China’s AI race heats up as Shanghai launches massive subsidy scheme

Shanghai has unveiled an ambitious 1 billion yuan (US$139 million) subsidy programme for the artificial intelligence industry, as the metropolis bids to compete with a string of other Chinese megacities that are also investing heavily to develop world-class AI ecosystems.

The Shanghai subsidy package will focus on reducing costs for start-ups and making it easier for local businesses to adopt AI solutions, with 600 million yuan going toward subsidising computing power, 300 million yuan providing discounts on third-party AI models, and 100 million yuan helping companies procure data collections or corpuses to train new models.

The programme also offers additional subsidies for renting, purchasing or building computing facilities, AI models and data sets, with subsidy rates ranging from 10 to 100 per cent of the contract value, according to a document released on Monday by the Shanghai Municipal Commission of Economy and Informatisation.

The plan is designed to directly lower companies’ costs – a strategy that is likely to yield tangible results in boosting Shanghai’s local AI industry, according to Pan Helin, a member of an expert committee under China’s Ministry of Industry and Information Technology.

“One of Shanghai’s key advantages in AI development is its strong funding,” said Pan.

Shanghai has long been an attractive destination for entrepreneurs in China due to its large financial sector and global outlook. But the city’s high operating costs – from office rent to daily expenses – can push new AI start-ups towards cheaper cities like nearby Hangzhou, Pan said.

Competition in China’s AI industry is fierce, with several cities vowing to become leading players. Shanghai is not the first to offer generous subsidies to attract AI companies: Hangzhou, Shenzhen, Chengdu and Beijing have also introduced similar support measures.