- Incentives target first-time product deployment
- City expands broader “AI plus” policy framework
Xihu District in Hangzhou has rolled out new subsidies of up to 1 million yuan ($146,323) to encourage early adoption of AI-related products, as the city looks to accelerate commercialization and address a key bottleneck for developers.
Under the policy, organizations that open real-world scenarios for testing and early deployment of AI products can receive subsidies covering 30% of contract payments, capped at 1 million yuan per product.
The incentives are aimed at easing what officials describe as the “first-use” challenge for AI companies.
The program focuses on demand-side participation, offering financial support to entities that provide initial deployment environments for new technologies.
“Products making their first entry into the domestic market and trialed in Xihu’s scenarios are our priority,” a local official said, adding that applications are open immediately.
A liability waiver mechanism has also been introduced to address concerns among government bodies and state-owned firms about potential risks from early-stage adoption.
The move forms part of Hangzhou’s quest to build a structured “AI plus” ecosystem. Under a 2025 city-level plan, authorities are promoting AI applications across sectors including urban governance, manufacturing, low-altitude aviation and healthcare, covering the full cycle from scenario design to commercialization.
Hangzhou has set a goal of becoming China’s leading AI hub, evolving from its roots as an e-commerce center into a broader deeptech powerhouse, with a focus on AI.
At the municipal level, projects that involve joint innovation between enterprises and research institutions can receive subsidies of up to 30% of investment, capped at 5 million yuan, with a limited number selected annually.
Additional support is available for up to 10 flagship demonstration projects each year.
Toward market-driven adoption
Data suggest the city’s approach is shifting from a policy-led framework toward market-driven adoption. In Xihu District, more than 50% of application scenarios are now initiated by enterprises.
The district’s AI industry cluster generated 140.6 billion yuan in revenue in 2025, up 29.8% year on year, the highest in the city.
Other districts in Hangzhou have introduced complementary measures as well. Shangcheng District offers subsidies of up to 3 million yuan for joint AI application projects, with additional incentives for projects recognized at provincial or municipal levels.
Binjiang District, which hosts AI champions such as Unitree (宇树科技) and H3C (新华三), provides subsidies of up to 60% for so-called one-person companies (OPC) procuring computing power and AI resources, capped at 1 million yuan annually per firm.
