US Senate advances bill to fund tech development to counter China

·4-min read

The United States Senate on Monday advanced a bill that would provide billions of dollars in government funding for technology research as part of a broader legislative effort to counter China.

The chamber voted 84-11 to move ahead with the Endless Frontier Act, introduced by Senate Democratic leader Chuck Schumer, which seeks up to US$100 billion over five years for basic and advanced tech research and another US$10 billion to create new technology hubs across the country. The move clears the way for the Senate to vote on the bill’s passage.

If passed, the bill would also start a new high-level office at the National Science Foundation to oversee the development of technologies including artificial intelligence, semiconductors, quantum computing and biotechnology.

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“Members on both sides of the aisle know that decades of federal underinvestment in science and technology have imperilled America’s global economic leadership,” Schumer said ahead of the vote to begin consideration of the bill.

“Holding the Chinese Communist Party accountable for its years of rapacious economic policies and theft of American ingenuity will help create a level playing field that American workers have lacked for decades.”

China spent a record US$2.2 trillion yuan (US$340 billion) on R&D in 2019, representing 2.2 per cent of the country’s GDP – a record high, according to the OECD. This amounted to 80 per cent of the US’ R&D spending, which accounted for 2.6 per cent of its GDP that year.

China’s goal is to boost spending to 3.76 trillion yuan by 2025, according to the National Development and Reform Commission, the country’s planning agency.

The Endless Frontier Act could change as lawmakers try to introduce revisions or amendments as they try to get it passed before the May 31 Memorial Day holiday, but concern over China is one of very few areas where Democrats and Republicans agree.

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The legislation, which Schumer introduced jointly with Todd Young, a Republican from Indiana, is one of several bipartisan bills aimed at countering China, which lawmakers are expecting to combine into a larger bill that addresses all of the US government’s friction points with Beijing.

For example, the Strategic Competition Act of 2021 – sponsored by Bob Menendez of New Jersey, the Senate foreign relations committee’s Democratic chairman, and Jim Risch of Idaho, its senior Republican – is also under consideration in the committee.

The Menendez-Risch bill would add new sanctions on Chinese officials accused of human rights violations in Hong Kong and Xinjiang; fortify US ties with Taiwan; and try to further limit Beijing’s military operations and territorial claims in the South China Sea and beyond.

Whatever the final legislation looks like, it will almost certainly be signed into law when it reaches US President Joe Biden’s desk.

Biden has made competition with China a central theme of the first four months of his presidency – in not only foreign but domestic policy.

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Speaking to a joint session of Congress on April 28, he said: “We’re in competition with China and other countries to win the 21st century.”

He said Chinese President Xi Jinping was “deadly earnest” about seeing China become “the most significant, consequential nation in the world”.

Senator Maria Cantwell, a Washington Democrat who chairs the Senate commerce committee, said last week that the Endless Frontier Act’s passage was crucial for the US to remain ahead of China in technology industries.

The question, Cantwell said, was whether the US was “going to be able to come together? Or is some top-down country who can manage a planned economy going to beat us at a technology game?”

“It’s incumbent upon us to figure out how to work together, resolve this issue and make the investment so that our country can remain the R&D leader in the world,” she added.

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

Lawmakers from both parties have warned that the US is too reliant on Chinese supply chains – an issue that has grown in significance during the coronavirus pandemic.

After the commerce committee passed the Endless Frontier Act on May 12, the head of the Information Technology and Innovation Foundation (ITIF), an industry think tank, said the bill would boost US competitiveness against China.

“ITIF is particularly pleased to see that the legislation contained US$10 billion to support the funding of a limited number of regional technology hubs,” Rob Atkinson, the group’s president, said.

Additional reporting by Jodi Xu Klein

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