{"id":231609,"date":"2021-06-09T12:21:48","date_gmt":"2021-06-09T19:21:48","guid":{"rendered":"https:\/\/chinadigitaltimes.net\/?p=231609"},"modified":"2021-06-10T16:25:29","modified_gmt":"2021-06-10T23:25:29","slug":"u-s-senate-passes-industrial-policy-bill-to-compete-with-beijing","status":"publish","type":"post","link":"https:\/\/chinadigitaltimes.net\/2021\/06\/u-s-senate-passes-industrial-policy-bill-to-compete-with-beijing\/","title":{"rendered":"U.S. Senate Passes Industrial Policy Bill to Compete with Beijing"},"content":{"rendered":"
The United States Senate has passed a landmark, bipartisan bill to dramatically increase government spending on technological development. The bill, known as the U.S. Innovation and Competition Act, allocates $250 billion to spending in sectors deemed critical to America’s competitiveness against China. It now heads to the House, where it still must be reconciled with a bill authored by more skeptical House representatives<\/a>. The Wall Street Journal’s John D. McKinnon reported on the passage of the bill on Tuesday:<\/strong><\/a><\/p>\n The legislation represents a potential landmark effort to turn the tide on several long-term trends in U.S. competitiveness. Those include eroding federal investments in research overall and a shrinking share of the world\u2019s semiconductor manufacturing.<\/p>\n [\u2026] The bill aims to overhaul U.S. government support for science by expanding the government\u2019s role in technological research, including through the National Science Foundation. It would authorize about $190 billion in spending to strengthen U.S. advanced technologies to better compete globally, according to a recent Congressional Budget Office analysis, although not all of that money would represent new spending.<\/p>\n The bill also has become a vehicle for a number of other tech-related initiatives. One would authorize about $52 billion for encouraging more semiconductor production in the U.S. [Source<\/strong><\/a>]<\/p><\/blockquote>\n In recent weeks, top officials in the Biden administration have made it clear that they see the U.S.-China relationship as having entered a new era. At the end of May, Biden’s “Asia Czar” on the National Security Council<\/a>, Kurt Campbell, affirmed that “the period that was broadly described as engagement has come to an end,” and that “the dominant paradigm is going to be competition.” CNN’s Katie Lobosco provided an overview of the key features of the Innovation and Competition Act:<\/strong><\/a><\/p>\n Invests in semiconductor manufacturing<\/strong> Buy American requirements<\/strong> Countering China’s state-directed economic policies<\/strong> The legislation directs the President to use the full range of his authority to impose sanctions against people or entities that have stolen US trade secrets or benefited from such theft, as well as sanctions against foreign entities or people that have supported or engaged in cyberattacks or otherwise undermined US cybersecurity on China’s behalf. [Source<\/strong><\/a>]<\/p><\/blockquote>\n On Wednesday, the National People’s Congress foreign affairs committee responded to the passing of the bill by accusing the U.S. of “paranoid delusion of egoism<\/a>.” But one notable aspect of the U.S. bill is its resemblance to China’s own industrial policy, known as “Made in China 2025.” China’s industrial policy has long been criticized by Washington, which accuses Beijing of providing unfair competitive advantages to its domestic firms. Xi Jinping has made achieving “self-reliance” an increasing priority, particularly since the fifth plenum of the 19th Party Congress last October<\/a>.<\/p>\n The Trump and Biden administrations have also shown greater enthusiasm about protectionist “Buy American” policies<\/a>, and concerns about unfair competition seem to have quietly fallen by the wayside. The New York Times’ David E. Sanger, Catie Edmondson, David McCabe, and Thomas Kaplan reported on the similarities between the Competition Act and Made in China 2025, while noting how U.S. politicians have taken pains to avoid calling the bill an “industrial policy”:<\/strong><\/a><\/p>\n Mr. Schumer and the bill\u2019s other sponsors have steered clear of the phrase \u201cindustrial policy,\u201d knowing that would revive a 30-year-old debate about whether the government was picking winners and losers, or championing certain industries over others. That argument goes back to the days of the Reagan administration, when the biggest threat to America\u2019s semiconductor and auto industries seemed to be Japan, and the federal government started some small-scale initiatives, including one called Sematech, to reinvigorate the semiconductor industry. (The federal government\u2019s participation in Sematech ended a quarter-century ago.)<\/p>\n [\u2026] What is most striking about the legislation is the degree to which the projects that the bill funds closely parallel those in China\u2019s \u201cMade in China 2025\u201d program, which funnels huge government spending into technologies where the country is seeking to be independent of outside suppliers. The Chinese government announced its initiative six years ago.<\/p>\n The result, many experts say, is that the bill may accelerate the decoupling of the world\u2019s largest and second-largest economies, even as each worries about how dependent it is on the other. Beijing fears that it will be reliant for years on foreign sources for the most advanced chips and cutting-edge software; Washington has the mirror-image worry that China\u2019s dominance in 5G technology will give Beijing the ability to cut off American telecommunications. [Source<\/strong><\/a>]<\/p><\/blockquote>\n Another initiative that analysts have pointed to as evidence of the Biden administration’s embrace of industrial policy is its new “trade strike force” to fight unfair Chinese trade practices and bolster domestic supply chains. The initiative was announced as part of a White House report released on Tuesday. South China Morning Post’s Cissy Zhou reported on perceptions of Biden’s industrial policy in China:<\/strong><\/a><\/p>\n The White House announced on Tuesday that the Biden administration will establish a trade strike force, led by the US Trade Representative Katherine Tai, to halt the \u201chollowing out\u201d of American industry and the erosion of critical supply chains for products such as semiconductors and medicines.<\/p>\n [\u2026] \u201cCompared to the Trump administration, the Biden administration\u2019s policy toward China since taking office has been more aggressive, especially in the hi-tech sector,\u201d said Shi Yinhong, an adviser to the State Council, the country\u2019s cabinet.<\/p>\n [\u2026] Wang Huiyao, president of the Centre for China and Globalisation, a Beijing think tank, said the US measures to address supply chain vulnerabilities were not a move in the right direction for globalisation.<\/p>\n \u201cThis is really driven by this cold war mentality to block companies doing business with each other \u2026 this is really turning back the clock of history development,\u201d said Wang. [Source<\/strong><\/a>]<\/p><\/blockquote>\n There are quite a lot of references to China using “unfair subsidies” in the report. But hard to make much sense of that when US is in process of passing a nearly-$250 billion strategic industry-oriented subsidy bill https:\/\/t.co\/bJkLblNb4U<\/a><\/p>\n \u2014 Tom Hancock (@hancocktom) June 9, 2021<\/a><\/p><\/blockquote>\n Another key feature of the bill is a significant increase in funding towards a newly created directorate for technology and innovation within the National Science Foundation (NSF), a government agency that has historically served as a key sponsor for scientific research and education. But much of the initial $100 billion allocated towards the new directorate has been reallocated to traditional research initiatives and labs. Last week, The Economist reported in depth on the history of federal R&D research and the competition for NSF funds:<\/strong><\/a><\/p>\n When it was first introduced in May 2020, the Endless Frontier Act planned to set aside $100bn for a new Directorate for Technology and Innovation within the NSF. This would have borrowed characteristics from the Defence Advanced Research Projects Agency (darpa), the military-research office responsible for spearheading research that led to the internet, the computer mouse and mRNA vaccines.<\/p>\n The act\u2019s ambitions have since narrowed. Instead of the full $100bn, the NSF\u2019s new tech directorate will get $4bn. Some of the money has gone to pork. A significant portion has been diverted to the Department of Energy\u2019s national labs. Though more than $50bn of funding will go to NSF, much of it either replaces existing funding or is earmarked for causes other than R&D, such as stem education.<\/p>\n Innovation experts advise against looking a gift horse in the mouth, however. Federal spending on research has fallen from more than 1.2% of GDP in 1976 to less than 0.8% today. As a portion of the federal budget, it has dropped from 12% at its 1960s peak to 3%. The money set aside for R&D in the new bill will not reverse this slide. But the law will still deliver substantial additional funding to the NSF: its budget for 2022 will be 27% higher than in 2021 and will double over the next five years. Jonathan Gruber of the Massachusetts Institute of Technology, whose work helped to spur the legislation, views the act as a \u201cdown payment\u201d towards future innovation.\u00a0[Source<\/strong><\/a>]<\/p><\/blockquote>\n A continued open question is how U.S. allies in Europe will react to the Biden administration’s latest initiatives to compete with China. In May, Politico Europe reported that the E.U. has welcomed similar protectionist initiatives<\/a> to Biden’s “Buy American” plan, and is reportedly preparing legal tools to pressure member states to “Buy European.” But the allies also have plans to partner more closely on issues related to technology and trade. On Wednesday, Politico Europe’s Stuart Lau reported that the U.S. and E.U. are set to announce a new partnership later this month, as part of a joint effort to “push back against China and promote democratic values”:<\/strong><\/a><\/p>\n While negotiations on the new body are still ongoing, U.S. President Joe Biden and European Commission President Ursula von der Leyen plan to announce details of the project when they meet in Brussels on June 15. The EU proposed the initiative in December, and U.S. officials have been eager to show that Washington is willing to work with its allies after a rocky period in the transatlantic relationship during Donald Trump’s presidency.<\/p>\n [\u2026] Officials hope the new transatlantic body will give the EU and U.S. a stronger footing to keep pace. As part of the so-called EU-U.S. Trade and Technology Council (TTC), Washington and Brussels are expected to detail how they will work together to promote joint standards around emerging technologies, and to make commitments to better police the digital world now dominated by a few Silicon Valley tech giants.<\/p>\n The alliance could tackle everything from the intricate tech supply chains \u2014 which often run through China \u2014 to making collective investments in digital projects. And it will be designed to work with other like-minded countries, including Australia and Japan, and at international bodies like the World Trade Organization.<\/p>\n “The point, of course, is to push for real global standards, standards that build on privacy, on the integrity of digital and the dignity of the individual as the starting point,” Margrethe Vestager, the Commission executive vice president in charge of digital policy, told EU politicians last week. [Source<\/strong><\/a>]<\/p><\/blockquote>\n But achieving a trans-Atlantic consensus on issues such as privacy and digital policy may be easier said than<\/strong><\/a>. As part of a broader article on U.S.-E.U. China policy, the Financial Times’ Demetri Sevastopulo and Sam Fleming reported:<\/p>\n One EU official cautions that there are still significant ongoing transatlantic differences over technology. The question was whether the EU and US could \u201cget over differences on data protection and big data content, and focus on the conditions that will allow us to prevail technologically in the geopolitical great power competition\u201d, the official says.<\/p>\n Tensions over semiconductors highlight how difficult this will be. The Dutch company ASML dominates the market for the advanced machines needed by Chinese companies to make high-end chips needed for devices such as smartphones.<\/p>\n But ASML has been unable since 2019 to obtain a licence from the Dutch government to export its extreme ultraviolet lithography equipment to China\u2019s Semiconductor Manufacturing International Corporation, the country\u2019s biggest chipmaker, according to people familiar with the matter. Biden on Thursday banned Americans from investing in 59 Chinese companies that included SMIC. [Source<\/strong><\/a>]<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":" The United States Senate has passed a landmark, bipartisan bill to dramatically increase government spending on technological development. The bill, known as the U.S. Innovation and Competition Act, allocates $250 billion to spending in sectors deemed critical to America’s competitiveness against China. It now heads to the House, where it still must be reconciled with […]<\/p>\n","protected":false},"author":1072,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":"","_links_to":"","_links_to_target":""},"categories":[116,2,10,14744,100,6],"tags":[6192,2046,16088,2726,3588,2526,2524,376,2035,3306,5863,5860,7702,14815,5838,5812,6379],"class_list":["post-231609","post","type-post","status-publish","format-standard","hentry","category-world","category-economy","category-law","category-level-2-article","category-politics","category-sci-tech","tag-competition","tag-eu-trade","tag-europe-relations","tag-made-in-china","tag-protectionism","tag-science","tag-scientific-development","tag-semiconductor","tag-technology-innovation","tag-technology-transfer","tag-us-china-business-competition","tag-us-china-trade","tag-us-relations","tag-u-s-senate","tag-us-technology","tag-us-trade","tag-united-states","et-doesnt-have-format-content","et_post_format-et-post-format-standard"],"yoast_head":"\n
\nThe bill would provide more than $50 billion over five years to subsidize semiconductor manufacturing, a move aimed at competing with China and addressing the global chip shortage that’s disrupting supply chains for things like cars, smartphones and appliances.<\/p>\n
\nThe legislation would requires that the iron, steel, manufactured products and construction materials used in federally funded infrastructure projects is produced in the United States. Currently, some federal projects don’t require the materials to be American-made.<\/p>\n
\n[\u2026] The bill directs the US secretary of state to publish a list of all state-owned enterprises in China that have used either of those tactics. It also takes steps to strengthen America’s partnership with allies in the region, like Japan and Australia, to stop importation of goods made with stolen intellectual property.<\/p>\n\n