House conservatives criticize CHIPS-plus package as "fake" China bill

The largest bloc of House conservatives sent its members a memo on Thursday calling on Republicans to vote against the Senate's new China competition bill, slamming it as a "zombie" version of previously passed legislation.

Why it matters: The Republican Study Committee memo, obtained by Axios, illustrates the difficulties Congress will face in passing the "CHIPS-plus" bill even after it's expected to be approved with broad bipartisan support in the Senate.

• A number of House Democrats are also opposed to the package for a variety of reasons, meaning the RSC's opposition could further strain leadership's already thin majority.

The backdrop: The initial U.S. Innovation and Competitiveness Act (USICA) — which the Senate passed more than a year ago — came into jeopardy this month when Senate Minority Leader Mitch McConnell (R-Ky.) threatened to tank the bill if Democrats pursued a robust reconciliation package reviving President Biden's Build Back Better agenda.

• Senate Democratic leadership planned instead to pass a slimmed-down bill focusing on $52 billion in "CHIPS" funding — Creating Helpful Incentives to Produce Semiconductors — and tax incentives.
• But a bipartisan group of Democrats and Republicans pushed back on the plan and insisted the package include the provisions important to national security, science and technology that were cut out.
• The bill ultimately grew back to its initial $250 billion price tag this week and is expected to pass in the Senate next week.

Details: The RSC memo, titled "CHIPS for China," describes the Senate bill as a "fake so-called 'China' bill,'" laying out a series of provisions that the group takes issue with.

• The memo criticizes the measure for failing to define certain terms such as "semiconductor manufacturing," a "significant transaction," and a "material expansion."
• It also raises alarm bells about potential exceptions the RSC fears could have an adverse impact on helping America compete with China.

Yes, but: The RSC — chaired by Rep. Jim Banks (R-Ind.) — has long been opposed to the initial USICA bill and crafted its own China bill last year as a counter-proposal.

• It was unlikely the RSC's position on a bipartisan Senate version of the bill would budge.
• But the memo shows where a large swath of conservatives stand on the new bill and presents a fresh challenge for House leaders as they navigate its final passage.

Read the memo.