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Senate Majority Leader Chuck Schumer is one of the sponsors of the US Innovation and Competition Act, which passed in the Senate on Tuesday. Photo: EPA-EFE

US Senate passes broad US$250 billion legislation to counter and compete with China

  • A measure that touches on nearly every aspect of the nations’ complex relationship, including semiconductors, Taiwan, Xinjiang and the 2022 Winter Olympics
  • US House of Representatives will next take up its own version of the legislation, called the Eagle Act

In a rare show of bipartisan solidarity in the polarised US Capitol, the Senate came together on Tuesday to pass sweeping legislation designed to strengthen Washington’s hand in its escalating geopolitical and economic competition with China.

By a vote of 68 to 32, the 2,400-page US Innovation and Competition Act of 2021 brought together a coalition of progressives, moderates and conservatives who, despite their intense disagreements on nearly every other consequential policy issue, have become united in their view the Chinese government under the rule of Xi Jinping has become a threat to global stability and American power.

“The world is more competitive now than at any time since the end of the second world war,” Senate majority leader Chuck Schumer, a New York Democrat, said on the Senate floor moments before the vote. “If we do nothing, our days as the dominant superpower may be ending.”


US Senate passes massive bipartisan bill to counter tech competition from China

US Senate passes massive bipartisan bill to counter tech competition from China

“This bill could be the turning point for American leadership in the 21st century, and for that reason, this legislation will go down as one of the most significant bipartisan achievements of the US Senate in recent history.”

The bill, which includes about US$250 billion worth of spending, touches on nearly every aspect of the complex and increasingly tense relationship between Washington and Beijing.

It includes billions of dollars to increase American semiconductor manufacturing, a sign of growing urgency in Washington that the US has become dangerously reliant on Chinese supply chains. It bans American officials from attending the 2022 Beijing Winter Olympics over human rights concerns, and declares Beijing’s policies in China’s far-west Xinjiang region a genocide, echoing the position of the US State Department and multiple parliaments around the world.

Some US$2 billion of spending would be earmarked as incentives “to solely focus on legacy chip production to advance economic and national security interests, as these chips are essential to the auto industry, the military, and other critical industries”.

It contains a range of provisions meant to strengthen US ties with Taiwan and US military alliances in the Pacific, including the Quad, an increasingly formalised pact between the US, Australia, India and Japan – and still others to crack down on Chinese influence on US campuses, in international organisations and online.

“This is an opportunity to compete with China at the research level,” Senator Roger Wicker, a Tennessee Republican, said before the vote. “This bill will strengthen our country‘s innovation in key technology fields of the future, areas such as artificial intelligence, robotics, quantum computing and communications, and this bill also is a game changer in terms of giving universities all over the United States an opportunity to participate in game-changing research.”

‘Dangerous decade ahead’: warnings for US and China in global showdown

The legislation also authorises new sanctions on Chinese officials for a range of crimes, including cyberattacks, intellectual property theft and, in Xinjiang – where human rights groups cite United Nations reports and witness accounts that as many as 1 million Uygurs and other Muslim minorities are held in “re-education camps” – against perpetrators of “systematic rape, coercive abortion, forced sterilisation or involuntary contraceptive implantation policies and practices”.
Beijing has repeatedly denied the allegations of human rights abuses in Xinjiang and insists that the camps are vocational training facilities.
Now the issue shifts to the House of Representatives, which has already begun considering a number of China-related bills, the largest being the Eagle Act. Eventually, if the House passes its own legislation, the two chambers will have to reconcile any differences in their respective bills before they can send them to President Joe Biden to be signed into law.

Biden has used the US competition with China as justification for a range of domestic and foreign policies, and is almost certain to sign a final bill once it reaches his desk.

US proposes ‘strategic competition’ policy to counter China’s hi-tech aims

For various reasons, including stated concerns about rising US debt and individual amendments not being added to the bill, a handful of the Senate’s frequent critics of Beijing voted against the legislation. They included Republicans Ted Cruz of Texas and Rick Scott of Florida, who said the cost of the legislation was too high despite “the threat [the Chinese government] poses to our national security”.

The Chinese embassy in Washington did not immediately respond to a request for comment.

“I think the bill is important, whether or not we’re talking about the competition with China,” said Elizabeth Economy, a senior fellow at Stanford University’s Hoover Institution. “It’s clear that the United States needs to do more, and I think this is a really important effort and it sends an important message as well.”

“I think there is widespread acknowledgement among both Democrats and Republicans that we need to be smarter and do better in terms of meeting the broad array of challenges that China presents to our political, economic and security interests,” she said. “There‘s a sense that China poses a clear and present danger, if not an existential threat, and that if the US fails to step up and meet this challenge at this particular moment in time, it may not have another opportunity.”

US Secretary of State Antony Blinken testifies about his agency’s budget before the Senate Appropriations Committee on Tuesday. Photo: Reuters

The Senate vote followed months of debate in the chamber. In February, Schumer asked numerous Senate committees to draft China legislation of their own, which he ultimately combined into the expansive bill that passed on Tuesday.

Asked in a Senate Appropriations Committee hearing on Tuesday whether he would support the funding requests in the bill, US Secretary of State Antony Blinken said he would “welcome” the opportunity.

“I have to tell you again that we really applaud this initiative,” Blinken said.

“It‘s going to give us new tools, new resources to deal more effectively with the competition, and I very much welcome the opportunity to work closely with you, members of this committee, other relevant committees to put this into practice,” he said.

Democrats on the House Foreign Affairs Committee have already agreed to some changes to the Eagle Act, including adding clearer language calling for a diplomatic boycott of the 2022 Beijing Winter Olympics, Politico reported, citing people involved in the discussions.

Republicans say they want more concessions to support a final version, including stronger language in support of democracy in Taiwan, according to the Politico report.

Additional reporting by Robert Delaney

This article appeared in the South China Morning Post print edition as: Senate passes US$250b bill to counter ‘threat’ from China