The Chinese Academy of Sciences (CAS) and US Internet of Things (IoT) firm, Sensity Systems Inc., last week announced an agreement under which the two organisations will form a new joint venture in China to focus on the development of smart city solutions for China and sales worldwide.

On the surface the deal links a leading IoT platform for Smart Cities with a top academic institution in the world’s biggest smart city market. However, in the US, many are suggesting the technology will be used for more sinister purposes, while in China there is a fear that using a US vendor might create opportunities for espionage. Smart City, please meet International Politics!

As manufacturers and governments worldwide seek solutions to combat climate change, China is focused on taking the global lead in the market for Smart City installations. China aims to reach a rate of 70% urbanisation by 2030. Meaning that 350 million people will be added to China’s urban population during that time, more than the total current US population.

There are presently 654 cities in China, of which over 80 have more than one million people. Their rapid urbanisation is creating socioeconomic problems and worsening environmental issues like traffic congestion and pollution that is levying even greater costs on the environmental future of China and the rest of the world.

“The Chinese Smart City market will be the largest and fastest growing in the world. Today, more than 500 cities in China have announced their plans to implement Smart City systems”, said Dr. Feng Yuan, Director of CAS Smart City. “This agreement represents a unique relationship between two leading Chinese and US companies in the IoT industry focused on smart cities and sets the foundation for China’s 13th Five Year Plan focused on deploying critical infrastructure. Together, CAS Smart City and Sensity will leverage their respective strengths to create significant value, not only for the two organisations involved, but also for the customers, distributors, OEMs and other agents throughout China”.

Under the agreement, CAS Smart City (a corporate enterprise formed by the Chinese Academy of Sciences) and Sensity will set up a green field joint venture based in Nansha, a district of Guangzhou, in southern China. It will capitalise on Sensity’s world recognised IoT platform technology for smart cities, as well as previously developed technologies from CAS Smart City. It will build on the experience of both CAS Smart City and Sensity in deploying smart city technologies in more than 50 cities around the world.

CAS Smart City and Sensity will both contribute capital, technology and human resources to the new company and the venture is expected to be operational in Q3 this year. While the joint venture will work first on developing smart city solutions focused on the Chinese market, then likely develop products can also be sold outside of China under Sensity’s existing platform program.

However, China's smart city efforts have been scrutinised in the US for their potential threats to civil liberties. The theory is that data collected by city officials for legitimate-sounding purposes could theoretically be shared with other agencies who have more repressive intentions, said Sophia Cope, a staff attorney with the Electronic Frontier Foundation, a civil liberties group. "The devil is in the details", she said. Unless U.S. companies can assure themselves about how their technology should be used, "they should probably think twice".

China actively censors Internet activity and does have a record of imprisoning individuals for political dissent, while human-rights advocates have said that Chinese police used surveillance footage to identify people in political protests. However, Hugh Martin, Sensity's Chairman and CEO, said that his conversations with Chinese officials have convinced him that the networks will be installed to combat traffic and pollution, not to stifle dissent.

“The issues confronting cities, such as pollution, traffic congestion, energy consumption and threats of terrorism, are similar around the globe. Further, in our increasingly interconnected world, actions of one country may impact other countries. We need a common platform and standards to allow applications and services to be leveraged to help solve city and environmental problems globally,” said Martin.

Sensity’s networks usually function using cloud-based services to manage gathered data. However, for their Chinese venture, the company agreed that information gathered by sensors and applications would be stored and processed on domestic server systems, according to Martin.

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“Up until now, given China’s requirements for Smart City solutions, there has not been a way to bridge Smart City work underway in China with that of the rest of the world. By forming a joint venture that can leverage the best of Sensity and CAS Smart City, along with application compatibility, we can both help accelerate the creation of an optimal Smart City platform for China, and at the same time ensure a global marketplace for software application developers to help address common problems in a similar way”, Martin continued.

Mr. Yuan also acknowledged than any data gathered has to be managed carefully, stressing the need to balance the desire for privacy with benefits such technologies can provide to citizens. "I think there should be a tradeoff," he said, mirroring IoT and Smart City discussions in every aspiring smart nation on the planet.

Meanwhile, in China, there is an underlying unwillingness to allow foreign vendors to supply sensitive components of the country's technology infrastructure. Fears that use of US technology could allow sensitive information to be sent back to the US have been somewhat present but rarely acknowledged.

As smart cities meet the paranoid world of international politics, we can only hope that the technology develops, unobstructed, for the right reasons and for the benefit of society.