Japan would like to offer 5G firms cheap loans – because subsidies are only bad when Huawei gets them

Look over here! Mmmmm, tax breaks

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In an effort to counter the influence and spread of Chinese-built kit, the Japanese government has approved a draft bill that will offer low-cost finance to firms looking to develop 5G and drone technologies.

The bill will give qualifying businesses cut-rate loans from state-owned banks, provided their products meet specific security standards.

The government also plans to dangle generous tax breaks in front of domestic companies working in 5G, provided they meet the state's stringent standards.

The bill will be submitted to the Japanese diet in the coming months, with the aim of bringing it into law by summer. With the coalition government commanding a nearly 40-seat majority, it's highly likely to pass.

It closely follows an update to the Japanese tax code, introduced last December, which encourages cash-rich corporates to invest their money into startups working in the 5G sector, with the aim of stimulating an economy that's actively shrinking and expected to enter recession this year.

Coinciding with a major period of turmoil for Huawei, which is a major provider of 5G infrastructure, despite being shut off from the core networks of many European countries – most notably France and the UK.

Last year, the US government placed Huawei on an Entity List, preventing US firms from doing business or exchanging technology with it. Uncle Sam's biggest concern is that Huawei could pass intel to the Chinese government – allegations Huawei has always strenuously denied.

Huawei has been accused of accepting massive subsidies from the Chinese government, allowing it to undercut products from Western-based 5G vendors like Ericsson and Nokia.

Earlier this month, US attorney-general William Barr said America should buy a controlling stake in network infrastructure makers Nokia and Ericsson to help construct a bigger rival to Huawei.

The bill proposed by the Japanese government isn't a direct subsidy, but it's not far off, giving Japanese compnies an undeniable advantage in the form of preferential finance and tax rates. ®


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