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U.S. chip subsidy effort faces pushback over China issues

Berita 24 English -  A series of amendments to a $190 billion United States Senate bill aimed at countering China's technological challe...

Berita 24 English - 
A series of amendments to a $190 billion United States Senate bill aimed at countering China's technological challenge is in limbo after business groups objected to provisions intended to ensure that no money goes to China or other US adversaries.

New regulations or reviews of Chinese investments or deals could jeopardize the future operations of US businesses in the country, which include semiconductors and medical equipment. Since 2002, the bilateral trade deficit has averaged more than $100 billion per year.

Senators from both parties want "guardrails" in places, such as mandatory security disclosures and interagency reviews, to prevent US businesses from jeopardizing national security by outsourcing critical technologies to China.

Senate legislation authorizes $120 billion for high-tech research and another $54 billion for subsidized semiconductor production in the United States. It makes no distinction between foreign recipients and US-based firms when determining who receives funding for US-based chip factories.

A primary objective is to bring the world's most advanced chip manufacturing facilities to the United States, which can be accomplished only by Taiwan Semiconductor Manufacturing Co and Korea's Samsung Electronics Co Ltd.

Senator Marco Rubio of Florida has introduced legislation requiring US national security officials to screen recipients and disclose funding or support from foreign entities, including the Chinese government or state-owned enterprises.

Both TSMC and Samsung operate in China.

Another amendment, co-sponsored by Democratic Senator Bob Casey and Republican Senator John Cornyn, would require an interagency review of any US investments in China or a shortlist of adversarial countries. That would be a sea change for US law, which has long included provisions for screening inbound investments but not outbound investments.

"If a company wishes to offshore semiconductor manufacturing to China, we must be informed," Casey said on Wednesday from the Senate floor. "Yet, business interests such as the US Chamber of Commerce and the US-China Business Council have banded together to oppose this commonsense proposal."

Casey aimed at Republicans who opposed the measure, claiming they talk tough on China but "cut and run" when confronting big business.

According to John Murphy, senior vice president for international policy at the US Chamber of Commerce, existing laws such as the Export Control Reform Act of 2018 (ECRA) could address the China investment issue. The proposal needed more Senate debate before being included in such a broad package.

"Congress and the administration should concentrate their efforts on utilizing the legal tools that are barely dry," he said, referring to ECRA.

One Senate aide cited strong opposition to the Casey-Cornyn amendment from businesses and some Republicans, including Senator Mike Crapo, the Senate Finance Committee's ranking member, adding, "We're not confident that it will come to a vote."

Crapo did not respond to a request for comment.


Senate Majority Leader Chuck Schumer has been attempting to pass the United States Innovation and Competition Act this week, but Republicans maintain that the bill is not ready.

"There is a growing consensus that the Senate bill's fundamental flaw is its lack of guardrails," a Republican House aide said of the Senate package.

The House of Representatives is considering its own China bill and may include additional provisions on-chip funding.

Rubio's office stated that it was still pursuing the incorporation of his amendment. When he introduced his counterintelligence screening amendment last week, he noted that the much-needed investments would be "meaningless if they are stolen by foreign adversaries, including the Chinese Communist Party."

Any restrictions on foreign company subsidies are likely to benefit Intel Corp, the long-time US national champion in chip manufacturing, which has pledged to redouble its efforts in advanced technologies and invest more than $20 billion in new US manufacturing facilities.

Intel announced last year that it would sell its sole chip manufacturing facility in China to SK Hynix.

Derek Scissors, a China and security expert at the conservative American Enterprise Institute, believes businesses should be forced to make a choice.

"If you receive federal government funding, you will be unable to expand your business in China. This is the conclusion. And if you disagree with that, don't accept federal funds, "Scissors declared.

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