Supporters of the Senate bill argue that, for strategic and industrial reasons, the United States has no choice but to match China’s incentives. One problem is that a new government-funded effort to move chip production to the United States could send an equivocal signal about Washington’s commitment to Taiwan, South Korea and Japan — the vulnerable U.S. allies on China’s periphery whose companies dominate the industry. If the Senate bill’s subsidies work, these allies, not China, would lose production share to the United States in the short run. (Taiwanese, Korean and Japanese companies would be eligible for subsidies too.) Also, the money would come as outright grants of up to $3 billion per project, with few strings attached. That’s a stark contrast to the equity stake the Treasury took in return for supporting General Motors, or even to the job-creation conditions that firms must often meet in return for economic development aid.
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