be key for the rest of the city’s commercial rollout.
Priority sectors: Cybersecurity, AI, entrepreneurship
Hangzhou: Environmentally friendly startup paradise
Applications: Hangzhou has never been a manufacturing city. High-tech development fits the city’s goals, allowing it to exploit its geographical advantages without destroying the exceptional natural environment. Hangzhou is leading the pack in branding and promoting its 5G efforts, likely because it hopes to attract startups and SMEs to develop a private sector ecosystem.
R&D: According to the city’s plans, the government will encourage innovative enterprises to carry out R&D in the fields of 5G core equipment, chips, components, modules and terminals, and breakthrough applications. They aim to integrate 5G innovation with other industries. The city will also seek to bring “high end talent” to the city. Their plan anticipates national research programs and other city-level talent projects that also include the attraction of foreign talent.
Infrastructure:
- Hangzhou plans a targeted 5G rollout, focusing on dense commercial areas
- So far, claims to have upgraded 877 stations and built more than 1,000
- Current coverage of over 200 square kilometers
Priority sectors: Entrepreneurship, software, retail and logistics
Wuhan: Integrated city-factory
Applications: Wuhan’s city government main innovation is bringing its existing leading industries into a project to integrate the manufacturing industry in the city into a unified “smart industry.” The city government believes that 5G application will contribute to integrate their industries and accelerate the city’s industrial growth.
Unlike other major cities, Wuhan has not set up a 5G leading group or published a plan for 5G. However, 5G appears heavily in plans to digitalize the city’s manufacturing base, which is led by electronics and automobiles. By incorporating high-speed networks into enterprise management, the city hopes to achieve a new model of digital industrialism.
R&D: While traditionally focused on industry, Wuhan authorities hope to lead an economic transition to develop software and high tech R&D. Both sectors have enjoyed an average of 40% annual growth over the past 10 years.
Infrastructure:
- By 2020: 3,000 base stations
- By end 2020: City expects “fully internet-enabled industry”
Priority sectors: Automobiles, electronics, software, large-scale industry