The central government started to push the smart-city project last year, trying to find a fresh economic boost from the massive urbanization wave.

China appointed nearly 200 cities, including metropolises such as Beijing and county-level urban areas, to trial smart-city projects in 2013.

Notable pilot sectors include transportation and government information disclosure. But only a few have put the concept into actual use and are performing well.

Industry observers highlighted potential risks in China's ambitious smart-city investment.

"Chinese cities have distinct differences compared with their Western counterparts in many ways. Because of that, we have very limited models to study when drawing up our blueprints," said Li Tie, director-general of the China Center for Urban Development under the National Development and Reform Commission.

A large number of Chinese city governments are heavily dependent on selling land for income and city officials' tenures are too short to finish a comprehensive development plan, said Li.

"When a mayor steps down, his or her successor is very likely to change the development course, so previous investments will be left unattended, and infrastructure projects will be abandoned. We face a serious issue," said Li.

Wu, from IDC, said Chinese cities only focus on hardware investments despite the fact that service and software are also critical drivers for smart-city projects.

Roughly 70 percent of government investments went to hardware installation in China, way higher than the global average of 16 percent, according to IDC.

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