US Senate passes China competition Bill to start talks with House

The Senate voted 68-28 for the plan to aid the domestic semiconductor industry and bolster US competitiveness with China. PHOTO: REUTERS

WASHINGTON (BLOOMBERG) - The Senate on Monday (March 28) passed its version of a long-stalled Bill to aid the domestic semiconductor industry and bolster US competitiveness with China, a key step needed to kick off negotiations with the House on final legislation.

The Senate voted 68-28 for the plan, which includes US$52 billion (S$70.82 billion) in grants and incentives to bolster chip manufacturing as well as provisions aiming to jump-start innovation and bring key industries back to the US amid a global supply chain crunch.

"America cannot afford to come in second place when it comes to technologies like 5G, AI (artificial intelligence), quantum computing, semiconductor, bio-engineering and so much more," Senate Majority Leader Chuck Schumer said before the vote

"This Bill is a necessary step towards securing the bright future of American ingenuity, which has always helped us lead the way."

Chinese Foreign Ministry spokesman Wang Wenbin said on Tuesday at a regular press conference in Beijing that the Bill "hyped up the China threat theory".

"The US should work to uphold the stability of global industrial supply chains, including in the semiconductor industry, instead of making issues out of China and seeing China as an imaginary enemy," he added.

Mr Schumer introduced the original version of the Bill with Senator Todd Young, an Indiana Republican, last year.

Despite backing from the semiconductor industry and the White House, the legislation was left in limbo as the House took a different approach on how to encourage innovation and manufacturing.

The Senate focused on developing new technology while the House emphasised basic research and development.

Both the House and Senate versions of the legislation include US$52 billion in emergency appropriations for semiconductor manufacturers, which have publicly pushed Congress as they prepare to invest in chip manufacturing facilities in states that include Arizona, Texas, Ohio and New York.

Mr Schumer and House Speaker Nancy Pelosi can now begin the process for negotiating a compromise that can draw enough support to pass in both chambers.

But a final measure is unlikely to be completed before the end of May.

The administration has urged Congress to pass the legislation, with President Joe Biden mentioning it during his State of the Union address.

Commerce Secretary Gina Raimondo has recruited a roster of former Trump administration officials to serve as boosters of the measure on Capitol Hill and in the press.

A bipartisan group of supporters including Ms Raimondo, Mr Young and Democratic Representative Doris Matsui of California, a sponsor of the chip funding, hosted former Trump advisers H.R. McMaster, Matt Pottinger and others on a recent call urging Congress to agree on a package that could help the US counter a rising China.

The legislation has attracted opposition from conservatives and progressives alike, who take issue with the legislation's favourable treatment of companies seeking to invest in US manufacturing.

Join ST's Telegram channel and get the latest breaking news delivered to you.