China plans to invest 4 trillion yuan (US$601 billion) to develop the smart grid over the next decade, China Securities Journal reported Tuesday.

The smart grid program is a part of China's plan to promote Internet of Things applications such as remote-control panels, clothes that talk to washing machines, virtual health care and vehicle-to-vehicle communications.

"The smart grid system is the top priority in China's Internet of Things development," the newspaper cited unidentified people as saying, adding details will be unveiled around December 30.

Internet of Things also includes smart transportation systems, smart logistics, smart homes and health care.

The smart grid is also vital to the application of cleaner energy as it could be used to cut emissions and reduce reliance on coal, market observers said.

The smart grid can optimize the use of wind and solar power since they are both unstable sources of energy.

The smart grid can also act as a two-way channel. For example, it can allow people to sell electricity back to the grid. For instance, electric cars can be mobile energy storage units. Owners who charge their autos at charging stations can sell the electricity back to the stations.