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Schumer Plans China-Focused Follow-Up to CHIPS and Science Act

MAY 04, 2023
Senate Democrats have announced a legislative push that resuscitates and expands on provisions omitted from last year’s CHIPS and Science Act that address the U.S.–China rivalry. They expect their effort will include proposals for targeted R&D funding and new controls aimed at preventing China from exploiting U.S. technological advances.
Will Thomas
Spencer R. Weart Director of Research in History, Policy, and Culture

Senate Majority Leader Chuck Schumer (D-NY) announced a new legislative initiative on May 3 focused on the U.S. competition with China.

Senate Majority Leader Chuck Schumer (D-NY) announced a new legislative initiative on May 3 focused on the U.S. competition with China. Behind him, from the left, are: Sens. Patty Murray (D-WA), Ron Wyden (D-OR), Tom Carper (D-DE), Debbie Stabenow (D-MI), and Chris Coons (D-DE). (Image credit – Office of Sen. Schumer)

Senate Majority Leader Chuck Schumer (D-NY) announced a major initiative yesterday to develop bipartisan legislation that would reinforce the U.S. position in its competition with China, with a special emphasis on technology.

The push renews the campaign Schumer and Sen. Todd Young (R-IN) waged in the last Congress to pass a national competitiveness bill, which ultimately resulted in the CHIPS and Science Act. While that law made extensive changes to U.S. science and technology policy and appropriated $52 billion to support domestic semiconductor manufacturing, many provisions, especially ones addressing trade and foreign policy, were dropped in the frantic negotiations to move it across the finish line.

Now, Schumer is calling on Senate committees to develop bipartisan proposals focused on China and on U.S. international partnerships aimed at counterbalancing Chinese power. These are to include measures to limit “the flow of advanced technology to the Chinese government” and to block U.S.-based investment in technology being developed in China.

Schumer also envisions expanding on the CHIPS and Science Act’s semiconductor initiative, mentioning “biotech or bio-manufacturing” specifically and asking senators to identify “other key areas of technology that need funding.”

Research security and investment controls a major focus

Discussing his goals for the legislation at a press conference , Schumer highlighted the prospect of tightening restrictions on trade with China through export controls or sanctions. He said he aims to build on the strict controls the Biden administration placed on advanced semiconductors last October.

Schumer also said he is interested in strengthening federal power to review and block foreign investments in U.S. companies as well as authorizing what is known as an “outbound” review process that screens U.S. investments in Chinese companies.

“It’s incumbent on us to ensure that the U.S. is not the financial lifeblood supporting the Chinese government and its military technological advancement. We must make sure that we can prevent the Chinese government from using our own free society to acquire and even steal U.S. innovations and critical technologies,” Schumer remarked.

Because the administration’s export controls restrict U.S.-made equipment and components from being used to produce advanced chips sold to buyers in China, and because that condition applies to most chips produced globally, the policy essentially aims to cut off China from procuring advanced semiconductors. The controls also restrict U.S. citizens and permanent residents from working on advanced semiconductors in China for any company with operations there.

U.S. officials have explicitly said their goal is to slow China’s advancement of its domestic semiconductor industry so that the U.S. can stay as far ahead as possible , and the administration is reportedly preparing to extend such controls to additional technologies such as ones used in quantum devices .

On its own accord, the administration is also planning to implement outbound investment reviews to prevent individuals and companies in the U.S. from financing Chinese advances in strategically significant technologies.

Schumer’s new legislation could determine how far new controls reach. For example, in 2021 two of the senators developing the new legislation, Sens. Bob Menendez (D-NJ) and Ben Cardin (D-MD), joined Sens. Jim Risch (R-ID) and Marco Rubio (R-FL) in backing a measure to apply screening to gifts to universities from donors in China. That proposal was opposed by higher education advocacy groups, who argued it would inhibit international collaborations.

The new legislation could also include stricter rules for disclosing foreign sources of research funding. Now-retired Sen. Rob Portman (R-OH) nearly negotiated the inclusion of language he developed with Sen. Tom Carper (D-DE) in the CHIPS and Science Act that would have made it explicitly illegal to knowingly fail to disclose foreign funding as well as given the State Department more discretion to deny visa applications for visiting researchers. However, Asian American advocacy groups successfully opposed the provision, arguing it could lead to discriminatory abuses.

Legislation faces partisan political environment

To succeed, Schumer’s legislative push will require even broader buy-in from Republicans than the CHIPS and Science Act, as now any bill must not only avoid a potential Senate filibuster but also find acceptance from Republican leadership in the House.

At his press conference, Schumer was flanked by a group of Senate Democrats, who indicated they had already been conferring with their Republican colleagues. However, some also spotlighted Democrats’ current standoff with House Republicans over the impending need to raise the federal debt limit, in which the Republicans are demanding sharp cutbacks in federal non-defense spending.

Senate Appropriations Committee Chair Patty Murray (D-WA) said, “China is not debating about whether to pay its debts or wreck its economy. China is not debating about whether to invest in its future, or cut and cap the investments they need to keep it competitive. … So, why do House Republicans want to threaten economic catastrophe and put us behind? We cannot let partisan hostage-taking win the day and lose us the 21st century.”

Murray further remarked, “I’m already talking to my colleagues on Appropriations about what kind of investments make sense, whether it’s in R&D, strategic partnerships abroad, or in other areas, similar to how we did with the CHIPS funding last Congress, which had widespread bipartisan support.”

The Appropriations Committee is convening a closed hearing on the fiscal year 2024 budget request in the context of the U.S.–China relationship next week. A public hearing will take place the following week featuring Defense Secretary Lloyd Austin, Commerce Secretary Gina Raimondo, and Secretary of State Tony Blinken.

Speaking about Schumer’s proposal with Roll Call, a Capitol Hill news outlet, Sen. Young expressed optimism about its prospects, suggesting new spending is not out of the question so long as it is targeted. “I would hope that my colleagues irrespective of party would be willing to make strategic investments where necessary for our national security,” he remarked.

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