WASHINGTON -- The U.S. Congress will not vote this summer on comprehensive legislation to boost American competitiveness against China in semiconductors and other critical technologies, with the House and the Senate struggling to bridge the divide between their proposals.
The Biden administration has been working with legislators on a bipartisan package to support cutting-edge companies and research.
But progress has been slow, and the legislative window has closed for the summer. How soon Congress can enact the legislation will have an impact on America's race with China for technological hegemony, and on the plans of allies and economic partners like Japan.
The House went back into summer recess this week following a special budget session. It is slated to reconvene Sept. 20, meaning that the prospect of passage has receded until at least autumn.
Democratic and Republican lawmakers agree on the need for comprehensive measures to make America more competitive with China. But the House and the Senate have to iron out the differences between their bills into a single package for President Joe Biden to sign.
Much of the attention on the legislation focuses on chips, which are essential to national and economic security. The Senate included $52 billion in subsidies for semiconductor production and research in the United States Innovation and Competition Act it passed in early June. But a similar bill passed in the House later that month included no designated spending on semiconductors.
The Semiconductors in America Coalition, whose members include chipmakers Intel, Taiwan Semiconductor Manufacturing Co. and Samsung Electronics, as well as such buyers as Apple and Google, urged congressional leaders in July to approve the $52 billion in "emergency supplemental funding."
With China offering massive subsidies to build up its semiconductor industry, many U.S. stakeholders consider it a national security priority to expand the American share of global production capacity from the current 12%. They worry about depending too heavily on chips from Taiwan and South Korea, which have strong economic ties with China, amid a protracted shortage worldwide.
But there is strong reluctance among Democrats who control the House to pour taxpayer money into big corporations. Some lawmakers have called for attaching stringent conditions to such subsidies.
The House and the Senate are also divided on how to promote innovation. The Senate bill would steer $29 billion toward private-sector basic research in artificial intelligence, quantum computing and other leading-edge fields through the National Science Foundation. The House would allocate $13.2 billion.
The more than 2,000-page Senate bill has also drawn pushback in the House for extending to areas beyond economic competitiveness, such as proposals for a "diplomatic boycott" of the 2022 Winter Olympics in Beijing and long-term fellowships in Taiwan for U.S. government employees.
Some House members want to downplay anti-China elements of the legislation to avoid stoking anti-Asian racism. One option would be to extract clauses likely to win bipartisan support and pass them first.
Meanwhile, China's Communist Party-controlled legislature has swiftly passed a series of measures aimed at the U.S., including one mandating retaliation against foreign sanctions.
China hawks across party lines had hoped for swift passage of a competition bill. But with debates on such big-budget Biden administration priorities as infrastructure and climate change action ahead in September, the congressional schedule will be tight.
"I'm disappointed," a Republican congressional source said. "I wouldn't be surprised if it could happen next year," this person added, referring to a vote on the China legislation.
The timing of its passage also affects economies with U.S. ties. Japan, Taiwan, South Korea and the European Union are all bolstering assistance for their semiconductor industries in response to the ongoing chip shortage, and a delayed buildup in the U.S. could lead to a supply glut down the line.