Sat, Jul 30, 2022 page10

• US Congress passes bill to boost chip production

  US-CHINA COMPETITION: Beijing’s embassy opposed the bill, which would subsidize firms that produce in the US, saying it showed Washington’s ‘cold war mentality’

  • Reuters, WASHINGTON
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  The US House of Representatives on Thursday passed sweeping legislation to subsidize the domestic semiconductor industry as it competes with Chinese and other foreign manufacturers, a victory for US President Joe Biden and his fellow Democrats hoping to keep their slim majority in the US Congress in the November midterm elections.

  The final vote was 243 to 187, with one Democrat — US Representative Sara Jacobs — voting “present.” Twenty-four Republicans joined 218 Democrats in backing the measure. Passage sends the bill to the White House, where Biden is expected to sign it into law as soon as early next week.

  The US Senate on Wednesday passed the draft act with bipartisan support, after more than a year of effort. A rare major foray into US industrial policy, the bill provides about US$52 billion in government subsidies for US production of semiconductors used in everything from vehicles and high-tech weaponry to electronic devices and video games. It also includes an investment tax credit for chip plants estimated to total US$24 billion.

  

  US President Joe Biden speaks on the telephone with White House chief of staff Ron Klain on the White House’s Truman Balcony in Washington on Monday.

  Photo: AP

  The legislation would also authorize US$200 billion over 10 years to boost US scientific research to better compete with China.

  Congress would still need to pass separate appropriations legislation to fund those investments.

  The bill passed hours after Biden had a telephone call with Chinese President Xi Jinping (習近平), in which Xi warned Biden against “playing with fire” over Taiwan.

  Aides had said that the leaders of the world’s two largest economies would also discuss supply chain and other economic issues.

  China had lobbied against the semiconductor bill.

  The Chinese embassy in Washington said China “firmly opposed” it, calling it reminiscent of a “cold war mentality” and “counter to the common aspiration of people” in both countries.

  Many US lawmakers had said that they would normally not support hefty subsidies for private businesses, but noted that China and the EU had been awarding billions of dollars in incentives to their chip companies.

  They also cited national security risks and huge global supply chain problems that have hampered global manufacturing.

  US Representative Michael McCaul, the top Republican on the House Foreign Affairs Committee, was one “yes” vote from his party.

  “We need to manufacture [chips] in this country and not let it go offshore,” he told reporters before the vote. “This is vitally important to our national security.”

  At the White House, Biden interrupted a meeting on the economy with corporate executives when told that the House had passed the bill.

  “The House has passed it,” Biden said, looking delighted, to applause in the room.

  House members cheered after the bill passed.

  The measure had been in the works for more than a year. The Senate in June last year passed a similar bill with strong bipartisan support, only to have it stall for months in the House as Republicans and Democrats disputed whether it should include provisions addressing issues such as climate change and China’s human rights record.

  The most recent bill passed the House by a narrower-than-expected margin after some Republicans pulled support at the last minute.
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