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People walk along the Bund in Shanghai. China’s financial capital has been keen on developing its technology sector over the past few years. Photo: Reuters

Shanghai to encourage AI, VR development as it eyes bigger role in tech

  • AI, VR technologies have ‘the potential to evolve into several clusters of industries’, analyst says
  • Key companies in these fields are expected to enjoy cuts in corporate tax rates
Shanghai, China’s financial capital, is seeking a greater role in artificial intelligence (AI) and virtual reality (VR) and is encouraging companies to step up research in these sectors.

At a conference to set up the city’s economic agenda for next year, the government said it will guide firms to step up research on “important platforms for the interaction between the virtual world and real society”. Li Qiang, Shanghai’s Communist Party secretary, and Gong Zheng, its mayor, attended the meeting on Tuesday.

“Shanghai and other governments in the Yangtze River Delta are actively investing in the future, with focuses on integrated circuits, biotechnology and AI,” said Wang Zhen, vice-president of the Shanghai Academy of Social Sciences. “Those technologies have the potential to evolve into several clusters of industries, to expand the economy and consumption.”

Shanghai has been keen on developing its technology sector over the past few years. In July, Beijing endorsed the transformation of Pudong, the eastern bank of the Huangpu River in Shanghai covering 1,200 square kilometres, into a “pioneer zone”, to which global AI, biotechnology and semiconductor companies will flock.

At Tuesday’s meeting, the city’s government said Shanghai should “actively seize the track of the digital economy and comprehensively promote the city’s digital transformation”. Key companies in these fields are expected to enjoy cuts in corporate tax rates.

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The city aims to build world-class technology industries that can consolidate its role as a gateway to mainland China for foreign businesses, said the Shanghai Academy’s Wang.

Shanghai’s technology push comes amid the rise of the metaverse, which translates as Yuanyuzhou in Chinese. Chinese companies are rushing to register relevant trademarks.

As of Sunday, more than 1,360 mainland firms, mainly technology companies, had applied to register metaverse-related trademarks, a big jump from three months ago, when only 130 companies had filed such applications, the Securities Daily reported on Monday, citing data from business and trademark registration tracking firm Tianyancha.

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Technology companies based in Shanghai, especially those focusing on gaming and online communities, including MiHoYo, Bilibili and Soul, are scrambling to create their own version of the metaverse.

MiHoYo, creator of the hit mobile game Genshin Impact, said it was building a “complete virtual world”. Cai Haoyu, the company’s co-founder and president, said during an online sharing session earlier this year that its virtual world would accommodate at least one billion people by 2030.

Last month, Chen Rui, the founder and CEO of Bilibili, said the video streaming and gaming platform had great potential to develop the metaverse concept, following similar declarations from Tencent Holdings and NetEase. Bilibili was testing UPowerchain, a digital native community built for new applications, culture, games and digital assets, and community governance, as reported earlier this month by Pandaily, which cited people familiar with the company.

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Soul, a technology start-up backed by Tencent, which matches like-minded users through AI-enabled recommendations on its social networking platform Soul App, proposed to build a “social meta-universe for young people” at the beginning of this year. As of March, its app had 33.2 million monthly active users, growing at 109 per cent year on year, the company said.

Beijing has, however, taken a cautious approach to the concept and issued a warning about the risks associated with metaverse-related businesses. In a commentary published on December 9, People’s Daily, the Communist Party of China’s mouthpiece, said “virtual property” sales carried risks of volatility, fraud, illegal fundraising and money laundering.

Additional reporting by Daniel Ren

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