CHINA reacted angrily today to the US Senate’s Innovation and Competition Act, which passed with bipartisan support on Tuesday.

The sweeping legislation, dubbed the “China Competitiveness Act” in the US, involves massive state investment in research and technology, as well as regulations to mandate use of US suppliers in infrastructure projects. These are combined with long blacklists of Chinese companies and products.

The centrepiece is a $50 billion (£35.4bn) investment in semiconductor manufacturing, a sector currently dominated by China.

There are also big funding increases for the US National Science Foundation and university research sectors to develop artificial intelligence, robotics and biotechnology.

But China objects to provisions that accuse its state-owned enterprises of intellectual property theft and “forced technology transfer.”

Chinese law often requires foreign firms to partner with local ones to bid for contracts in order to help develop its own technology. 

The US Secretary of State will be obliged to publish lists of Chinese companies believed to have benefited from US technology, who will be sanctioned.

Washington blacklisted 59 Chinese companies last week on the grounds that they could be tied to the military.

The US-based corporate think tank Information Technology Innovation Foundation has complained that China has not kept its promise to be a “low-cost production platform for foreign multinational corporations” but has used state control of its economy to drive technological advance, leaving Western corporations unable to compete in capital-intensive sectors like high-speed rail.

The Act, which must pass in the House of Representatives and be signed into law by President Joe Biden, was dismissed as “cold war zero-sum thinking” by Chinese Foreign Ministry spokesman Wang Wenbin.

China said it was preparing a law that would assist any Chinese firm targeted by foreign sanctions.