Sweeping legislation that would start to unleash about $250 billion in federal funding encourage U.S. technological competition with China is set to easily clear the Senate as early as Tuesday, Reuters reports. Here’s what’s in it.
The Innovation and Competition Act of 2021 (ICA 2021) cleared a procedural vote in May by a wide 68-30 margin, and the final version of the bill is expected to have a similarly relaxed passage through the Senate. As Barron’s reported, the huge bill is an “amalgam of hundreds of China-related proposals” that have circulated through Congress in recent years and reflects a consensus across both political parties in which U.S.-China relations are “increasingly viewed through a prism of competition and national security.”
At the heart of the bill is the Endless Frontier Act, which was initially proposed as a $100 billion funding package for the National Science Foundation to put towards research in fields like quantum computing. As Vox explained, the Senate has instead morphed it into a gargantuan package throwing money all over the place, with hundreds of amendments tacked on (some of it at the cost of science funding in the original proposal).
Of the funding on the table, Barron’s wrote only $54 billion is expected to be appropriated on passage—mostly to subsidize the creation of more semiconductor plants in the U.S., which currently imports much of its supply from factories in Taiwan. The rest of the funds will be reliant on Congress authorizing their distribution in future spending bills. For example, provisions of the bill outline funding for a variety of technical and scientific endeavors, including $81 billion for the National Science Foundation from 2022 to 2026, roughly $16.9 billion to the Department of Energy over that time period for research into energy-related supply chains in the tech sector, and $10 billion for the Department of Commerce to create regional tech hubs across the country.
ICA 2021 would provide $10 billion in additional funding to NASA’s human spaceflight exploration program, as well as authorize the International Space Station to continue operations through 2030. Some $1.5 billion in funding for research into next-generation 5G wireless technology is also outlined in the legislation.
ICA 2021 also goes out of its way to posture the U.S. as tough on China. Provisions in the bill would prohibit U.S. diplomats from attending the 2022 Beijing Winter Olympics. According to CNN, the legislation directs the U.S. Secretary of State to create lists of every state-owned enterprise in China suspected to have committed industrial espionage or forced technology transfers, as well as encourages the White House to impose sanctions on individuals or entities suspected of stealing or benefiting from the theft of U.S. intellectual property and/or involvement in cyber attacks on U.S. assets. Other parts of the bill “create an inter-agency task force to address Chinese market manipulation in the United States, and authorize spending to support an independent media in China,” CNN wrote. Expanded requirements for federal infrastructure materials to rely on U.S.-made iron, steel, manufactured products, and construction materials—rather than import cheaper materials from abroad—are also part of the bill.
Donald Trump’s administration struck a hard line on China, starting a tit-for-tat trade war and targeting its tech industry for particular pain—under Trump’s tenure, Chinese tech companies like telecommunications giant Huawei faced accusations of espionage and sanctions intended to cut off their access to U.S. technology.
Joe Biden’s White House has followed a similar direction, riding a bipartisan wave of wariness about the growing influence of China’s tech sector. A recent executive order barred U.S. investors from having financial interests in 59 different Chinese companies, including Huawei, supposedly linked to defense, surveillance, or human rights abuses such as concentration camps for Uyghur Muslims in the Xinjian region. In addition to semiconductors, the Biden administration has proposed a dramatic expansion of U.S. production of lithium batteries and rare earth mineral mining, industries that are also heavily reliant on the Chinese supply chain. China has responded to U.S. pressure with its own retaliatory measures.
Currently, the bill has yet to pass the House of Representatives, although there is as of now no timetable set for the legislation and it may end up being considerably different than the Senate version. Biden is expected to promptly sign it into law if and when the legislation reaches his desk. Barron’s reported that “some analysts” expect ICA 2021 to be passed into law by the time Congress adjourns for the month of August.
Correction: The Senate bill proposed extending ISS operations through 2030, not 2020 (which is in the past). We regret the error.