Shanghai Wants To Spur Economic Growth By Tapping Into New Technologies

The world’s most populous country’s most populous city officially unveiled plans to boost support for innovations in the metaverse over the next five years. Other technologies were also mentioned, such as blockchain, NFTs, and Web3, but the part they will play in the future is still unclear.

On July 13^th, the municipality of Shanghai released a draft of its “14^th Five-Year Plan for the Development of Shanghai’s Digital Economy.” In the paper, the government vowed to promote “the deep integration of digital technology and the real economy.” The statement went further to say that this would be achieved by “scientists judging technology prospects” and “entrepreneurs discovering market demand.”

Shanghai wants to “strengthen cutting edge technological breakthroughs,” focusing on virtual reality headsets, chips, cloud computing, 5G tech, and other conduits.

A reported 10 billion Yuan ($1.5 billion) had been allocated to see the plan through. Shanghai’s governing body hopes the investment will stimulate economic recovery and growth.

Government-directed funding will create ten “leading” companies serving as “chain-owner enterprises. These large companies will compete in the international market. Around 100 smaller firms will master core metaverse technology.

These companies will work together to achieve the goal of “benchmarking products and services,” said Wu Jincheng, head of Shanghai’s Economy and Information Technology Committee, at a press conference on July 8th.

While the plan touched on advancing NFTs and other cryptocurrency endeavors such as blockchain and Web3, the metaverse seems to be its primary focus. Shanghai’s governing body will accelerate research and deployment of the metaverse platform, emphasizing virtual concerts, idols, sports, and other digital entertainment options.

Mr. Wu said investment in the metaverse “will drive the transformation and upgrading of various industries in the real economy.” He added that there is a “huge market value” in the metaverse. These three sectors are predicted to gross a combined $224 billion by 2025.

Although the proposal indicates the government’s support in developing enterprises that are building NFT trading platforms and “research and promote the digitization of NFT and other assets,” government sentiment over cryptocurrency has been mixed as of late. The recent crypto market downturn led the state-run newspaper Economic Daily to dissuade citizens from investing in cryptocurrencies.

And still, data collected by Statista shows that interest in NFTs, along with the metaverse, is greater in China, Hong Kong, and Singapore than anywhere else. Additionally, China has recently re-emerged as a major mining hub behind the U.S. despite a crackdown on bitcoin mining operations in 2021. 

The plan is committed to building blockchain+ technology supported by a blockchain development ecosystem with solid innovation and independent control. Planned exploration into Web3 is also in the works. The five-year agenda includes research in multi-platform OpenID, distrusted data storage, and a decentralized domain name resolution system (DNS), among others.

No word on the prospects of decentralized finance (DeFi) was mentioned in the plan. However, the proposal mentioned “digital finance” with the promise to promote smart contracts and improve asset trading, payment and settlement, and registration and custody.”

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