The US Senate voted 68 - 32 on Tuesday (June 8) to approve a sweeping package of legislation intended to boost the country's ability to compete with Chinese technology.
An indignant China responded to the vote by saying it objected to being cast as an "imaginary" US enemy.
The desire for a hard line in dealings with China is one of the few bipartisan sentiments in the deeply divided US Congress, which is narrowly controlled by President Joe Biden's fellow Democrats.
The measure authorises about $190 billion (S$252 billion) for provisions to strengthen US technology and research - and would separately approve spending $54 billion to increase US production and research into semiconductors and telecommunications equipment, including $2 billion dedicated to chips used by automakers that have seen massive shortages and made significant production cuts.
China's parliament expressed "strong indignation and resolute opposition" to the bill. It said in a statement that the US bill showed "paranoid delusion of wanting to be the only winner" and had distorted the original spirit of innovation and competition.
"We firmly object to the United States seeing China as an imaginary enemy," Chinese foreign ministry spokesman Wang Wenbin told reporters in Beijing.
The bill must pass the House of Representatives to be sent to the White House for Biden to sign into law. It is not clear what legislation in the House will look like or when it might take it up.
The bill has a number of other China-related provisions including prohibiting the social media app TikTok from being downloaded on government devices, and would block the purchase of drones manufactured and sold by companies backed by the Chinese government.
It would also allow diplomats and Taiwanese military to display their flag and wear their uniforms while in the United States on official businesses.
It would also create broad new mandatory sanctions on Chinese entities engaged in US cyberattacks or theft of US intellectual property from US firms, and provides for a review of export controls on items that could be used to support human rights abuses.
Senate Majority Leader Chuck Schumer, a co-sponsor of the measure, warned of the dire consequences of not funding research to keep up with China.
"If we do nothing, our days as the dominant superpower may be ending. We don’t mean to let those days end on our watch. We don’t mean to see America become a middling nation in this century," Schumer said.
Biden praised the bill: "We are in a competition to win the 21st century, and the starting gun has gone off ... We cannot risk falling behind."
US Commerce Secretary Gina Raimondo has said the funding could result in seven to 10 new US semiconductor plants.
Many US companies praised the bill. General Motors Co said the legislation "represents an important step to address the semiconductor shortage that continues to impact US automotive manufacturing."
Some critics have likened the Senate funding effort to China's high-tech industrial development push, dubbed "Made in China 2025," which long irked the United States.
The bill also seeks to counter Beijing’s growing global influence through diplomacy, by working with allies and increasing US involvement in international organisations after Republican former President Donald Trump's "America First" agenda.
Senator Maria Cantwell noted the bill would authorise Nasa spending and its Artemis mission to the Moon.
"As China has made it clear, they're going to Mars, we are going back to the Moon to ready ourselves to go to Mars," Cantwell said.