I had a chance to visit Alibaba’s headquarters at the end of August. The company recently made headlines by racking up ¥3.5 trillion in sales on “singles’ day” on Nov. 11. But Alibaba is no longer a mere online shopping firm. It is a Fourth Industrial Revolution enterprise going to change the world by combining big data and artificial intelligence.

Jack Ma launched Alibaba in a public apartment 19 years ago. Its market value is now several times that of Japan’s largest company and has a presence close to that of the U.S.-based IT giants like Google, Apple, Facebook and Amazon. Alipay, its payment settlement system used by 500 million people in China, is a symbol of China’s cashless economy. It is even said that its scoring system is changing people’s behavior.

A gigantic screen in the entrance of the Alibaba headquarters, showing road traffic situations on Hangzhou’s main roads in real time, was particularly impressive. A system developed by Alibaba is optimizing traffic signals by feeding the big data into an AI program. It has reduced the city’s traffic congestion by 20 percent. The most spectacular result is said to be halving the time for an ambulance to reach the scene of an emergency. Alibaba already sells the system abroad and the city of Kuala Lumpur has decided to introduce it. What’s important is that the Fourth Industrial Revolution is changing urban spaces and their whole management.

In the field of self-driving technology, expectations for which are growing in Japan, tie-ups between carmakers and digital companies — both domestic and foreign — are getting much attention. In pushing such tie-ups, the importance of changing the whole urban environment must be recognized. This will require not only improvement of technology proper to vehicles but also accumulation of road traffic information and big data about facilities in neighborhoods, among other things. For example, information such as local road conditions, whether there are pedestrian crossings and whether there are elementary schools or kindergartens nearby, will be needed.

Google has launched an urban development project to “googlize” the entire city of Toronto. Japan needs to strive to build a supercity, which puts together the features of a new society as hinted above. If a supercity is created, it will serve as a strong stimulus for regional revitalization — a major agenda for the government. Above anything else, this policy will be easy to understand for people and help them have a hope in and look forward to a bright future.

Several attempts have been made so far to build smart cities. But such attempts should be more than a partial effort such as energy saving through the use of information technology. The government and the private sector need to work together to create an urban space that is of much larger scale and has breakthrough power. A look at the world trend shows that partial smart city plans are gradually integrated into a plan to turn a whole city into a smart space. Projects in Dubai and Copenhagen similar to that in Toronto are gaining attention.

In the Oct. 23 session of the advisory committee for special state strategic zones, Prime Minister Shinzo Abe instructed Satsuki Katayama, the minister in charge, to compile a plan to build a supercity. An interim report is expected soon.

Possible features of a supercity will include, for example, autonomous vehicles moving throughout the area, cashless payments and financial settlements, and digital administration that will automatically change information on one’s bank account and driver’s license, if necessary, after a move to another municipality. Comprehensive regulatory reform will be needed to make such a supercity possible.

In carrying out such a plan, how to build a consensus among residents will be very important. While a new city must be built by concretizing the fruits of the Fourth Industrial Revolution, characterized by accumulation of various data and utilization of them, protecting residents’ private information is important. Informed consent of the residents will be needed, and how to build a scheme to accomplish that will be a big issue.

Having won a third term as president of the Liberal Democratic Party in September, Abe can serve as prime minister through 2021 at the longest. If he serves his entire third term, his administration will be the longest-serving in modern Japan, surpassing that of Taro Katsura in the early 20th century. Longtime rule has great merits. Political stability leads the economy to grow more stably. It will also increase trust abroad in the Japanese government, especially in Abe himself, and bring about positive effects on diplomacy.

On the other hand, a long-running administration can face problems. Such an administration carries the risk of becoming a lame duck in its final days. The administration faces the serious question of what legacy it will leave behind. The biggest challenge for Abe in his third term as LDP chief is to increase his administration’s clout and avoid becoming a lame duck by presenting a large-scale policy initiative that can potentially become its legacy. Pursuing the creation of a supercity that condensates the essence of the Fourth Industrial Revolution will be a policy of great significance.

Heizo Takenaka, a professor emeritus of Keio University, served as economic and fiscal policy minister in the Cabinet of Prime Minister Junichiro Koizumi from 2001 to 2005. He is a member of the government’s Industrial Competitiveness Council.

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