China cuts taxes to help chip makers in face of US pressure
China is cutting taxes on its fledgling soft ware and inte - grated circuit industries as US export controls threaten to handicap Chinese tech companies.
The Finance Ministry’ s announcement comes amid a spiral ling tariff war with Washington over Chinese technology ambitions.
Most smartphones, tablet computers and other electronics are assembled in China. But its manufacturers usually use US, Japanese or Taiwanese microchips and other components.
Beijing is developing its own suppliers to capture more of the industry’ s profits and reduce what the ruling Communist Party sees as a security risk in relying on foreign vendors.
Integrated circuits, or microchips, are among technologies China has targeted for state - led development in official plans that helped to ignite Beijing’s tariff battle with President Donald Trump.
The United States, Europe, Japan and other trading partners say those plans violate China’s market- opening obligations. Chinese officials have offered to alter details but are unlikely to abandon a strategy they consider a path to prosperity and global influence.
Under the new measure, soft ware and integrated circuit companies founded by the end of 2018 will owe no income tax for two years and the rate will be cut by half for three years after that, the Finance Ministry said.
Its two-sentence statement gave no details. But the top economic official, Premier Li Ke qi ang, said on 8 May policies to promote the industry would apply equally to for - eig n-financed and Chinese companies.
Beijing has spent billions of dollars over the past two decades on research subsidies and importing technology, sometimes using tactics that have angered Washington and other governments. Mr Trump vetoed the 2017 acquisition of an Oregon tech company, Lattice Semiconductor, after it became clear the buyer was financed by the Chinese government.
Political analysts say the sense of urgency over reducing reliance on foreign technology increased after another telecom equipment maker, ZTE Corp, was nearly forced into bankruptcy last year by US export controls.
Washington imposed as even- year ban on technology sales to ZTE over its exports to Iran and North Korea.
Mr Trump agreed to restore access after ZTE agreed to pay a $1 billion (£790,000) fine and replace its executive team.
Also last year, the Trump administration imposed restrictions on technology exports to a state -supported Chinese semiconductor maker, Fujian Jinhua Integrated Circuit Co.
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