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The Senate stands able to move large bipartisan know-how and manufacturing legislation to tackle China

Employees are working on the silicon wafer production line at a GalaxyCore Inc. factory in Jiashan County, Jiaxing City, Zhejiang Province, China on May 25, 2021.

Guo Junfeng | Visual China Group | Getty Images

The Senate is due to pass one of the largest industrial laws in US history this week to bolster the country's technology production to keep up with competition from China.

The bill, which is expected to easily evacuate the Upper Chamber with support from Republicans and Democrats, includes tens of billions of dollars in scientific research, subsidies for chipmakers and robotics makers, and a National Science Foundation overhaul.

The scope of the bill, the end product of at least six Senate committees and weeks of debates, reflects the many fronts of rivalry between the US and China and offers a rare glimpse into bipartisan legislation to combat Beijing's economic and military expansion.

The proposal, subject to definitive changes, would:

Provided $ 52 billion to support domestic semiconductor manufacturing $ 81 billion approved for the National Science Foundation from Fiscal Year 2022 to Fiscal Year 2026 Approved $ 16.9 billion for the Department of Energy in the same period for research and development and energy-related Supply chains in key technology areas from participating in the 2022 Beijing Winter Olympics

Some commentators see a modern parallel to the Cold War between the US and the Soviet Union in the Innovation and Competition Act of 2021. If the country fails to expand semiconductor production or redirect rare earth supply chains, proponents say, the US could be at a strategic disadvantage in the years to come.

The final bill is expected to cost about $ 200 billion.

Non-partisan Blitz

Senate Majority Leader Chuck Schumer, Democrat of New York and one of the bill's top cheerleaders, spent weeks putting together the many pieces of the bill. The final invoice should contain well over 1,400 pages of text.

"The bipartisan legislation will be the largest investment in scientific research and technological innovation in generations and set the United States on the path to lead the world in the industries of the future," said Schumer on Monday from the Senate session.

The bill is a product of six committees and contains dozens of Republican amendments, he said, adding that the chamber will consider some final changes on Tuesday before passing the bill.

"It will be one of the most important things that we have done in a very long time, the largest investment in scientific research and technological innovation in generations, decades," said Schumer.

CNBC policy

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For their part, Senate Republicans have largely stuck to the tough Trump-era China approach, even if that means a higher price tag or a more involved federal government.

Most of the mammoth piece of legislation is what was previously known as the Endless Frontier Act.

Now, a change to that provision by Schumer and Sen. Todd Young, R-Ind., Would breathe new life into the National Science Foundation, allocate $ 81 billion to the NSF between fiscal years 2022 and 2026, and establish a directorate for technology and innovation .

"Today our leadership is challenged by a state capitalist regime in Beijing that threatens to win the next century by dominating the critical technologies that will shape it," Young wrote in a May post for the Ripon Forum, a Republican opinion journal.

“It is time the United States went on the offensive by passing the bipartisan Endless Frontier Act, which would cement US leadership in scientific and technological innovation through increased investment in the discovery, development and manufacture of technologies that are critical to national security and economic competitiveness, "he added.

Even Conservative Senator John Cornyn, R-Texas, has spoken out in favor of the law. Its bipartisan CHIPS for America Act has since been incorporated into the broader bill and would allocate approximately $ 50 billion to boost U.S. semiconductor manufacturing.

"The reality is that despite the back and forth in the process and some political snippets, the Senate has come up with a very comprehensive bill," Dewardric McNeal, who was a political analyst at the Pentagon during the Obama era, told CNBC.

“One of the biggest questions many China experts had about this legislation was whether it would focus on 'running faster than China' by investing more in ways to get ahead of China and technologically suggest or if they would focus more on blocking China's move forward and fight China if it gets too far on legal and regulatory measures, "he added." It looks like the Senate has tried one to do a bit of both. "

The bill would fund a Department of Commerce-administered grant program that, to an unspecified extent, offsets state and local government financial incentives for chipmakers who upgrade or build factories.

Schumer and others hope such programs will entice domestic and foreign chipmakers to open new, state-of-the-art foundries in the United States. The world's most advanced foundries are operated solely by Samsung in South Korea and Taiwan Semiconductor Manufacturing Co.any in Taiwan.

The rare display of bipartisanism is even more impressive when you consider that even with majorities in both chambers, Congress Democrats were unable to move forward.

With Sens. Joe Manchin, D-W.Va., And Kyrsten Sinema, D-Ariz., Who are against the abolition of filibusters, progressive political elements from immigration reform to gun control have stalled.

Infrastructure has barely improved: hundreds of billions of dollars still separate Republicans and Democrats, many of whom fought for the promise to pass a law to repair the country's roads, bridges, and waterways that occurs only once in a generation.

Another cold war?

It is clear to all of the major parties involved – Democrats, Republicans and Chinese officials – that the bill and its broad support provide the clearest evidence yet that Washington’s deep skepticism about Beijing was not reserved for the Trump administration alone.

Last week, President Joe Biden again underscored his government's deep distrust of the Chinese government.

The White House announced on Friday that it would expand restrictions on American investments in certain Chinese companies with alleged links to the country's military and surveillance efforts and add more companies to a growing US blacklist.

On August 2, Americans will be banned from investing in 59 Chinese companies, including Aero Engine Corp. of China, Aerosun Corp. and Huawei Technologies.

The government announced Tuesday, hours before the Senate was due to vote on the technology bill, that it would examine a dramatic expansion of US production of lithium batteries, rare earth minerals and semiconductors.

Earlier this year, the White House announced it would conduct a 100-day review of domestic supply chains for critical materials and technologies. Officials have been careful not to name a single country, but commentators say the review and resulting recommendations are seen as an attempt to reduce US reliance on Chinese exports.

Many US technologies that are believed to be critical to future economic and military superiority – electric vehicles, smart cities, faster computers, and cutting edge weapons – are currently being made with supplies of rare earths from China.

According to the U.S. Geological Survey returned 80% of the rare earths imported by the United States between 2016 and 2019.

A more open shot at Beijing comes from part of the bill known as the Strategic Competition Act, which is a product of the Senate Foreign Affairs Committee.

Sens. Robert Menendez, DN.J., and Jim Risch, R-Idaho, want $ 1.5 billion over five years to support the "Anti-Chinese Influence Fund to Combat the Malicious Influence of the Chinese Communist Party around the world." .

The Strategic Competition Act would also ban US officials from the 2022 Winter Olympics in Beijing and call for an end to "ongoing human rights violations by the Chinese Communist Party, including the Uyghur genocide." The provision would not exclude US athletes from participating in the Games.

House Speaker Nancy Pelosi (D-CA) holds her weekly press conference with reporters from Capitol Hill on May 20, 2021 in Washington, D.C.

Ken Cedeno | Reuters

While the debate on multiple amendments prevented the Senate from passing the bill before the Memorial Day recess, the bipartisan passion for keeping the US competitive is expected to remain in the House of Representatives, where the bill is expected to survive another round of discussion before he got to Biden's desk.

Biden, who on Tuesday called for $ 50 billion to boost semiconductor manufacturing and research, is widely expected to sign the bill and has spoken out broadly in favor of strengthening U.S. chip manufacturing.

House Speaker Nancy Pelosi, D-California, on Thursday reiterated her support for a diplomatic boycott of the 2022 Olympics.

"Although China has changed in the last generation, its administration's appalling human rights record has not changed," she said in a press release from the 3rd Tiananmen Democracy Demonstrator. "The US Congress has and will continue our decades of bipartisan and two-chamber commitment to hold the Chinese government accountable."

Despite the pointed language in the bill, McNeal said comparisons to the Cold War between the US and the Soviet Union were unwise and misleading.

“It's not a cold war at all. But given the high level of economic integration and dependency between the US and China, it is something much more complex and complicated, ”he wrote. “In contrast to the Soviet Union, China has no diplomatic allies worth mentioning (regardless of North Korea and Pakistan), no military alliances and no ideological bloc to strengthen its diplomacy and security policy. All things that the Soviet Union could boast of. "

"It still has to go to the House of Representatives and there's no real way of knowing how the process will be (always messy) over there, nor what the end result will be," he added, "but the Senate has something big and done great things. "

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