Shanghai unveils AI development master plan as power crisis, new Covid-19 curbs threaten to derail city’s economic recovery

The city’s draft AI plan outlines various measures, including financial support, to help drive the industry’s development
Pudong New District, located east of the Huangpu River, is expected to be the pilot area where AI projects backed by the plan will be initiated

Artificial intelligence

Ann Caoin Shanghai

Published: 10:30pm, 30 Aug, 2022

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Shanghai, the financial and commercial hub of China, has drawn up a new programme to advance the development of its artificial intelligence (AI) industry, as a power crisis and Covid-19-related disruptions threaten to hamper economic recovery efforts in the metropolis.

The city’s draft AI plan was released on Tuesday by the General Office of the Standing Committee of the Shanghai Municipal People’s Congress, which will solicit public opinion until September 13. It outlines various measures to help drive the industry’s development, including providing financial support, fostering entrepreneurs and start-ups, sharpening focus on certain market segments and building up the sector’s supply chain.

“After years of development, the city’s artificial intelligence industry has maintained a growth trend as a whole,” the local legislature said in a statement before the draft plan’s release. It indicated, however, that the industry must overcome certain issues, “such as insufficient independent innovation capability, difficult implementation of [AI application] scenarios and insufficient governance systems”.

The initiative, which was unveiled ahead of the opening of this year’s World Artificial Intelligence Conference in Shanghai on September 1, reflects the concerted effort by local authorities to build up the regulatory infrastructure behind the city’s nascent AI industry, which is competing against those in Beijing and tech hub Shenzhen.

A staff member engages with a robot at the venue for the World Artificial Intelligence Conference in Shanghai on July 9, 2020. Photo: Reuters

Under the draft plan, AI companies can test small-scale innovative applications under relaxed regulatory conditions. This “sandbox regulation” was previously adopted in the country’s financial technology sector until Beijing tightened its scrutiny against disorderly expansion and anticompetitive behaviour.

“Market entities are encouraged to innovate actively, and it is clarified that relevant departments should formulate regulatory rules and standards that adapt to the characteristics of artificial intelligence, and establish a list of minor violations that will not be punished,” the draft said.

A number of local government departments will be responsible for the Shanghai AI industry’s development, according to the plan. The city’s Commission of Economy and Information will be the primary agency in charge, backed by the departments for development and reform, science and technology, cybersecurity and market supervision.

Shanghai ‘doubles down’ on efforts to develop Lingang free-trade zone

Financial backing under the plan includes subsidies and capital support for AI projects, as well as the development of industrial estates, but it did not specify the sums involved. Projects involving AI semiconductors, equipment and software will be entitled to discounted loans and other supporting measures.

The plan could help the city establish a more comprehensive ecosystem for AI development, Ren Aiguang, deputy director at the Science and Technology Department of the Ministry of Industry and Information Technology, said at a press conference in Shanghai last week.

Ren said Shanghai, which has attracted a number of major international companies, already has “an industrial supply chain covering basic support, software algorithm and industry application layers”.

02:13

Shanghai turns off decorative lights on the Bund to save power

Still, a heatwave has raised concerns about a power crunch that could derail Shanghai’s efforts to get its damaged economy back on track, after a two-month Covid-19 lockdown was lifted on June 1.

There is also the threat of new Covid-19 curbs that may be imposed on the city amid a resurgence of the pandemic in parts of the mainland.

Pudong New District, an area located east of the Huangpu River that is bestowed with the central government’s special economic and development support, is expected to be the pilot site for projects supported by the city’s AI plan.

AI promises US$600 billion annual boost for China economy, says McKinsey

At present, Shanghai is home to a growing number of technology start-ups, many of which are based in Pudong. Electric carmaker Tesla’s Gigafactory 3 and China’s top two contract chip makers, Semiconductor Manufacturing International Corp and Hua Hong Semiconductor, also operate in that area.

Wider use of AI technologies in industrial processes, medical research, autonomous vehicles and many other applications will create an economic value worth US$600 billion a year for China, according to a report published in June by consulting firm McKinsey & Co.

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