Labor and Business Agree: China’s State-Owned or Supported Companies Shouldn’t Get Tax Money to Build U.S. Rail Cars and Buses

By Elizabeth Brotherton-Bunch
Jun 04 2021 |
A CRRC-built train travels on the Shenzhen Metro. Photo by Wahsaw via Wikimedia Commons

A diverse coalition of unions and companies are urging Congress to maintain and strengthen the Transportation Infrastructure Vehicle Security Act (TIVSA).

Labor unions joined with business groups this week to send a letter to Capitol Hill asking key Members of Congress to reject any attempt to weaken a 2019 law that banned Chinese state-owned or supported companies from receiving tax dollars to build U.S. transit.

The Transportation Infrastructure Vehicle Security Act (TIVSA) prohibits companies with ties to China’s government from receiving taxpayer-funded contracts to build U.S. rail cars and buses. As the letter notes, TIVSA was enacted into law as “a direct response to alarming national security and economic concerns with China’s state-owned and state-supported rolling stock manufacturers,” including the China Railway Rolling Stock Corporation (CRRC), which makes rail cars, and Build Your Dreams (BYD), which makes buses.

“Restricting the flow of U.S. tax dollars to these entities was a clear statement that the People Republic of China (PRC) must not have operational control of or backdoor access to U.S. transportation systems or access to U.S. tax dollars to advance its industrial and military capabilities,” the coalition writes.

The United Steelworkers (USW), International Association of Machinists and Aerospace Workers (IAM) and Transport Workers Union of America (TWU) were among the labor unions to sign onto the coalition letter. On the business front, the American Foundry Society, American Iron and Steel Institute, Rail Security Alliance, Railway Supply Institute, Securing America’s Future Energy, and Steel Manufacturers Association were among those who signed the letter. The Alliance for American Manufacturing also joined the effort.

The letter was addressed to Sen. Sherrod Brown (D-Ohio) and Sen. Pat Toomey (R-Pa.), the chairman and ranking member of the Senate Banking Committee, along with Rep. Peter DeFazio (D-Ore.) and Rep. Sam Graves (R-Mo.), the chairman and ranking member of the House Transportation and Infrastructure Committee. Coalition members tell the Members of Congress that efforts should be taken to strengthen TIVSA, as national and economic security concerns “persist today, more so than ever.”

Specifically, the coalition urges Congress to eliminate any further delay in TIVSA’s effective date, correct a “flawed implementation” that gives four U.S. cities a permanent exemption from the TIVSA law, crack down on circumvention, and validate Buy America compliance of BYD and CRRC.

Research shows that both CRRC and BYD maintain close ties to China’s government. A 2019 report from Radarlock, for example, found that the companies “are at the forefront of the PRC’s military-civil fusion (MCF) strategy with documented connections to the People’s Liberation Army, China’s Communist Party (CCP), and restricted PRC telecommunications entities like Huawei,” the coalition writes.

The Defense Department named CRRC to a list of “Communist Chinese Military Companies” that are operating in the United States to support the PLA “with access to advanced technologies and expertise,” the coalition adds. Meanwhile, BYD uses its status to “obtain technology, information, and positioning from the international market, then to carry those back to the CCP and the PLA,” according to Radarlock.

But there also are economic concerns about CRRC and BYD.

“The CRRC and BYD business model also threatens American workers with its focus on U.S.-based assembly of imported, Chinese-produced components,” the coalition writes. “With its state ownership and the financial backing of the PRC, CRRC secured transit railcar contracts in major U.S. cities with impossibly low bids that established, market-oriented railcar producers had no chance of competing against.”

Evidence suggests that the ultimate goal of CRRC and BYD isn’t to make money off of individual government contracts, but rather secure enough of them to run other companies out of business and dominate the global market.

In 2018, for example, CRRC tweeted “that it accounts for ‘83% of all rail products in the world’ and suggested it was seeking to conquer ‘the remaining 17%,’” the coalition points out. BYD, meanwhile, plans to utilize “massive PRC subsidies and other forms of state support enabling its growth trajectory” in order to “expand its reach beyond transit buses and into the U.S. passenger electric vehicle market,” the coalition writes.

This is a direct threat to 5,600 U.S. auto parts suppliers (who employ around 871,000 workers). It’s also a challenge to American efforts to incubate domestic battery production, which is a key goal of the Biden administration.

“Established competitors and their unionized workforce make up a strong and growing rolling stock manufacturing sector that is ready to respond to the needs of transit agencies for high-quality, American-made railcars, electric buses, and other transit vehicles,” the coalition writes. “However, the U.S. assembly operations of CRRC and BYD are a supply line for rolling stock components imported from China, representing a direct threat to the domestic supply chain that supports well-paying jobs – many of which are union jobs – that vastly exceed the hundreds of assembly positions at the CRRC and BYD facilities.”

Read the full letter.