Smart cities are often seen as a promising concept, but in reality, they still face significant challenges. Despite substantial investments, many experts believe that smart cities remain in the conceptual stage. According to an industry insider who has worked on multiple smart city projects, these initiatives are often just "new bottles of old wine." Local governments tend to use the term "smart city" as a way to justify traditional IT projects, without truly understanding the deeper meaning of urban intelligence. This reflects some of the core issues in smart city development. First, many local governments still need to complete their basic information systems before moving toward true smart solutions. Dr. Wang Tao from the Chinese Institute of Electronics argues that pushing for intelligent cities is not yet feasible when basic informatization hasn't been achieved. He questions: "How can we talk about intelligence without information?" Without a solid data foundation, it's impossible to build a truly smart system. Another major challenge is funding. Currently, there is no dedicated budget for smart city projects at the government level. Although the Ministry of Housing and Urban-Rural Development has launched pilot programs, it hasn’t provided specific financial support. As Zhao Ying explains, local governments already have strict annual budgets, and smart city projects aren't typically included. Many city leaders either admit they don’t have funds or allocate only small amounts, which limits the scope of what can be done. Data integration is another critical issue. Information silos and inconsistent standards make it difficult to combine data across different departments. For example, Tongfang Software aims to create a city operation center that provides a real-time view of urban activities. However, due to fragmented data, they can only display limited insights. This problem arises from closed data systems and lack of standardized formats. Zhao Ying emphasizes that data integration is the heart of smart cities. Unlike simple system integration, smart city projects require meaningful data processing and analysis. She compares system integration to building a house’s structure, while data is the blood that brings life and intelligence to it. Only through proper data integration can cities become truly smart and efficient. To address this, Zhao suggests several steps. First, legal frameworks should be established to ensure responsible data usage. Second, inter-departmental mechanisms must be created for data sharing. Third, a data transaction mechanism could help monetize data resources. Finally, administrative tools may be necessary to enforce data integration where voluntary cooperation falls short. Looking ahead, the government is gradually shifting its focus from infrastructure to value creation. Local governments now prioritize the long-term benefits and sustainability of smart city projects. In response, companies like Tongfang are exploring new business models, such as operating local parks and supporting industrial transformation. In terms of competition, domestic companies like Tongfang are gaining ground over foreign counterparts. They offer more tailored solutions that align with local needs, something that international firms haven’t fully addressed. The Chinese government also shows strong confidence in domestic players, which helps them gain a competitive edge in smart city development.

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