Senate passes sweeping bill to help U.S. compete with China, boost chip manufacturing

Chinese lawmakers urged Congress to “immediately stop” progress on the bill, the official Xinhua News Agency reported Wednesday, citing a statement from a National People’s Congress committee that handles foreign affairs.

The bill “smears China’s development path and domestic and foreign policies,” the statement said, and “interferes in China’s internal affairs under the banner of innovation and competition.”

Schumer combined his and Young’s original Endless Frontier Act — named after a seminal 1945 report that led to the creation of the National Science Foundation — with legislation from the Foreign Relations Committee, Banking Committee and the Homeland Security and Governmental Affairs Committee, among others.

It mirrors Biden’s call to address a long slide in federal government spending on R&D. Last year, it amounted to 0.7 percent of gross domestic product, according to the National Science Foundation — a ratio flattered in part by the hit to GDP from the pandemic. R&D spending peaked at 2.2 percent of GDP in 1964 and was followed by decades of breakthroughs, including the moon landing, mapping the human genome and developing the Internet.

Chip assistance

Also added to the new bill was a separate initiative that provides $52 billion in incentives and grant programs to bolster domestic semiconductor manufacturing, sought by Republican Senators John Cornyn of Texas and Tom Cotton of Arkansas and Democrats Mark Kelly of Arizona and Mark Warner of Virginia.

The move was cheered by those in the industry, following months of complaints from manufacturers that a semiconductor shortage was hampering the delivery of everything from consumer electronic devices to pickup trucks.

“Semiconductors form the nerve center of America’s economy, national security, and critical infrastructure,” said John Neuffer, the president and CEO of the Semiconductor Industry Association. “We look forward to working with leaders in the administration and Congress to swiftly enact needed federal investments in chip technology to help ensure more of the chips our country needs are researched, designed and manufactured on U.S. shores.”

DARPA money

That money, along with another $2 billion for related programs, would be available upon the law’s passage. The other spending in the bill would be subject to the appropriations process. An amendment from Senator Ben Sasse, a Republican from Nebraska, would also authorize an additional $17.5 billion for the Defense Advanced Research Projects Agency — or DARPA — over a period of five years.

Some Republicans rejected the idea of the government directing research and industrial policy.

“Maintaining our technological superiority over China requires punishing bad Chinese behavior and relying on the natural innovative entrepreneurship of America’s market economy, not by imitating Chinese central planning,” Pennsylvania GOP Senator Pat Toomey said in a statement before voting against the bill.

Senate GOP leader Mitch McConnell, who had criticized earlier versions of the bill as “not ready for prime time” and weak on defense, said the legislation was an important step forward and a rare area of bipartisan compromise, but should not be the “final word” on U.S. competition with China.

“Needless to say, final passage of this legislation cannot be the Senate’s final word on our competition with China,” McConnell said on the Senate floor. “It certainly won’t be mine.”

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