Senate attacks China with bipartisan manufacturing bill
Senate Majority Leader Chuck Schumer (D-NY) holds a press conference at the United States Capitol in Washington, DC on March 16, 2021.
Kevin Dietsch | Swimming pool | Reuters
The Senate is expected to pass one of the most significant industrial bills in U.S. history this week to bolster the country’s technology manufacturing in a bid to compete with competition from China.
The bill, which should easily wipe out the upper house with the backing of Republicans and Democrats, includes tens of billions of dollars for scientific research, grants for chip and robot makers, and a National Science overhaul. Foundation.
The scope of the bill, the end product of at least six Senate committees and weeks of debate, reflects the many fronts of the US-China rivalry and offers a rare glimpse of bipartisanship for legislation to counter expansion. economic and military of Beijing.
The proposal, subject to final modifications, would consist of:
- Providing $ 52 billion to support domestic semiconductor manufacturing
- Authorize $ 81 billion for the National Science Foundation from fiscal year 2022 to fiscal year 2026
- Authorize $ 16.9 billion for the Department of Energy over the same period for research and development and energy-related supply chains in key technology areas.
- Ban U.S. diplomats from attending Beijing 2022 Winter Olympics
Some commentators see the so-called Innovation and Competition Law of 2021 as a modern parallel to the Cold War between the United States and the Soviet Union. Failure to expand domestic semiconductor production or redirect rare earth supply chains, proponents say, could leave the United States at a strategic disadvantage in the years to come.
The final bill is expected to cost around $ 200 billion.
Majority leader in the Senate Chuck Schumer, a New York Democrat and one of Bill’s main cheerleaders, worked for weeks to put the many pieces of legislation together. The final bill is expected to contain over 1,400 pages of text.
“Biparty legislation will be the biggest investment in scientific research and technological innovation in generations, setting the United States on the path to global leadership in industries of the future,” Schumer said Monday from the Senate.
The bill is the product of six committees and features dozens of Republican amendments, he said, adding that the chamber would consider some final amendments on Tuesday before passing the bill.
“This will be one of the most important things we’ve done in a very long time, the biggest investment in scientific research and technological innovation in generations, decades,” said Schumer.
For their part, Senate Republicans have mostly stuck to the Trump-era’s harsh approach to China, even if it means a higher price tag or a more involved federal government.
The bulk of the mammoth piece of legislation is a proposal formerly known as the “Endless Borders Act”.
Now an amendment, which provision of Schumer and Senator Todd Young, R-Ind., Would breathe new life into the National Science Foundation, allocate $ 81 billion to NSF between fiscal years 2022 and 2026, and establish a direction of technology and innovation.
“Today our leadership is challenged by a state capitalist regime in Beijing that threatens to win the next century by dominating the critical technologies that are sure to shape it,” Young wrote in a May editorial published by The Ripon Forum, a Republican Opinion Journal.
“It is time for the United States to go on the offensive by passing the bipartisan Endless Frontier Act, which would solidify American leadership in scientific and technological innovation through increased investments in the discovery, creation and manufacture of technologies essential to national security and economic competitiveness. ,” he added.
Even Conservative Senator John Cornyn, R-Texas, has expressed his support for the bill. Its bipartisan CHIPS for America law has since been incorporated into the larger bill and is said to appropriate around $ 50 billion to boost semiconductor manufacturing in the United States.
“The reality is that despite the back and forth on the process and some political cuts, the Senate crafted a very comprehensive bill,” Dewardric McNeal, who was a Pentagon political analyst at the time, told CNBC. Obama.
“Some of the biggest questions many Chinese experts have asked about this legislation were whether or not it would focus on ‘running faster than China’, investing more in ways to stay ahead and beat China technologically, or would it focus more on blocking China moving forward and attacking China if it gets too far ahead using legal and regulatory measures, “he added. . “It seems the Senate has tried to do a bit of both.”
The bill would fund a subsidy program run by the Commerce Department that, to an unspecified extent, would match financial incentives offered by states and local governments to chipmakers who upgrade or build new factories.
Schumer and others hope such programs will inspire domestic and foreign chipmakers to open new, state-of-the-art foundries in the United States. The world’s most advanced foundries are operated exclusively by Samsung in South Korea and Taiwan Semiconductor Manufacturing Company in Taiwan.
The rare display of bipartisanship is even more impressive given the long list of political points that Congress Democrats were unable to advance even with majorities in both houses.
With Senators Joe Manchin, DW.Va., and Kyrsten Sinema, D-Ariz., Opposed to removing filibustering, progressive policy elements ranging from immigration reform to gun control are to the point of death.
Infrastructure is not doing much better: Hundreds of billions of dollars still separate Republicans and Democrats, many of whom campaigned on the promise to pass a single bill to fix roads, bridges and tracks waterways of the country.
A new cold war?
It is clear to all the major parties involved – Democrats, Republicans and Chinese officials – that the bill and its broad support provide the clearest evidence to date that Washington’s deep skepticism of Beijing was not not exclusive to the Trump administration.
Even within the past week, President Joe Biden has underscored his administration’s deep distrust of the Chinese government.
The White House announced on Friday that it expand restrictions on US investment in certain Chinese companies with suspected ties to the country’s military and surveillance efforts, adding more companies to a growing US blacklist.
On August 2, Americans will be banned from investing in 59 Chinese companies, including Aero Engine Corp. of China, Aerosun Corp. and Huawei Technologies.
The administration announced on Tuesday, hours before the Senate passed the technology bill, that it would look at the dramatic increase in U.S. production of lithium batteries, rare earth minerals and semi -conductors.
Earlier this year, the White House announced it would conduct a 100-day review of national supply chains for critical materials and technologies. Officials were careful not to name any country by name, but commentators say the review and resulting recommendations are seen as an effort to alleviate the United States’ dependence on Chinese exports.
Many American technologies considered essential to future economic and military superiority – electric vehicles, smart cities, faster computers, and advanced weaponry – are currently being made with rare earth shipments from China.
It supplied 80% of rare earths imported by the United States between 2016 and 2019, according to the US Geological Survey.
A more open blow in Beijing comes from part of the bill known as the Strategic Competition Act, a product of the Senate Foreign Relations Committee.
Senators Robert Menendez, DN.J., and Jim Risch, R-Idaho, seek $ 1.5 billion over five years to support the “Anti-Chinese Influence Fund to Counter the Malicious Influence of the Chinese Communist Party in the world “.
The Strategic Competition Law would also ban US officials from participating in the Beijing Olympics in 2022 and demand an end to “the Chinese Communist Party’s” continuing human rights violations, including the Uyghur genocide. ” The provision would not prevent American athletes from participating in the games.
U.S. House of Representatives Speaker Nancy Pelosi (D-CA) holds her weekly press conference with reporters from Capitol Hill in Washington, DC on May 20, 2021.
Ken Cedeno | Reuters
While debate over several amendments prevented the Senate from passing the legislation before the Memorial Day recess, the bipartisan passion for ensuring the United States remains competitive is expected to linger in the House, where the bill is expected to endure. another round of deliberations before its adoption.
House Speaker Nancy Pelosi, D-Calif., On Thursday reiterated her support for a diplomatic boycott of the 2022 Olympics.
“While China has changed in the last generation, its government’s appalling human rights record has not changed,” she said in a June 3 press release. . She timed her statement to mark the 32nd anniversary of the Chinese government’s violent crackdown on pro-democracy demonstrators in Tiananmen Square. “The US Congress has maintained and will continue its decades-long bipartisan and bicameral commitment to hold the Chinese government accountable. “
Despite the sharp language of the bill, McNeal says Cold War comparisons between the United States and the Soviet Union are misguided and misleading.
“This is not a cold war at all. However, it is something much more complex and complicated than that given the high level of economic integration and dependence between the United States and China,” he said he wrote. “Unlike the Soviet Union, China has no real diplomatic allies (North Korea and Pakistan notwithstanding), no military alliances, and no ideological bloc to strengthen its diplomacy and security policy. that the Soviet Union could boast of. “
“It has yet to go to the House and there is no real way of knowing what the (always messy) process will be there or what the end result will be,” he added, “but the Senate has is doing something big and important. “