The Senate is poised to pass a major bill that would pour hundreds of billions of dollars into science and technology in a bid to out-compete China, and it’s doing so with something rare these days: strong bipartisan support.
The Innovation and Competition Act of 2021 is part of a wave of recent China-related proposals in Congress.
Republican Sen. Todd Young of Indiana is one of the act’s key sponsors, as is Senate Majority Leader Chuck Schumer, D-N.Y., who has been leading the charge to get it passed.
“The U.S. Innovation and Competition Act will be one of the most significant pieces of bipartisan legislation we pass in a very long time,” Schumer said in the Senate on Thursday. “It could be a moment in history that future generations look back on as a turning point for American leadership in the … 21st century.”
The 1,445-page act would appropriate $52 billion for America’s microchip industry, tens of billions more for scientific research, and an overhaul of the National Science Foundation, adding a technology directorate.
It also includes funding to create new tech hubs around America.
David Johnson, president and CEO of the Central Indiana Corporate Partnership, said it could be a game changer for places such as Indianapolis, where there’s talent and energy but tech industries haven’t been able to scale up.
”It’s a no-brainer that that program would be great because there just hasn’t been a great deal of governmental participation in the building of the tech sectors of the economy that we have here,” he said.
He reckons there would be at least 20 or more cities that could have a shot — places such as Indianapolis, St. Louis and Nashville, Tenn.
“For those cities not to be in the mix means that America is not playing with all the talent that it’s got,” he said.
Semiconductors are a strategic industry
Jimmy Goodrich of the Semiconductor Industry Association said the U.S. today only produces 12% of the world’s semiconductors, down from close to 40% in 1990, in part because of neglect.
“Today the reality is that semiconductors are a strategic industry. Other governments around the world recognize their strategic importance and have for a long time provided government incentives to locate a greater share of semiconductor manufacturing in their country,” he said.
“If we don’t take steps to bolster our competitiveness, it’s clear that our competitors will forge ahead of us.”
And the White House has expressed support, too. If the bill passes the Senate, it will have to clear the House of Representatives before going to President Biden’s desk. The bipartisan support in the Senate gives momentum for the House to take up the bill soon.
But some have concerns.
A group of more than 60 organizations wrote a joint letter warning about the legislation, saying its “anti-China framing” would feed racism, violence, xenophobia and white nationalism. Progressive lawmakers have also pushed back against what they see as a Cold War mentality.
Gregory Kulacki, a senior analyst with the Union of Concerned Scientists, which was a signatory to the letter, applauds the proposed investments in research. But he said eagerness to rush the bill through opened it up to what he considers counterproductive elements.
“This is sort of a knee-jerk reaction that’s going to damage our relationships with our allies. It’s going to create domestic problems at home on the civil liberties front. … And it’s not going to affect Chinese behavior at all,” he said.
There’s a genuine desire to respond
Anna Ashton of the U.S.-China Business Council has been tracking proposals aimed at China and the perceived challenge it poses to America. She said the last Congress considered more than 500 of them and the current Congress, which started in January, is on track to blow past that record.
“Some of it is a genuine desire to respond to that in a way that will be effective and ensure U.S. competitiveness in the future and also U.S. national security. But I think it’s also been incredibly politicized,” she said.
“There’s kind of a competition between Republicans and Democrats to come across as the right choice, the right party to handle the China challenge, and that’s fueling a lot of the rhetoric and efforts to introduce proposals that seem like they are tough on China.”
Schumer noted on Thursday morning that the Senate had so far voted on 18 amendments to the act, four from Democrats and 14 from Republicans.
All of this comes at a time when U.S.-China relations are at their worst in decades, with tension over trade, human rights and foreign relations.
On Wednesday, the point person for Asia on the National Security Council, Kurt Campbell, told an online forum the era of engagement with China was over and competition would be the dominant paradigm.
The legislation sends a message, according to Scott Kennedy of the Center for Strategic and International Studies.
“In some ways, I think it helps provide a backbone to the administration so that the Chinese know that there is a unified front,” he said.
“It also creates an amazing amount of momentum to continue the tensions and to not look for off-ramps.”