China prepares tax incentives for high-tech products

China is reportedly planning new tax incentives for companies producing high-tech products in order to support the economy. According to Bloomberg, citing sources familiar with the matter, the Beijing administration is considering new tax incentives for companies producing high-tech products in order to support the economy. The sources, who asked not to be identified because the information is not public, said the tax policy under consideration could save advanced manufacturers hundreds of billions of yuan. However, it was noted that the plan is still subject to approval and may be subject to change. Chinese President Xi Jinping’s decision to designate a “modern industrial system” as one of China’s top economic priorities at a meeting held earlier this month had led to expectations that measures such as subsidies would be taken for manufacturers. On the other hand, a State Council meeting in May also discussed supporting advanced manufacturing enterprises covering a wide range of industries, from chips to artificial intelligence and biopharmaceuticals. While China’s economic recovery has lost momentum following the COVID-19 pandemic, recent data show that exports and investment in the country have weakened overall. The slow recovery in the property market and record youth unemployment are also cited as examples of this. In this economic outlook, analysts believe the government will take more targeted measures, such as tax incentives, to boost business confidence.