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Emma Ma

Mia Nurmamat

A major Chinese tech hub is moving to pull the plug on dedicated funding for its low-altitude economy, making it the first city in the country to propose repealing a full financial support package for the sector.
The proposal in Hangzhou, the capital of Zhejiang province, comes after the deadly crash of a small aircraft into Beijing’s tallest skyscraper in June. Still, some analysts contend that the reversal does not signal broader policy tightening for the low-altitude economy, but rather a shift towards more optimised and targeted industry regulations.
Hangzhou’s initial policy took effect two years ago and was originally set to remain in force through the end of next year. It spans key segments of the sector – from enterprise establishment and technological innovation to new low-altitude flight routes and infrastructure buildout – offering differing amounts of fiscal rewards.
Without spelling out the reasoning behind the move, the Hangzhou Municipal Bureau of Finance noted on its official website that “following internal review and consultations with relevant government departments”, it was determined that “the document has grounds for repeal”.
The month-long public consultation period ends on October 7.


Tan Chaochen, chairman of the Shenzhen Bao’an Low-Altitude Economy Industry Association, said Hangzhou’s proposed repeal should not be seen merely as a routine regulatory clean-up, but as part of Beijing’s broader push to regulate local industrial policies and build a unified national market.
For instance, the top fiscal reward offered by the Hangzhou government hits 200 million yuan (US$29.87 million) for anchor enterprises, while the maximum payout for newly registered firms tops 10 million yuan.
“The proposed repeal may be linked to China’s strengthened fair-competition review regime,” Tan said. “Local governments have competed for low-altitude economy companies through relocation incentives, but such selective subsidies may distort competition.
“Hangzhou’s cash rewards for newly established companies may no longer fully align with national efforts to regulate local investment incentives.”
A Shanghai government official, who spoke on condition of anonymity because of the matter’s sensitive nature, shared Tan’s view. The official said Hangzhou’s incentive programme was seen by other cities as creating an unfair competitive advantage, and the matter had been brought to regulators’ attention.
“The proposed repeal of the support measures does not mean Hangzhou is scaling back its backing for the sector,” Tan Chaochen added. “The focus is moving from attracting companies to helping them fly and build viable businesses.”
Hangzhou’s ambitious goals remain, as the city aims to nurture more than 600 firms across the low-altitude industrial chain, with total sector output topping 60 billion yuan by 2027. As of the end of 2025, both targets were said to be more than 70 per cent fulfilled.
The once-hyped vision of intracity air-taxi services has effectively run its course in China
Ma Liqi, Aircontainer founder
While Hangzhou still trails Shenzhen and Guangzhou in aircraft manufacturing, key components and industrial depth, it has strengths in digital technology, e-commerce logistics, and tourism, according to Tan.
“The decisive factor will no longer be which city offers the largest subsidies, but which can first establish safe and profitable business models,” Tan said.
Meanwhile, the low-altitude sector has been forced to pivot in the wake of June’s crash involving the electric vertical take-off and landing (eVTOL) light aircraft.
Ma Liqi, founder of Aircontainer, a Shanghai-based eVTOL start-up, said the incident laid bare safety vulnerabilities within urban low-altitude airspace for regulators, industry participants and the general public.
“The once-hyped vision of intracity air-taxi services has effectively run its course in China,” Ma said. “Going forward, intercity routes and flight corridors linking major economic regions are set to become the application scenarios for eVTOLs.”
China’s low-altitude sector has maintained robust growth momentum since the first quarter of 2024, according to a UBS report in April.
The bank’s analysts, led by Chen Xin, noted that financing for the domestic low-altitude economy reached 3.9 billion yuan in the first three months of 2025, marking a 60 per cent jump, year on year. Financing growth peaked in the third quarter of last year, with estimated quarterly financing topping 10 billion yuan, up by 77 per cent, year on year.


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Hangzhou tech hub looks to end financial incentives for development of light aerial vehicles, including eVTOLs, signalling more optimised regulations after June crash


Hangzhou tech hub looks to end financial incentives for development of light aerial vehicles, including eVTOLs, signalling more optimised regulations after June crash.


In a China first, low-altitude sector hits turbulence as subsidies face reality check

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Hangzhou tech hub looks to end financial incentives for development of light aerial vehicles, including eVTOLs, signalling more optimised regulations after June crash

Hangzhou tech hub looks to end financial incentives for development of light aerial vehicles, including eVTOLs, signalling more optimised regulations after June crash