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US Senate gives green light to $190 billion technological competitiveness plan

The US Senate has voted vigorously for a legislative package designed to counter the perceived threat posed by Chinese tech capabilities. The measure authorizes $190 billion to bolster domestic R&D.

Chinese tech companies such as Huawei and ZTE have often been used as proxies for their home countries in the ongoing trade war between the US and China.

Republicans and Democrats — who otherwise agreed on little else — have taken a hard line against Beijing, and there is considerable continuity between the aggressive stance of former President Donald Trump and that of President Joe Biden.

Among his first announcements in office, Biden promised to support the growth of industries for designing and manufacturing critical technologies domestically, especially semiconductors and telecommunications hardware.

Currently, these areas are dominated by a small number of companies, with production in East Asia, raising concerns about supply chain security (particularly in the context of the global chip shortage).

The US share of global semiconductor production has fallen from 37 percent in 1990 to 12 percent today. Biden wants to boost high-tech manufacturing in the US to build resilient supply chains independent of China for national security purposes.

Now the US Senate has approved a legislative package that aims to strengthen US competitiveness in the technology sector to compete with China, while supporting the economic recovery from Covid-19.

It authorizes — among other funds — about $190 billion to bolster domestic R&D, such as with the creation of a new AI and quantum science directorate at the National Science Foundation.

Separately, a $54 billion emergency fund will be set aside for the commerce division to boost U.S. manufacturing and research in semiconductors and telecommunications hardware. Most of the expenditure will occur in the next five years.

Commerce Secretary Gina Raimondo has said the funding could support the establishment of seven to 10 new chip factories in the US.

Senate Leader Chuck Schumer, a Democrat, said the US spends less than 1 percent of its GDP on basic research, less than half of what China does.

“The premise is simple: If we want American workers and American companies to continue to lead the world, the federal government must invest in science, basic research and innovation, just as we did decades after World War II,” he said.

“Whoever wins the race for the technologies of the future will become the global economic leader, with profound implications for foreign policy and national security.

“If we do nothing, our days as the dominant superpower may end. It is not our intention to let those days end on our watch. It is not our intention for America to become a mediocre nation in this century.

” Senate Leader Mitch McConnell supports the legislation, but said he would have liked to include more Republican-sponsored amendments:

“The final approval of this legislation cannot be the Senate’s last word on our competition with China. It certainly won’t be mine,” he said.

The bipartisan legislation passed by a 68-32 procedural vote will now go to the House of Representatives — which has already approved a previous iteration — before it goes to the White House for approval.

The bill includes several other provisions related to China, such as banning the installation of TikTok, owned by ByteDance, on government devices, blocking the purchase of drones from companies backed by the Chinese government, and allowing diplomats and Taiwanese military to show their flag on official business. President Biden said:

“We are in a competition to win the 21st century, and the gun has gone off. 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.”

The Foreign Affairs Committee of China’s legislature, the National People’s Congress, criticized the bill’s passing, describing it as demonstrating a “Cold War mentality” and interfering in the country’s internal affairs.