(Yicai Global) May 8 -- Shanghai is to plough CNY270 billion (USD38.1 billion) into a raft of state-of-the-art new infrastructure projects that will enable the digital economy, drive growth and put the city on track to achieve its goal of attaining the highest international standards in the field by the end of 2022, the municipality announced yesterday.

Shanghai is the first provincial-level government to unveil such a scheme as new infrastructure, which includes fifth-generation mobile network capabilities, artificial intelligence and Big Data technologies as well as the latest innovations such as smart charging stations and new energy vehicles, becomes a new engine for China’s economic development.

"Accelerating the construction of new infrastructure is a very important way to extend effective investments and empower the new economy," said Ma Chunlei, deputy secretary-general of the Shanghai Municipal People's Government and director of the Shanghai Municipal Development and Reform Commission.

The digital economy is driven by computing technologies that are used in economic activities and it is powered by hyperconnectivity. As a result, urban development has entered a new stage where computing power ensures competitiveness and network infrastructure provides capacity, Wang Gaoxiang, general manager of the China Center for Information and Industry Development Consulting's center for urban economic research, told Yicai Global.

The building of this new infrastructure will not only stimulate short-term demand, it will also increase long-term supply, Wang said. It will give new retail sectors, new manufacturing industries and new services room to expand and will promote urban advancement and modernization, he added.

Shanghai already leads the nation in network infrastructure, data centers, computing platforms and major scientific and technological infrastructure, Wang said. It plans to build a public digital database for mega cities with international influence that will guide cities around the world in building similar frameworks.

New Platforms

The 48 new infrastructure projects will comprise four key new areas with Shanghai characteristics. They are ‘new networks’ that use the latest generation of mobile network infrastructure, ‘new facilities’ that use innovative infrastructure, ‘new platforms’ that focus on integrated infrastructure such as AI, and ‘new terminals’ that comprise smart terminal infrastructure.

Data centers are the core infrastructure linking data, computers and networks in the field of ‘new platforms.’ Shanghai has over 120,000 data centers so far and it plans to invest CNY12 billion to add a further 60,000 by the first quarter of next year, said Zhang Jianming, vice director of the Shanghai Municipal Commission of Economy and Informatization. This is likely to drive more than CNY38 billion in investments.

"The construction of 60,000 more racks is a sign of Shanghai's support for the development of the digital economy," Zhang said. These centers have a direct spillover effect into their industry, and generate an estimated 20 times more value than their intrinsic value, he added.

Shanghai will also look into building more green, smart, flexible and high-end data centers with centralized layouts and stronger computing power, Zhang said.

Social Capital

Unlike conventional infrastructure, only part of the funding for the new infrastructure will come from the state. The Shanghai government will provide around CNY60 billion and the main investment of CNY210 billion will come from social capital, Ma said.

In this way, the market remains the main driving force and the government gives guidance through key policies, he said.

Shanghai will support banks and financial institutions to provide over CNY100 billion (USD14.1 billion) in loans at preferential rates. This will allow projects to secure low-cost long-term financing and encourage more social capital investments in the field of new infrastructure.

Editors: Chen Juan, Zhang Yushuo, Kim Taylor