China is striving to gain a lead in the global race toward building an intelligent and data-driven society, as the country has the highest number of smart city pilot projects in the world.

The world's second-largest economy has more than 500 smart city pilot projects ready or under construction, accounting for about half of the world's total, consulting company Deloitte said in a recent report.

The number is far higher than that of second-placed Europe, which has about 90 such projects under way or planned, the report said.

"Europe and the United States are leading the world in terms of urbanization, thanks to their first mover advantages. While in Asia, specifically in China, the government has been promoting its urbanization strategy for years, which helps the country achieve the highest urbanization growth rate globally and a vast space for development in the future," Deloitte said.

The smart city concept was invented after rapid urbanization created a string of challenges in areas including transportation, water conservation, communication, waste disposal and pollution.

In China, for instance, nearly 70 percent of the waste is disposed of in landfills. Over 500 million square meters of land in aggregate has been occupied by dumps in cities around the country, and the annual economic loss is as high as 30 billion yuan ($4.35 billion), according to data from the Institute for Urban and Environmental Studies at the Chinese Academy of Social Sciences.

To deal with such pressing problems, government officials are keen to overhaul how a city is managed by leveraging the latest technologies such as artificial intelligence, the internet of things, big data and cloud computing.

They hope to help the flow of traffic, improve law enforcement, better resource utilization and make public buildings more energy-efficient by partnering companies to build smart networks in cities that can process big data in real time.

Ma Jionglin, a senior partner at Deloitte, said: "China is one of the most active countries in the world in building smart cities. With the advancement of urban management and the increasing emphasis on people's living and working styles, smart cities will enter a new stage of development."

Already, China has included the smart city initiative in its national strategy and made significant investments in these projects. Both first-tier cities and small and medium-sized cities are home to smart city projects and they have formed many smart city clusters across the eastern and southern coastal areas of China.

Despite the good momentum of development, most of the smart cities today are not truly "smart" in one sense, according to the Deloitte report.

"The construction of smart cities is largely solely funded by the government without in-depth participation by businesses, and data isolation is common without cross-functional integration. Also, deficiencies exist in information security," the report said.