New bid to boost innovation in the service industry

A package of new measures were unveiled on Monday by the Shanghai government to attract high-quality enterprises, foster AI-driven advancements, and stimulate new consumption modes, aiming at transforming the city into a global hub for service sector innovation.

There are 31 measures in total, placing a strong emphasis on expanding the service sector by attracting high-quality enterprises and innovative projects.

Correspondingly, the government has introduced targeted investment strategies, including industrial ecosystem recruitment and exhibition-based investment, leveraging major platforms such as the China International Import Expo.

In addition, the plan supports the growth of existing enterprises, particularly those achieving significant revenue milestones, ensuring that both new and established players contribute to the city's economic dynamism.

To enhance innovation, the measures encourage more investment in research and development, especially in key projects and industrial software.

Zhai Jinguo, deputy director of the Shanghai Science and Technology Commission, said: "We will focus on fostering innovation in hard tech and emerging fields and improve the gradient cultivation system for enterprises, from small and medium-sized tech firms to leading tech giants."

The integration of artificial intelligence (AI) technologies is a major focus, with the government offering subsidies for advanced AI models and establishing a dedicated AI industry fund.

This move is expected to accelerate the adoption of AI across various service industries, from health care to finance, and foster the development of new, AI-driven business models.

The policy also supports talent development, with a focus on attracting global experts and fostering new employment models.

By creating opportunities for skilled professionals and encouraging innovative work practices, Shanghai aims to build a workforce that can sustain long-term growth in the service sector.

To activate consumption, the measures also introduce a range of initiatives aimed at boosting consumer spending and creating new business opportunities.

Among these are the development of nighttime and "silver" economies, which cater to the growing demand for after-hours services and products tailored to older adults.

The policy also promotes innovative offerings such as the "goods economy," which focuses on the consumption of animation-related products and events by the young generation.

The integration of culture, tourism, and commerce is also a key priority, with the government working to create new consumption scenarios that enhance the overall consumer experience.

These efforts are expected to not only stimulate economic activity but also enrich the cultural and social fabric of the city.

The measures also include reforms to lower business costs and improve the overall business environment.

Tax incentives and financial support for small and medium-sized enterprises are central to this effort, ensuring that smaller players can thrive alongside larger corporations.

Streamlined regulations and enhanced public services are also part of the plan, making it easier for businesses to operate efficiently and effectively.

By reducing bureaucratic hurdles and providing targeted support, the government aims to create a more conducive environment for innovation and growth.

According to official statistics, in 2024 the value-added of Shanghai's service industry amounted to 4.2 trillion yuan (US$0.58 trillion), a year-on-year increase of 5.7 percent and accounting for 78.2 percent of GDP.