The 56-year-old Ai was deliberately chosen for the film fest – where the theme this year is "freedom" – even though he was never likely to attend.
"I feel sorry I can't come. That's why I have designed and sent something symbolic," he said in a pre-recorded video message broadcast at a press conference.
"I hope it can give some kind of statement on the way authorities can limit freedom of speech, can limit basic human rights for artists to travel or participate in cultural activities — very ruthlessly and with no explanation."
"I'm still living under a kind of soft detention. My passport is still in the authorities' hands. I feel very good about being part of the jury because for me it's always important to get involved," he told AFP by telephone.
And "I still can make an object which expresses my anxiety and frustration," he added.
His chair, which was shipped from Beijing for the 12-day event, is an ironic commentary on his absence, the artist said.
"The original model of the chair is a classical chair," reminiscent of the style used in the Ming Dynasty (1368 to 1644 AD), he added.
But Ai's chair is impossible to use, with a curved cane securely fixed diagonally across the seat.
The seat will be on view to the public at the Skandia cinema, one of eight venues screening 180 films from more than 50 countries.
Ai will watch the films from his home in Beijing and take part in the jury's decisions.
He was named among the world's most important artists by ArtReview magazine, a leader in its field, and "one of the most interesting artists on the planet right now," by festival director Git Scheynius.
"We wanted to highlight directors, artists, authors and journalists who aren't able to express themselves in their own countries," said Scheynius.
Ai studied and worked in the United States in the 1980s and early 1990s before returning to China. Seen as one of the boldest members of China's art scene, he also became a vocal critic of Beijing's record on human rights and corruption.
In one case, he broke taboos by helping tally a list of students killed when their schools collapsed in the massive 2008 Sichuan earthquake, fuelling suspicion about corruption in construction permits.
Ai was detained for 81 days in 2011 during a roundup of activists at the time of the Arab Spring uprisings, allegedly on tax evasion charges.
In January, he released a 102-minute film about a villager who was crushed by a truck. The incident triggered outrage from those who suspected the man was killed for campaigning against land seizures, a widespread grievance in China.
Ai makes wide use of social platforms like Twitter, where he has a huge following. Last year, he produced a version of the widely imitated South Korean hit Gangnam Style, pulling out a pair of handcuffs to symbolise authorities' efforts to silence him.
The video was quickly censored.
Sheynius called Ai "one of the few who actually manage to combine the art with a message in a very good way.
"Even though he is in China and should have pretty limited possibilities to express himself, he still does it," she said.
Last Thursday, organisers held a peaceful protest outside the Chinese embassy in Stockholm, wearing T-shirts saying: "We wish you were here."
Another noticeable absence from this year's festival will be Iranian film maker Mohammad Rasoulof, whose "Manuscripts Don't Burn" about authors and activists murdered in the 1980's and 90's is among the entries.
Organisers said Tehran authorities took away his passport in September when he returned from a visit to Germany.
The festival runs through .