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US President Joe Biden holds up a silicon wafer during the CEO Summit on Semiconductor and Supply Chain Resilience at the White House, April 12, 2021. Photo: AP

China bill with US$54 billion in chip funding faces uphill battle in Congress

  • A rare legislative foray into industrial policy, the bill included US$190 billion to strengthen US tech and an additional US$54 billion for chip production
  • Many issues addressed in the bill, including trade and human rights, are expected to feature at Monday’s virtual summit between Biden and Chinese leader Xi Jinping

Sweeping legislation to boost US competitiveness with China and fund much-needed semiconductor production passed the Senate with bipartisan support in June, but has stalled in the House of Representatives and now faces an uphill climb to become law before next year, if ever.

Although President Joe Biden’s Democrats control both the Senate and House, and the White House says competing with China is a top priority, House members said they wanted to write their own bill, not consider the Senate-passed US Innovation and Competition Act, or USICA.

Five months later, the House has not voted on its own bill nor taken up USICA. And with a packed legislative agenda, there is scant time to do so in 2021.

The Senate passed USICA by 68-32. The measure was a rare legislative foray into industrial policy, authorising US$190 billion to strengthen US technology and research, and an additional US$54 billion to increase US production and research into semiconductors and telecommunications equipment.

There is a worldwide shortage of computer chips, crimping production of everything from gaming consoles to vehicles, and money in the bill would have gone to chip makers to expand manufacturing.

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Many issues addressed in USICA, including trade and human rights, are expected to feature at Monday’s virtual summit between Biden and Chinese leader Xi Jinping.

A House Democratic leadership aide declined to give a timeline for House consideration of the measure, saying only that there are still areas where the House and Senate must resolve differences.

Some USICA provisions may end up in other legislation expected to pass within weeks. Several lawmakers have offered pieces of the bill as amendments to the National defence Authorisation Act, or NDAA, a must-pass annual defence policy bill.

On Sunday, Senate Majority Leader Chuck Schumer said in a letter that the Senate would likely take up NDAA this week and “may add the Senate-passed text of USICA to the NDAA.”

He added that “would enable a USICA negotiation with the House to be completed alongside NDAA before the end of the year.”

The House Foreign Affairs Committee advanced its own China bill in July, but all 20 committee Republicans opposed the “Ensuring American Global Leadership and Engagement Act,” or Eagle Act, and there has been no word on when it might come up for a vote in the full House.

The Eagle Act has a narrower scope than USICA, focusing largely on foreign policy rather than boosting industry. It also includes provisions, such as measures to boost climate cooperation, that Republicans said they will not support.

Senator Mark Warner, who as chairman of the Intelligence Committee has stressed the challenge of competing with China, said passing USICA is especially important given chip shortages slowing production at US manufacturing plants.

“I’m urging my colleagues in the House to move this legislation without any further delay,” he said in an emailed statement.

Congressional aides worry the bill could slip well into 2022.

The desire for a hard line in dealings with China is one of the few truly bipartisan sentiments in the deeply divided US Congress.

“Congress and the executive branch must lock arms and fundamentally respond to this generational threat,” said Representative Michael McCaul, the top Republican on the House Foreign Affairs Committee, when asked about the importance of legislation addressing competition with Beijing.