Shanghai’s state-owned businesses in 800 billion yuan push to restore city’s economy
Businesses controlled by Shanghai’s municipal government have pledged to plough 800 billion yuan (US$120.7 billion) annually into industries like hi-tech manufacturing in the next five years in the city’s latest push to regain its status as the mainland’s economic juggernaut.
Jin Xingming, director of the Shanghai State-owned Assets Supervision and Administration Commission, told a press conference on Thursday that the state-owned enterprises would also become the main force behind technological advances as Shanghai strives to become a global innovation hub.
“The commission let the companies use one third of their net incomes to invest in innovation,” he said. “The funds will lead to follow-up investments in the future and result in more capital inflows from the investing public.”
The annual 800 billion yuan investment by about 12,000 state-owned businesses under the oversight of Shanghai’s government represents more than double their 323 billion yuan of profits in 2016.
Aside from hi-tech and manufacturing businesses, the funds will also be used to support the city’s infrastructure projects and service industry.
Top state-owned companies controlled by the local government include SAIC Motor, the mainland’s largest carmaker by sales volume, and Shanghai Shendi Group, the Chinese partner of Shanghai Disneyland.
Jin said emerging industries will be a primary target by the state-owned firms, without disclosing an exact amount of potential investment.
Shanghai, the mainland’s commercial capital, has seen its economic growth eclipsed by other parts of the provincial-level regions since 2008 as it shifted its focus from manufacturing to the service sector.
The city unveiled its ambition to become an innovation hub in 2015, hoping to attract top internet businesses from around the world to restore its leading position in China’s economic development.
Chen Mingbo, head of the Shanghai Commission of Economy and Information Technology, said on Tuesday that the city government was striving to bolster artificial intelligence development with the aim of creating Shanghai’s own internet behemoths on par with the so-called BAT firms – Baidu, Alibaba and Tencent.
Shanghai’s new Communist Party boss Li Qiang, who replaced Han Zheng to become the city’s top official late last month, is known for his reformist outlook and strong support for privately-owned businesses.
Jin said the local state-owned asset regulator will give market forces a full play in doing businesses and making investments.
“The overall trend is that state-owned businesses will also need to compete with public funds to secure lucrative investment deals,” said Wang Feng, chairman of Shanghai-based financial services company Ye Lang Capital.
“Indeed, many of the unicorns were funded and backed by venture capital funds, instead of government funds,” he said, referring to unlisted technology firms valued at more than US$1 billion.
Shanghai is building a massive electronic platform to trade data such as personal credit records to help it draw more internet firms dealing with AI technologies. The Shanghai Data Exchange, established in April, aims to account for a third of national data trading volume by 2020.