US Senate passes bill aimed at countering China’s tech sector

The US Senate has passed legislation that provides more than $250bn to help maintain a competitive edge over China in areas from artificial intelligence and quantum computing to semiconductors.

The Senate on Tuesday voted 68-32 to pass the bill, underscoring broad bipartisan support in Congress to take action to counter Beijing. The US Innovation and Competition Act stitches together various China-related measures into the biggest piece of industrial policy legislation in decades.

The legislation provides $52bn to bolster the semiconductor industry on rising concerns that the US is too reliant on countries such as Taiwan at the same time that China is striving to build its semiconductor industry.

Part of the bill, known as the Endless Frontier Act, provides roughly $120bn for investment in technologies such as AI and quantum computing that China has prioritised as part of its industry policy for high-end technology.

In addition to providing huge investment in technology, the 1,445-page bill includes a host of measures to constrain China. One would bar government agencies from buying drones manufactured by Chinese companies, including DJI, the world’s largest commercial drone maker.

The legislation would also ban federal employees from downloading TikTok, the popular short video app, on to electronic government devices.

The bill would require the state department and the intelligence community to provide Congress with a report on Chinese influence at international institutions, including the World Bank, IMF, the UN, and the World Trade Organization.

China is the only issue in Congress where there is bipartisan consensus, with lawmakers agreeing on the need to take a tougher stance. Politicians have introduced hundreds of bills to punish China over everything from its repression of Uyghurs to its military activity in the South and East China Seas. But US officials are increasingly aware of the growing role that technology is playing in competition between the two countries.

Kurt Campbell, the top White House official for Indo-Pacific policy, on Tuesday said the legislation was a critical part of Washington’s effort to make itself more competitive as part of a broad strategy to tackle China.

He said the Endless Frontier Act was “an effort to make clear that the new ramparts of competition, that will define American leadership, increasingly will be in technology, and we’re determined to take the steps to run faster”.

The push to increase investment in technologies comes amid warnings that China is rapidly catching, and in some cases has already overtaken, the US in technologies that are increasingly important for military uses.

The National Commission on Artificial Intelligence in March warned that China could surpass the US as the world’s AI superpower within a decade. Eric Schmidt, the former Google chief executive who chaired the commission, said the US was “close to losing” its cutting edge in microelectronics because of the US over-reliance on Taiwan.

The House of Representatives is next week expected to start debating its own China bill. While the Senate bill won easy passage, there is expected to be significant debate in the House about how the two chambers combine their respective legislation into a package that would garner enough support in the entire Congress and be signed into law by President Joe Biden.