US $170bn hi-tech bill raises China’s hackles

The industrial policy bill is full of Cold War mentality and ideological prejudice, says Beijing in response to US move

BEIJING/WASHINGTON: Beijing on Wednesday accused Washington of “paranoid delusion” after the US Senate passed a sweeping industrial policy bill aimed at countering the surging economic threat from China.

America’s political parties overcame partisan divisions to support pumping more than $170 billion into research and development, one of the most significant achievements in Congress since Joe Biden’s presidency began in January.

The United States Innovation and Competition Act represents the largest investment in scientific research and technological innovation “in generations”, according to Senate majority leader Chuck Schumer.

“We are in a competition to win the 21st century, and the starting gun has gone off,” Biden said. “As other countries continue to invest in their own research and development, we cannot risk falling behind.”

The bill is seen as crucial for US efforts to avoid being outmanoeuvered by Beijing as the adversaries compete in the race for technological innovation.

“The bill shows that the paranoid delusion of egoism has distorted the original intention of innovation and competition,” said the National People’s Congress foreign affairs committee, according to a report by the Xinhua news agency.

It said the bill was “full of Cold War mentality and ideological prejudice”.

The bill now heads to the US House of Representatives.

“Today, the Senate took a critical bipartisan step forward to make the investments we need to continue America’s legacy as a global leader in innovation,” US commerce secretary Gina Raimondo said, praising the passage of the bill. “This funding isn’t just about addressing the current semiconductor chip shortage, it is about long-term investments,” she said.

Schumer called the measure “one of the most important things this chamber has done in a very long time, a statement of faith in America’s ability to seize the opportunities of the 21st century”.

Semiconductors

The bill allocates $52 billion in funding for a previously approved plan to increase domestic manufacturing of semiconductors.

It also authorises $120 billion over five years for activities at the National Science Foundation to advance priorities including research and development in key areas such as artificial intelligence and quantum science. And it facilitates tie-ups between private firms and research universities.

“This is an opportunity for the United States to strike a blow on behalf of answering the unfair competition that we are seeing from communist China,” said Republican Senator Roger Wicker, one of the main co-sponsors of the effort.

Whichever countries best harness technologies like artificial intelligence, robotics and quantum computing will be able to shape innovation to its image, added Schumer, before criticising Chinese President Xi Jinping.

A summary of the Senate legislation notes how China is “aggressively investing over $150 billion” in semiconductor manufacturing in order to control the advanced technology.

‘China responsible for its own diplomatic woes’

China has only itself to blame for a global backlash against its policies, the White House’s top official for Asia said.

“Over the last year or two the country that has done the most to create problems for China is not the United States but China,” Kurt Campbell, the US coordinator for Indo-pacific affairs on the National Security Council said on Tuesday at an event hosted by the Center for a New American Security.

Campbell said the Chinese foreign policy establishment understands that the country’s policies, which include militarising artificial islands and outcroppings in the South China Sea and a more assertive approach to global diplomacy, have helped to cause a global backlash against Beijing.