Against Threat of Tariffs, China Cuts Taxes for Domestic Chipmakers

So the U.S. enacts a host of policies designed to punish Chinese imports, and China responds with tax cuts that bolster domestic industry. Go America?

Amidst a potential trade war with China, the US is threatening $50 billion worth of tariffs. The Trump administration has already levied stiff tariffs on imported solar panels – most of which come from China – and that move threatens to derail a $28 billion domestic industry (solar panel installation) which relies on imports for up to 80% of its supply.

In both cases, Trump cites discriminatory trade practices.

Meanwhile, as Reuters notes, Chinese chipmakers will be exempt from corporate taxes for two to five years.

“Companies producing high-end chips using 65 nanometer technology or smaller with an investment of over 15 billion yuan ($2.39 billion) will be exempt from corporate taxes for five years. Companies producing chips using 130 nanometer technology or smaller will be tax exempt for two years,” Reuters says.

China definitely engages in predatory trade practices (not to mention a counterfeit mega-industry), but the People’s Republic is bolstering domestic industry while we punish the competition instead of keeping our own house in order.

Read more here: https://www.reuters.com/article/us-china-semiconductors-taxbreaks/china-cuts-tax-rates-for-chipmakers-amid-trade-tensions-idUSKBN1H60JM