China spurs semiconductor development by cutting taxes

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China announced on Monday, tax breaks to stimulate the growth of the semiconductor industry, after US sanctions that have alarmed the ruling Communist Party by preventing the technology giant Huawei and some other companies from gaining access to US processor chips.

The leaders announced the acceleration of efforts to transform China into a self-reliant technological powerhouse, to be the top economic priority for this year, after the tariff war with Washington highlighted its reliance on American components for smartphones and other industries that Beijing wants to develop.

The Finance Ministry and other agencies announced that chip makers could import tax-free machinery and raw materials until 2030, without mentioning how much support it might represent to manufacturers.

Beijing has spent heavily over the past two decades building a Chinese chip industry, but makers of smartphones and other technologies still rely on the United States, Europe and Taiwan for the most advanced components.

Former US President Donald Trump cut off Huawei's access to US processor chips and other technologies in 2019 in a battle over Beijing's industrial ambitions.

And last year, Trump tightened restrictions by preventing global suppliers from using US technology to make chips for Huawei.

This threatens to hamper Huawei’s smartphone business, which was the number one seller in the world in early 2020, but withdrew from the top five brands.

Political analysts expect a slight change in the position of the United States under President (Joe Biden), who succeeded Trump in January.

Huawei founder Ren Zhengfei said last February that the sanctions were very unlikely to be lifted.

Semiconductors and processor chips are China's largest single imports, totaling more than $ 300 billion annually.

Under the latest measure, the government said, machinery and raw materials that cannot be produced or whose performance does not meet demand are exempt from import tax.

This applies to photoresists, masks, pads, polishing fluids, silicone crystals, foil, and materials needed to build clean rooms and other production equipment, according to the announcement.