Shanghai aims to raise US$15 billion in funds to gain an upper hand in AI development
The city government is looking at how to draw investors to raise capital and talent to manage the funds in the quest to become a tech hub
Shanghai plans to set up investment funds worth at least a total of 100 billion yuan (US$15.1 billion) over the next two or three years to bolster the development of businesses related to artificial intelligence technologies.
Chen Mingbo, head of the Shanghai Commission of Economy and Information Technology, told a press conference on Wednesday that the municipal government is looking at how to attract more public investors to raise capital for the funds, and high-calibre asset managers to run them.
“The size of 100 billion yuan of funds may not be enough (to support the growth of AI technologies),” he said. “The key lies in whether we can successfully mobilise all public resources to collectively develop AI-related businesses.”
Shanghai has been striving to regain its status as a major locomotive of the Chinese economy by spurring the growth in the finance and information technology sectors.
City leaders have envisioned the creation of Shanghai’s own internet behemoths on par with the so-called BAT firms – Baidu, Alibaba Group Holding – which owns the South China Morning Post – and Tencent Holdings.
Artificial intelligence, used in a wide range of areas such as autonomous driving, finance, medical and public security, is viewed by Shanghai officials as a key technology to accelerate the city’s transformation into a global innovation hub.
Chen did not elaborate on the sources of the mammoth funds, but it is believed that the government will provide the seed capital before roping in well-known venture capitalists and private equity fund managers to participate in the fundraising and asset management.
“Capital, talent and policy incentives will play a vital role in transforming Shanghai into a real innovation hub,” said Cao Hua, a partner at Unity Asset Management. “But competition is fierce since other Chinese cities are also aiming to attract more technology giants and promising start-ups.”
Shanghai implemented a loss-proof measure in 2015 to buoy investment by angel investors and venture capital funds. A fund or investor could recover up to 3 million yuan of losses from investments in Shanghai-based start-ups.
In the northeastern Yangpu district, qualified foreign professionals working for technology firms based in its 2.3 million square metre innovation zone are granted permanent residency.
The city is also offering inexpensive rental homes to skilled IT engineers and developers at start-ups to attract talent from around the globe.
Last year, Shanghai began building a national electronic platform to trade data such as personal credit records amid mounting demand for data collection as the city and country push to be a global tech superpower.
The data trading market is expected to reach 100 billion yuan in 2020, according to Keven Tang Qifeng, chief executive of Shanghai Data Exchange Corp.
Shanghai mayor Ying Yong said last year that the city’s future lay in its ability to become a hi-tech hub with international influence as he pledged to offer easier access to funds, lighten the tax burden and lower office costs to attract more technology firms.