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House Readies for a Tangle Over Competition
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House Readies for a Tangle Over Competition

Democrats have introduced a sweeping bill to boost competition with China. Here’s what’s in it.

Good Friday afternoon from snowy Washington, D.C.

House Democratic leaders are planning to bring their version of a competitiveness package to target China for a vote next week, kicking off a process to rectify differences with a Senate bill that passed over the summer.

The sweeping legislation, released Tuesday night, touches on everything from semiconductor production to research on marine mammals to human rights provisions. Lawmakers hope it will boost American industries and innovation while undercutting China’s role on the international stage.

But the House bill varies from the Senate in key ways, and it has received fire from House Republicans frustrated with Democrats for adding controversial provisions without committee consideration. The top Republican on the House Foreign Affairs Committee, Texas Rep. Mike McCaul, slammed the legislation this week as “hyperpartisan,” adding that it has no chance of becoming law.

It is true that any final bill reconciled between the two chambers will look different than the House Democratic package. Some components were already defeated in the Senate, and others are controversial among Republicans and the business community. 

The two parties also differ in how they want to compete with China: Republicans are wary of the many subsidies and grants in the legislation, and some argue there are not enough safeguards to make sure government funding does not end up going to Chinese businesses.

Still, lawmakers are largely unified in the goal of countering China, and the Biden administration has made clear that advancing the bill is a priority.

The expected vote comes after months of delay: Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi pledged to “immediately” begin the conference process in November. The Senate passed its version of the package with a bipartisan vote of 68-32 in early June.

“It’s really my strong hope that we’re not going to get distracted this time and the Democratic leadership in both the House and the Senate will see this thing across the goal line,” Indiana Republican Sen. Todd Young, who was a lead sponsor of major components of the Senate bill, said during an event with Punchbowl News this week.

I spent the past couple of days reading through parts of the House bill and talking to policy experts and congressional aides about it. What follows isn’t so much a comprehensive look at the measure as it is a collection of details I found interesting–either on their face, or for what they say about the future of legislating with respect to China. 

Full text of the bill is available here, for those who want 2,900 pages of light weekend reading. Democrats’ section-by-section summary is available here.

Uyghur Refugees

Readers of this newsletter might remember our prior coverage of a bipartisan effort to grant priority refugee status to Uyghur refugees. That bill is in the broader package, presenting a potential path forward for the measure, which has stalled in both chambers since it was introduced. It was not included in the Senate version.

The legislation directs the State Department to grant Uyghur refugees and others who have fled Xinjiang since 2009 priority status for expedited processing. This would make it easier for Uyghurs to apply for refugee approval from outside the United States. Some Uyghurs in third countries like Egypt and Saudi Arabia who consider applying as refugees through the current process have valid fears that it could expose them to repercussions. Priority status would sidestep those concerns–and it would be a tangible step toward helping people the American government has said are experiencing genocide. (Side note: President Joe Biden could extend this status to Uyghurs unilaterally, without the need for legislation. He hasn’t done so yet.)

Wrapping the measure in a larger China package appears to be Congress’ best bet to pass it. In November, Sen. Marco Rubio, who cosponsored that chamber’s version of the refugee priority bill, told The Dispatch that “anything that has to do with immigration obviously becomes a target for other immigration-related topics.”

“But hopefully it’s something we can include in some other piece of legislation without becoming a forum for a fight on everything else,” he said at the time.

The House package also requires the State Department to make public on its website a tally of Uyghur refugees awaiting processing and the number and reasons for any denials. This information would help advocacy groups and the public keep the government accountable. (We wrote previously on the State Department’s lack of transparency here.)

The State Department confirmed to us last year that not a single Uyghur refugee was admitted through the program in fiscal year 2021. And the separate asylum process for those already in the United States represents a painful wait. Caroline Simon of Roll Call reported earlier this month that about 800 Uyghurs are stuck in a bureaucratic backlog with an average wait time of four and a half years.

The competitiveness bill includes other language condemning China’s genocide of ethnic minorities. It also amends an earlier Uyghur human rights measure to mandate sanctions on Chinese officials responsible for carrying out systemic rape, forced abortions and sterilization, or involuntary contraception in Xinjiang.

Semiconductors

The package includes $52 billion in subsidies to boost American semiconductor manufacturing.

This matches the Senate version’s amount, a step lawmakers say will help address a shortage of semiconductor chips needed for a wide variety of products.

A shortage of chips during the coronavirus pandemic has disrupted many industries, particularly the automotive industry.

Language Funding

The American government would receive more funding to carry out Chinese language learning programs in the United States under the bill.

Explicitly included as an alternative to the language programs offered by Chinese state-backed Confucius Institutes, the legislation authorizes $10 million per year for the U.S. State Department to conduct Chinese language study programs. These would include Mandarin, Cantonese, Tibetan, Uyghur, Mongolian, and other contemporary languages spoken in China.

Outbound Investment Review

The House package takes a firmer approach to American investments and transactions in China than the Senate version. It would establish a committee on national critical capabilities, made up of representatives from key government agencies, tasked with screening and potentially blocking business transactions involving Chinese entities that are “likely to result in unacceptable risk to one or more national critical capabilities.” 

The legislation identifies priorities as deals that could threaten American national security or crisis preparedness. That includes products related to public health emergencies—like pandemics—to those needed in response to major disasters, like hurricanes. (Think personal protective equipment, or manufacturing supplies needed to rebuild critical infrastructure.)

Rhodium Group, a research and advisory firm, estimates that up to 43 percent of American foreign direct investment to China over the past two decades would have been covered by the the categories outlined in the bill. Supporters of a new screening process say it would help maintain American industrial capacity.

The business community is up in arms about this addition to the bill after working to defeat similar language in the Senate version.

Supply Chain Relocation

Companies looking to redirect their supply chains away from China could soon get help from Uncle Sam. 

The legislation creates a program to assist companies in moving their sourcing away from China. The government would give companies guidance on how to diversify their supply chains and identify alternative markets for establishing business partnerships and new facilities. Created by the State Department and the Department of Commerce, the program would focus on smaller and medium-sized companies that have fewer resources to conduct these activities on their own. 

Senators included the same language in their bill, meaning it is likely to pass in a final compromise package.

Passage of the recent Uyghur Forced Labor Prevention Act has made the topic more urgent, as companies look to keep their supply chains free of slave labor from Xinjiang. With heightened attention from lawmakers and greater tension with Chinese authorities, some companies may want to move production out of China altogether. 

Supply Chain Resilience

The package authorizes $45 billion through September 2026 for grants and loans to strengthen supply chains.

The bill also creates a supply chain resiliency and crisis response office within the Commerce Department, tasked with making sure American supply chains are strong. It mandates an effort to map supply chain vulnerabilities to mitigate risk, and it authorizes $500 million through September 2027 for the job. 

Medical Supply Chain

The legislation would boost state stockpiles of commercial drug, medical equipment, and other public health products, authorizing $10.5 billion through September 2024 for the program.

It also sets aside $100 million through September 2026 for the Food and Drug Administration to disburse grants to develop advanced pharmaceutical manufacturing technologies. The legislation requires drug companies to report details on foreign drug manufacturing facilities and output. 

Solar Manufacturing

In an effort to reduce reliance on Chinese-made solar components, the bill empowers the Energy Department to award grants and loans for the construction of solar manufacturing facilities in the United States or to retrofit and expand existing solar facilities. The bill authorizes $3 billion through September 2026 for the purpose.

The legislation calls on the department to weigh whether projects are strategically located to bolster the domestic solar manufacturing supply chain, and if they will create jobs and economic development in distressed areas. 

The section bans funds from going to any projects that source solar components from or supply components to facilities that use forced labor. Forced labor is rampant in the solar industry, as a large portion of key components rely on materials from Xinjiang. 

Green Climate Fund

The legislation authorizes $8 billion through September 2023 for the United Nations’ Green Climate Fund. The fund assists developing nations in responding to climate change and reducing emissions of greenhouse gases. The United States initially pledged to contribute $3 billion but has only followed through on $1 billion. Former President Donald Trump withdrew the rest of the pledge during his time in office.

Senators didn’t include funding for the Green Climate Fund in their version of the China competitiveness package. 

Republican congressional aides on Thursday pointed to this addition as the most objectionable of the changes House Democratic leaders made to the package. They raised fears that developing countries could use the money on supplies or products made in part or in whole by Chinese firms. For instance, solar companies relying on forced labor in China for some of their components could ultimately receive American taxpayer dollars through this program, which the United Nations manages without as much American oversight.

Marine Mammals

Maybe I included this one to check if you were paying attention. Maybe I just like manatees.

The package includes a bipartisan measure boosting marine mammal protection and research. 

It reauthorizes a grant program for public and private organizations treating sick, injured, or entangled marine mammals. The funds are also available for responses to mammal stranding events and collecting samples from marine mammals for health research.

It also creates a fund, with $7 million authorized each year through September 2026, for marine mammal rescue and rapid response.

It also commissions a study on marine mammal mortality, to be carried out by the Commerce Department, the Department of the Interior, and the Marine Mammal Commission. The study would evaluate connections between marine heat waves, algal blooms, prey availability, and habitat degradation on marine mammal mortality.

Research Investments

Broad scientific research across the government would receive support under the legislation. Priorities include climate research at the Department of Energy, quantum science at the National Institute of Standards and Technology for the Future, engineering biology research, and resources for scientific education.

Still, it cuts key research provisions that were in the Senate version. House leaders removed the $190 billion senators authorized for technology and research.

Electric Grid

The bill authorizes $375 million to reduce vulnerabilities to the electric grid. It identifies threats ranging from physical or cyber attacks, electromagnetic pulse, geomagnetic disturbances, severe weather, climate change, and earthquakes. Also included are instructions to make a plan for quickly transporting essential replacement equipment parts if the electric grid is damaged. If passed, the government would be authorized to create federally owned strategic equipment reserves for critical components. 

Immigration 

House Democrats added language to the package expanding immigration options for high-skilled applicants.

The package also waives the United States’ green card cap for people who have earned a doctoral degree in a science, technology, engineering, or mathematics field, as well as their spouses and children.

Of Note

Haley Wilt is a former associate editor for The Dispatch.