THE Shanghai government and China Broadband Capital (CBC) will establish a 300 million-yuan (US$46.8 million) fund to tap specifically the local cloud computing industry which the city intends to develop over the next five years.

The fund, co-founded by the Yangpu District government and CBC, will start to invest in projects from next year, Zhang Lei, CBC's senior manager who is in charge of the Shanghai-based fund, said yesterday.

"We are looking at cloud cases here and they are promising. We will focus on the start-ups and firms with high growth potential," Zhang told Shanghai Daily.

Cloud computing, one of the hottest sectors in the information technology industry, refers to the ability to share data, information and computing through the Internet.

The city government has built a office building in the district for start-up cloud computing firms to use.

Besides cooperating with the private sector Shanghai has also set up a 320 million-yuan fund to directly support cloud computing, including building a cloud demonstration center and public cloud service platforms, according to Shao Zhiqing, the vice chairman of the Shanghai Municipal Commission of Economy and Information Technology.

Cloud computing, the Internet of Things, software and services and next-generation telecommunications networks are the "strategic industries" the city will develop under its 12th Five-Year Plan until 2015, according to the government.

More than 110 firms with cloud computing business - including IBM, Microsoft and Ufida - may be operating in Shanghai by the end of 2011, double the number a year ago, Shao said.