House Passes Chips Bill as Republicans Air Soft-on-China Gripes

(Bloomberg) -- The House passed an expansive bill that would invest tens of billions in the U.S. tech sector, but Republican objections that it's too weak on China threaten what Democrats hoped would be a quick election-year win.

The bill started as a bipartisan push to bolster U.S. manufacturing and research, and ease the dependence on China for semiconductors, but it became mired in long-standing partisanship over U.S. policy on China.

The 222-210 vote, coming as the Winter Olympics opened in Beijing, fell mostly along party lines. Yet the final version of the legislation still has to be negotiated with the Senate and could be months away. Beijing have accused the U.S. of making China an “imaginary enemy.” 

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China's rising economic power and global influence have been a focus for three successive presidential administrations and the subject of bipartisan angst in Congress, but the two parties' tactics have differed widely. Former President Barack Obama emphasized engagement and building relationships in the Pacific region while former President Donald Trump used tariffs and tough rhetoric even as he deployed personal diplomacy with Chinese leader Xi Jinping. 

President Joe Biden, focused on his domestic agenda and the ongoing pandemic, hasn't written its China trade policy yet. Last month, he said he'd like to lift Trump-era tariffs but “we're not there yet.” 

The lingering partisan friction had been on display during the debate on the House bill.

Democrats have emphasized the bill's domestic benefits, including $45 billion over six years for a new Supply Chains for Critical Manufacturing Industries Fund and $52 billion over five years to support semiconductor production. 

The bill also authorizes $8.8 billion this year for Energy Department research and development programs, with that amount increasing each year through fiscal 2026. And it authorizes as much as $8 billion to help developing countries address climate change over the next two years and another $2 billion annually to help developing countries deploy clean energy technologies, expand zero-emission vehicles, promote sustainable land use, and adapt to the effects of climate change.

BGOV Bill Summary: H.R. 4521, U.S.-China Competition Package (1)

Republicans -- even those whose districts stand to gain from the infusion of semiconductor money -- criticized the bill on multiple points, including what they called a “slush fund” for climate programs. 

They also argued the bill does too little to keep U.S. technology out of the hands of the Chinese military or taxpayer money from supporting China's own green energy industry. 

Representative Michael McCaul, a Texas Republican who has a Samsung Electronics Co. plant in his district, sponsored the provision aiding the U.S. chip industry but said he opposed the bill.

“The administration came out with their statement of administration policy and they left the word ‘China' out of their anti-China bill,” McCaul said, referring to White House support for the House legislation. “I think that speaks volumes about the lack of content when it comes to countering the malign influence.”

Republicans, in a message retweeted Thursday by GOP leader Kevin McCarthy, said the bill became a “backup plan” for Biden's stalled economic agenda. 

McCaul said he's talked with Senate GOP leader Mitch McConnell and others about changing the bill “so we can take some of this really bad stuff out.” 

Democrats underscore the House measure includes at least parts of 63 bills that Republican have co-sponsored. And of those, they say, 29 have previously passed the House with a bipartisan vote.

“This is a magnificent piece of work,” Speaker Nancy Pelosi said Thursday. House Foreign Affairs Chairman Gregory Meeks, a New York Democrat, said the bill would “revitalize America's industrial base” and “force China to play by the rules on the world stage.”

Pelosi and her lieutenants worked quickly to write the bill under pressure from the Biden administration, industry and a group of 25 moderate House Democrats facing tough re-election bids.

Commerce Secretary Gina Raimondo, after meeting with House Democrats on Wednesday, dismissed talk that a final two-chamber agreement and passage of a U.S.-China Competition bill might not occur until Memorial Day. She suggested it is Republicans who are playing politics.

“We ought to be able to have a swift, efficient conference process, reconciling the differences,” Raimondo said.  

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