US Congress Moves to Ban Chinese-Made Railcars

A number of Democratic members of Congress have also voiced concern over Chinese practices like forced technology transfer and secret surveillance of American technology firms operating in China, and bills supported by members of both parties freezing Chinese-owned firms out of technology contracts using Federal funds are making their way to the President’s desk.

Now it appears that rapid transit and commuter rail cars will also join the list of banned products made by Chinese-owned companies. The U.S. Senate passed a bill Aug. 1 that includes language prohibiting transit agencies from buying vehicles from any Chinese-owned or subsidized company under any federal funding agreements for a period of one year.

Eno Transportation Weekly’s analysis of the bill notes that, in contrast to similar House restrictions, the Senate language grandfathers in contracts already awarded but prohibits any additions to or extensions of those contracts. In addition, the bill’s language leaves out one federal transit funding program, the Capital Assistance Grant program, leaving open the possibility that transit agencies could purchase Chinese railcars and buses using funds awarded under it.

The language would strike at the heart of one company’s U.S. business: the China Railway Rolling Stock Corporation (CRRC), the world’s largest railcar manufacturer. The company has quickly established a beachhead in the U.S. transit railcar construction industry since winning a contract to supply rapid transit cars for Boston’s Massachusetts Bay Transportation Authority (MBTA) in 2014. Since then, it has won contracts to build railcars for transit agencies in Chicago, Los Angeles and Philadelphia, built assembly plants in Springfield, Mass. and Los Angeles, and begun work on a third plant in Chicago.

Eno’s analysis notes that CRRC dramatically underbid other companies for those contracts and observes that Chinese government subsidies to the company could be the reason it could bid so low.

In response, CRRC Massachusetts (CRRC MA), the Quincy-based plant that’s building the Boston and Philadelphia railcar orders, has launched a public-relations counterattack via a “get the facts” website, Railway Age reports.

A CRRC MA news release distributed to transportation reporters, including this one, notes that there are no U.S-owned passenger railcar manufacturers, which means that all American transit agencies must buy railcars from foreign-owned firms. “Like all of our competitors, CRRC MA uses similar domestic supply chains and is subject to and in compliance with all Buy America regulations,” the release states.

It goes on to argue that what really matters in this dispute is “high-wage manufacturing jobs that spur growth in local communities and lower municipal taxes that increase workers’ earning power.”

The Eno article suggests that the impetus for this ban comes from U.S. freight railcar manufacturers, who note how quickly CRRC has been able to grab international market share in that field, thanks largely to the government subsidies. CRRC has yet to go after U.S. freight car orders, but the U.S. manufacturers worry that it will.

A defense procurement bill on its way to the President also includes a provision calling on the Secretary of Homeland Security to investigate the national-security implications of CRRC’s railcar contracts. CRRC MA’s website includes a quote from John Lewis of the Center for Strategic and International Studies pooh-poohing this aspect of the fight: “If you are going to spy on somebody, would you really use a metro car?”

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