By Yoko KubotaOct. 25, 2019 4:14 pm ETBEIJING—China has set up a new national semiconductor fund of 204.2 billion yuan ($28.9 billion), as it seeks to nurture its domestic chip industry and close the technology gap with the U.S.The government-backed fund is bigger by some $9 billion compared with a similar fund launched in 2014 that had raised 139 billion yuan, according to corporate registration information, which showed the fund was established on Tuesday.China’s newest war chest is likely to attract fresh concern from U.S. officials, who complained that the 2014 fund, largely financed by government agencies and state-owned enterprises, amounted to a form of state capitalism that gave its companies an unfair advantage against its U.S. competitors. The U.S. Trade Representative’s office said in a report last year that the 2014 fund indicates “the high degree of Chinese government involvement in establishing the funds to meet national strategic objectives.”“This means that China is doubling-down on the state-led practices and policies that led to the trade war, and it will only continue the trade war,” said Jeff Moon, a former assistant U.S. trade representative for China.Backers of the new fund include central and local government-supported enterprises including the state-run tobacco monopoly and China Development Bank Corp.Representatives of the Ministry of Industry and Information Technology, which oversees China’s industry-related policies, couldn’t be reached for comment.The new fund is the latest sign of China’s determination to become more independent from U.S. technology and keep pursuing its ambitious plan to become a global technology leader.In semiconductors, China still faces a long path to global dominance.The 2014 fund poured billions of dollars into dozens of projects. One of them was Yangtze Memory Technologies Co., which said in September it has started mass producing a type of advanced memory chip, called 64-layer 3D-NAND flash.While the company is catching up rapidly, it still lags behind industry leaders like South Korea’s Samsung Electronics Co. which are already producing more-advanced chips. Analysts say more time is needed to see whether YMTC’s production would be stable.Yet other efforts have hit roadblocks. Production at state-owned Fujian Jinhua Integrated Circuit Co., another memory chip maker, came to a halt after Washington barred American companies from doing business with it in 2018. Jinhua was accused of stealing technology secrets—a claim it has denied.Overall, analysts say China remains years behind leading rivals such as Intel Corp. , Taiwan Semiconductor Manufacturing Co. and Samsung in key areas of semiconductor technology.Besides chips, another major bottleneck for China’s self-sufficiency effort is chip-manufacturing equipment, a sector dominated by non-Chinese players. The leading companies include U.S.-based Applied Materials Inc. and LAM Research Corp. , ASML Holding NV of the Netherlands and Japan’s Tokyo Electron Ltd. Currently, Chinese chip makers rely heavily on foreign equipment to build advanced chips.China’s bid for more technological independence from the U.S. gained fresh impetus after Washington last year barred American companies from doing business with Chinese telecom gear maker ZTE Corp. and Fujian Jinhua, then with Huawei Technologies Co. this year. ZTE’s ban was later lifted.China’s foreign reliance on semiconductors stands out. It imported $312.1 billion in semiconductors in 2018, more than the $240.3 billion in crude oil imports, Chinese customs data showed.