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Senate passes $250 billion US-China competition bill

National flags of U.S. and China wave in front of an international hotel in Beijing February 4, 2010. REUTERS/Jason Lee

WASHINGTON (CN) — The Senate on Tuesday voted 68-32 to approve $250 billion to beef up American technological research, development and manufacturing so the U.S. can better compete with China now and in the future.

The U.S. Innovation and Competition Act, also known as S. 1260, was sponsored by Senate Majority Leader Chuck Schumer, is the product of more than a year of bipartisan congressional committee work and proposes huge investments in semiconductor manufacturing and renewable energy research and development. Senator Todd Young, a Republican from Indiana, was also instrumental in getting the bill passed and worked closely with Schumer.

“When future generations of Americans cast their gaze toward new frontiers, will they see a red flag planted on those new frontiers that is not our own? Today we answer unequivocally, ‘No.’ Today we declare our intention to win this century and those that follow it as well,” Young said from the Senate floor ahead of passage.

The legislation intends to exact a competitive toll on China, a nation considered by many Democratic and Republican lawmakers in the House and Senate alike to be the United States’ leading competitive threat in commercial, military, and cyber capabilities.

The legislation allots roughly $50 billion through 2026 for semiconductor manufacturing — a key factor to nabbing a competitive edge in a sprawling global industry. The sum is also a considerable front-end investment since semiconductors are used in most goods Americans enjoy like televisions, cell phones, refrigerators, cars and more.

A shortage of semiconductors kneecapped the auto industry over the last year due to the Covid-19 pandemic. Funding to boost semiconductor manufacturing in America came by way of an amendment from Senator John Cornyn, a Republican from Texas.

When she appeared at a semiconductor manufacturing facility in Manassas, Virginia, last month, Department of Commerce Secretary Gina Raimondo said she expects the investment will translate to the creation of at least seven to 10 new fabrication plants in the U.S. Presently, the most successful chipmakers in the world, like Samsung, are exclusively located overseas.

Nearly $15 billion is flagged for renewable energy supply chain research and development led by the Department of Energy, with the first $1 billion to be spent this year. Investments will increase from year to year with the largest single-year sum appropriated in 2026 to the tune of $5.5 billion. President Joe Biden has set 2030 as the nation’s goal to cut carbon emissions in half.

The National Science Foundation will also receive about $81 billion spread over the next four years. The foundation, an independent body established by Congress 71 years ago, acts like a research accelerator helping to advance U.S. development in engineering, science, mathematics and technology. The foundation received a budget of about $8.1 billion in 2019. Biden’s fiscal year 2022 budget proposes increasing NSF’s baseline budget to $10.2 billion.

As a part of the legislation passed Tuesday, NSF would also see the creation of a Directorate for Technology and Innovation, putting a single entity within the foundation at the helm of advancing U.S. innovation in biotechnology, robotics, artificial intelligence and more. The office would be funded by $29 billion over five years and those resources are included in the hefty $81 billion line for NSF overall.

“This is a chance for the US to strike a blow to the unfair competition we are seeing from China,” Senator Roger Wicker, a Republican from Mississippi said from the Senate floor on Tuesday.

Just before its passage, Senate Majority Leader Schumer commended fellow lawmakers for unifying on the bill.

“We spend half as much as the Chinese community party for research … The world is more competitive now than at any time since the end of the second World War. If we do nothing our days as a dominant superpower may be ending. We don’t mean to let those days end on our watch,” Schumer said. “Passing this bill is the moment when the Senate lays the foundation for another century of American leadership.”

Notably, the bill also calls for U.S. diplomats to boycott the Winter Olympics next year in China due to the nation’s human rights violations. Similar provisions or language in the bill that sets the U.S. and China as global powers and competitors at stark odds may make it into a final iteration after the House takes it on. But there is some desire among Democratic lawmakers to soften the rhetoric for fear of generating anti-China or anti-Asian sentiment.

The House of Representatives will consider the bill next but whether it will pass there remains uncertain. It is, however, expected that sizeable chunks of the 1,400-plus page legislation would be parceled out in the House for separate bills. Some House Republicans have balked at the bill, saying it isn’t tough enough on China, but the passage in the Senate on Tuesday night at least indicates an appetite is rising across both aisles to leverage the U.S. technological prowess.

Republican senators who did not vote in favor of the bill include: Senators Marsha Blackburn of Tennessee, John Boozman and Tom Cotton, both of Arkansas, Joni Ernst of Iowa, James Inhofe and James Lankford, both of Oklahoma, Rand Paul of Kentucky, Ted Cruz of Texas, Marco Rubio and Rick Scott, both of Florida, Cindy Hyde-Smith of Mississippi, Mike Braun of Indiana, Richard Burr of North Carolina, Deb Fischer of Nebraska, Pat Toomey of Pennsylvania, Richard Shelby and Tommy Tuberville of Alabama, Ron Johnson of Wisconsin, Tim Scott of South Carolina, Kevin Cramer and John Hoeven of North Dakota, Cynthia Lummis and John Barrasso of Wyoming, John Kennedy and Bill Cassidy, both of Louisiana, Mike Lee of Utah, Josh Hawley of Missouri, John Thune of South Dakota, Bill Hagerty of Tennessee and Jerry Moran and Roger Marshall of Kansas.

Senator Bernie Sanders, an independent from Vermont also voted against the bill.

Republican Senator Richard Burr said in a statement Tuesday night he voted against the legislation because it didn’t go far enough to defend against malign influence from China.

“China continues to attempt to infiltrate our nation’s economy and national security apparatus by targeting and exploiting our vulnerabilities. America’s key technology sectors and research institutions are particularly at risk. To better protect these vital sectors and foster American innovation, we need focused, robust, and thoughtful policies that defend against IP theft,” Burr said. “Unfortunately, this legislation lacks the necessary targeted approach and falls short of guaranteeing critical protections. For these reasons, I have voted against this bill.”

President Biden commended the legislation’s passage.

“We are in a competition to win the 21st century, and the starting gun has gone off,” he said in a statement. “As other countries continue to invest in their own research and development, we cannot risk falling behind. America must maintain its position as the most innovative and productive nation on Earth. I look forward to working with the House of Representatives on this important bipartisan legislation, and I look forward to signing it into law as soon as possible.”