Manufacture This

The blog of the Alliance for American Manufacturing

A Chinese state-owned enterprise is set to build a factory in Massachusetts.

Taxpayer dollars shouldn’t reward foreign companies that are heavily subsidized by foreign governments. Unfortunately, that's what’s happened in Massachusetts last October.

To refresh your memory, the Massachusetts Bay Transportation Authority (MBTA) awarded a $566.6 million contract to build new subway cars to a subordinate of China CNR Corporation Ltd., a state-owned rail manufacturer supervised by the State Council of the People’s Republic of China.

CNR purchased land in Springfield, Massachusetts, where it will build the new MBTA subway cars this week. And we still think it’s completely unacceptable.

Why? State-owned entities like CNR benefit from government subsidies such as grants, tax breaks, loans, and debt forgiveness. This means they can undercut market prices in a way privately owned businesses cannot.

By awarding this contract to CNR, Massachusetts authorities have a helped state-owned enterprise establish a manufacturing presence in the U.S. market, creating permanent, unbalanced competition that private sector firms now must deal with. That's a terrible precedent to set. Taxpayer dollars should be rewarding fair competitors, not furthering the reach of non-market entities around the world.