May 22, 2019 (China Knowledge) - Shanghai will be offering tax incentives and funding to support the development of the country’s domestic semiconductor industry as China starts to find itself locked into a new technological battle with the US.
Integrated circuits, artificial intelligence and biotechnology will be three of the key industries the city will be focusing on as China faces increasing pressure from the US in the technology sphere amid an escalating trade dispute.
In recent years, the Chinese government has been increasingly set on attaining technological self-sufficiency, setting up funds to nurture domestic technology providers as well as to acquire foreign patents and designs.
While China is already a global technology leader in many areas such as e-commerce, mobile payments and telecommunications equipment, much of these technologies are still built on US technologies such as chips from Qualcomm or Intel and Microsoft’s or Google’s operating systems.
Pressure on China to attain self-sufficiency soon has ramped up as US President Trump signed an executive order last week, blacklisting Huawei and its subsidiaries, effectively banning the Chinese company from being able to purchase US technologies.
China’s “Made in China 2025” strategy also include chipmakers as one of its target industries and the Chinese government hopes to catch up with global leaders and become self-sufficient by 2025. For this, the government will have to play an important role in providing incentives to attract investors and new players into these industries.
Shanghai currently has a measure in place which allows venture capitals and angel investors to use part of their investments in start-ups to offset tax payments, which helps to provide an additional safety net for these investors.
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