Senate Passes Legislative Package to Address Competition From China

The Senate passed a far-reaching China legislative package on Tuesday, offering a framework for how the U.S. plans to counter increasing competition from China.

Much of the sweeping package is aimed at bolstering the country’s ability to out-compete China, with increased investment in research and development around advanced technology like artificial intelligence and funding for semiconductor production—necessary for just about any digital technology—closer to home.

The Senate voted 68-32 to pass the United States Innovation and Competition Act, the same day the Biden administration released a report outlining initiatives to shore up critical supply chains of goods, including semiconductors, advanced batteries and rare earth minerals, and measures to address bottlenecks with a “whole of government” approach.

The developments come as President Joe Biden heads to Europe, where China is likely to loom over discussions with allies.

The bill, which will now go to the House for a vote, underscores the continued reframing of the U.S.-China relationship, as policymakers increasingly view it through a prism of strategic competition and national security.

Tensions between the two countries flared under the Trump administration, initially with the trade war but then with an array of measures aimed at restricting China’s access to advanced technology crucial to future technology—and global power. While the Biden administration is taking a more nuanced approach, it is largely continuing that tough stance.

While none of these developments are likely to rattle the broader market in the way the trade tensions a couple of years ago did, they offer signposts for investors as policymakers try to balance a more aggressive stance against China over human rights concerns and technology-related issues while not damaging U.S. companies’ lucrative business in China.

At the heart of the legislative package is investment aimed at bolstering U.S. leadership in areas like artificial intelligence, high-performance computing, and advanced manufacturing.


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