Shanghai Allocates $1.5B to Metaverse Development Fund
China’s biggest city is banking on blockchain and the metaverse to accelerate the country’s economic growth
- Shanghai’s new industry fund will broadly invest in the metaverse, as well as smart terminals and energy projects
- Chinese stocks and commodity prices dropped after the emergence of another Covid-19 subvariant, which threatens new restrictions and lockdowns
The city of Shanghai aims to lead China’s economic recovery by backing development in metaverse products and services, low-carbon energy projects and smart terminal technology.
The South China Morning Post reported that the Shanghai government planned to establish an industry fund of 10 billion yuan in assets, or nearly $1.5 billion, dedicated to metaverse development.
This financing will go toward creating 10 “leading” companies and 100 small-sized firms that will specialize in “benchmarking products and services,” said Wu Jincheng, head of Shanghai’s Economy and Information Technology Committee, at a press conference on July 8.
Wu added that investment in the metaverse “will drive the transformation and upgrading of various industries in the real economy” and that there is “huge market value” in the three aforementioned sectors which are estimated to be worth a combined $224 billion by 2025.
Smart terminal technology refers to virtual reality headsets, smart home gadgets, robots and smart vehicles. Shanghai’s Economy and Information Technology Committee plans to develop two companies that will leverage smart terminals to improve healthcare, elderly care and transportation.
Additionally, Shanghai intends to “nurture” 10 industry leaders and 1,000 specialized companies that will build low-carbon industrial fields for hydrogen energy development, high-end energy equipment and low-carbon metallurgy.
In December 2021, the Shanghai Municipal Commission of Economy and Information Technology first mentioned the metaverse as one of its four “frontiers for exploration,” as part of the department’s five-year development plan in accordance with that of the central government’s.
According to CNBC, the document included “encouraging” metaverse use in public services, business offices, social entertainment, industrial manufacturing, production safety and electronic games.
China pushes metaverse but not cryptocurrency
While local giants such as Alibaba and Tencent have been first-movers of China’s metaverse initiatives, the national government has been more critical and reproachful.
Earlier this year, the China Banking and Insurance Regulatory Commission issued a warning against illegal fundraising schemes being tied to the metaverse.
And the recent crypto market downturn led the state-run newspaper Economic Daily to dissuade citizens from adopting cryptocurrencies and warn investors of the risk of bitcoin “heading to zero,” according to the South China Morning Post.
Despite a government crackdown on bitcoin mining operations last year, China has recently re-emerged as a major mining hub after the US.
Another government that has recently pledged a considerable amount of funding toward blockchain technology is Italy.
The Ministry of Economic Development of Italy announced last week that 45 million euros, roughly equivalent to $45 million at the time of publication, will be reserved for companies that wish to set up blockchain projects.
Companies developing artificial intelligence, Internet of Things (IoT) or blockchain technology will be eligible to apply for government subsidies starting in September.
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