Shanghai used a record USD22.55 billion of foreign capital last year, up 11.5% year-on-year, Mayor Gong Zheng, told a news conference. “Foreign capital is a very important guarantee of the high-quality development of Shanghai, and last year’s record amount was a very strong and upbeat sign,” Gong said, adding it was achieved “thanks to our successful containment of Covid-19 and the resilience of the city”. Sixty multinational companies established regional headquarters in Shanghai last year, raising the total to 831, and such companies also set up another 25 regional research and development (R&D) centers in the city, which now number 506, he said. “That shows Shanghai is still the destination of choice for foreign investment and multinational companies when they plan supply chains and locate innovation centers,” Gong said. He added the city will use the opportunities brought by the Regional Comprehensive and Economic Partnership (RCEP) to attract more multinational companies.
Shanghai will implement a new version of a negative list to facilitate trade, continue to open up its service sector for foreign investment and build a world-class business environment, Mayor Gong added. The Lingang area in the city’s Pudong district is among the places where pilot opening-up policies will be implemented, as the central government included it in the China (Shanghai) Pilot Free Trade Zone. Last year, the industrial output of Lingang hit CNY255 billion, up 70% year-on-year, with new energy vehicle (NEV) manufacturing becoming the area’s first CNY100 billion industry. Gong said the government will continue to foster three key emerging industries in Lingang – integrated circuits, biomedicine and artificial intelligence (AI) – and try to boost the high-end equipment sector so that it also passes the CNY100 billion threshold, the China Daily reports.
Shanghai, home to Tesla’s largest production base, wants to expand manufacturing capacity for automotive chips to support the rapid growth of smart electric vehicles. Mayor Gong Zheng said after the annual session of the city’s People's Congress that the local government hopes the new energy vehicle (NEV) sector will drive its economy, and that “allocating resources for increasing the capacity of automotive chips” would help that goal. “We hope the issue of the chip shortage can be solved soon,” Gong said. He did not elaborate on how Shanghai would produce more chips, which require wafer fabrication plants that typically cost billions of dollars and take years to construct. China’s largest chip maker, Semiconductor Manufacturing International Corp (SMIC), is based in Shanghai, but is building new wafer fab capacity in Beijing and Guangzhou.
Last week the Shanghai government rolled out generous new incentives to attract talent and firms in the semiconductor supply chain, including a 30% subsidy for investments in semiconductor materials, equipment and design projects in the city. Mayor Gong did not mention Tesla’s Gigafactory 3 at the Lingang free trade zone, but Tesla's strong sales helped Shanghai create a new industrial supply chain. “Automotive chips have proven to be a stumbling block for the growth of the smart EV industry around the world,” said Eric Han, Senior Manager of Shanghai-based business advisory firm Suolei. “The Mayor’s statement is a message that huge investments will be made in the coming two or three years to develop and manufacture semiconductors used in cars.” A total of 550,000 NEVs – which include pure electric, plug-in hybrid and fuel-cell cars – were built in Shanghai last year, up 170% from 2020. Smart EVs, with more software-driven functions, have created a surging demand for semiconductors.
Tesla said earlier this month that the Gigafactory 3 delivered 484,130 Model 3 and Model Y vehicles last year, representing 51.7% of its global total of 936,000 units. In Shanghai, state-owned SAIC Motor and its joint-ventures with General Motors and Volkswagen also develop and assemble NEVs. Mayor Gong said about 250,000 new NEVs were bought by local residents last year, which accounted for 43% of the city’s total new car sales. Currently Shanghai has 670,000 NEVs on its roads, which is expected to more than double to 1.2 million in 2025. Global wafer fabs have enough capacity to produce auto chips for an output of 4 million NEVs in China, but that leaves a shortfall of 1 million vehicles, based on a demand forecast by the China Passenger Car Association (CPCA), the South China Morning Post reports.
