Legislation aimed at helping the U.S. compete against China, which has promised retaliation that could hurt America's economy, has moved closer to President Joe Biden’s desk, according to Politico.
The House soon will move ahead on Senate Majority Leader Chuck Schumer’s $250 billion U.S. Innovation and Competition Act (USICA), Politico reported Sunday. The bill passed the upper chamber with bipartisan support in June.
The legislation, aimed at challenging Beijing’s growing worldwide influence, became public in May as microchip shortages hurt automakers, phone producers, and home appliance manufacturers worldwide.
Angry Chinese communist officials have promised reprisals if the bill become law, though they have not offered specifics.
Experts told Politico that China could retaliate by deliberately disrupting imports of parts' supplies for U.S. manufacturers and by curbing Chinese purchases of U.S. exports.
"China does not have many ways to hurt the U.S. now without damage to itself, but reducing the flow of strategic inputs for electrical vehicles would be a possible avenue for retaliation," Mary Lovely, senior fellow at the Peterson Institute for International Economics, told Politico.
"China could use those supply chains to try to inflict pain, and [because] the Chinese leadership sees the West as moving to reduce their dependence on China, adding uncertainty about Chinese supply won’t be overly costly for China because the U.S. policy direction is mostly set."
The USICA integrates multiple China-targeted bills into one piece of legislation.
A bill entitled the Endless Frontier Act, designed to "outcompete China" in emerging technologies, was incorporated into Schumer’s bill. It was sponsored by Sen. Todd Young, R-Ind.
"Given our mutual dependency, it's impossible to completely insulate [U.S.] businesses and consumers from [Chinese] reprisals in the near term," Young told Politico.
"Ultimately passing USICA and ensuring U.S. leadership in these critical areas is the best way we can insulate our businesses and consumers in the longer term … and demands that we assume some risk in the short term."
The USICA would inject billions of taxpayer dollars for various enterprises, including U.S. semiconductor manufacturing and "buy American" requirements for federally funded infrastructure projects, Politico reported.
"We have been clear publicly and privately with [China’s government] that we intend to strengthen our own competitive hand, and the investments outlined in this legislation do just that," a senior Biden administration official told Politico.
The legislation also addresses Chinese threats that include state-directed intellectual property theft and malicious cyberattacks.
The bill would ban government agency purchases of Chinese manufactured drones. It also would ban the use of government hardware to download the Chinese video social network platform TikTok.
Chinese reprisals are inevitable if the bill becomes law, some U.S. business people believe.
"China is becoming much more aggressive. … They will go all the way to win," one business organization representative told Politico.
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