SHANGHAI plans to establish a government fund to support the development of cloud computing, officials said during a forum yesterday in the city.

The fund is part of a national strategy. Shanghai and four other cities - Beijing, Hangzhou, Shenzhen and Wuxi - have been chosen to test and develop cloud computing.

The city previously announced it would invest 200 million yuan (US$29.85 million) within five years on cloud computing, including opening a new industrial base and establishing an industry alliance.

More than 80 firms including China Telecom's Shanghai branch, Kingdee and Neusoft have joined the alliance, Zhu Zongrao, a software and IT service division director of the Shanghai Municipal Commission of Economy and Information Technology, told the Shanghai Cloud Computing Application Forum, which was held yesterday in Shanghai.

Zhu declined to reveal more information about the government fund or its timetable.

Cloud computing is Internet-based computing in which shared servers provide resources, software and information to computers and other devices when needed, like an electricity grid.

Output of the local cloud computing sector will hit US$15 billion by the end of 2015, the commission said.

The new technology will first be used for smart grid and urban transportation systems in China, said Li Deyi, an academic with the Chinese Academy of Engineering.