Momentum Building to Stop China From Taking Over the U.S. Transit Market

By Elizabeth Brotherton-Bunch
May 30 2019 |
In 2011, then-Los Angeles Mayor Antonio Villaraigosa joined a delegation of Chinese leaders for the opening of BYD’s North American headquarters. The company is subsidized and heavily influenced by the Chinese government, and makes most of its buses in China, with some final assembly happening in the United States. On top of that, BYD’s ties to the Chinese government allow it to significantly underbid competitors for U.S. transit contracts. | Photo by David Starkopf, Office of Mayor Antonio Villaraigosa

Bills would bar federal funds from going to trains or buses made by Chinese state-owned entities.

More Members of Congress are signing onto legislation to prohibit companies owned, controlled or subsidized by the Chinese government from building key pieces of U.S. transit.

A bipartisan group of 43 Senators have now signed on as cosponsors of the Transit Infrastructure Vehicle Security Act, and companion legislation has also been introduced in the House. These bills are designed to address growing concern that China is strategically working to dominate America’s freight rail, transit rail, and bus systems.

Should China succeed, roughly 750 American companies in 39 states could go out of business, 90,000 high-wage jobs will be lost, and a foreign power will have a monopoly over the U.S. transit system. There also are major security risks, including the potential for China to spy on American citizens.

AAM President Scott Paul sent a letter in support of the legislation to Members of Congress on Wednesday, urging them to sign onto the bill and “stop subsidizing the destruction of our domestic rolling stock manufacturing base with federal dollars.”

“America’s tax dollars should not be used to support Chinese state-owned firms seeking to undermine market competition,” he wrote.

Meanwhile, Members of Congress from New York on Wednesday wrote to the Metropolitan Transit Authority (MTA) — the agency in charge of New York City’s subway — to raise their concerns that Chinese-made subway cars could leave the system vulnerable to hackers. Senate Minority Leader Chuck Schumer (D-N.Y.) called for an investigation into the potential railcars earlier this month.

While the Chinese Railway Rolling Stock Corp. (CRRC) does not have an official MTA contract to build the subway cars, it was one of the winners of New York Gov. Andrew Cuomo’s “MTA Genius Transit Challenge” and is spending $50 million to create a subway car for the city. But as the lawmakers write, that car would “include modern train control technology, Wi-Fi, and other systems that could be susceptible to cyber-attack, hacking, or left vulnerable to backdoors in key systems.”

CRRC already has won contracts to build rail transit in Boston, Philadelphia, Los Angeles and Chicago — and did so by significantly underbidding its rivals. In Philadelphia, for example, CRRC outbid its next closest competitor, Canadian company Bombardier, by $34 million. Its bid was $47.2 million lower than South Korea’s Hyundai Rotem, which already had a manufacturing presence in the city.

“I cannot grasp how they are able to do it at that cost,” a Hyundai Rotem spokesperson said at the time.

CRRC can underbid its competitors so significantly because China’s goal isn’t to make money from individual transit contracts, as a company operating in a free market would. Rather, it wants to dominate the entire global transit industry, and is working to do so by entering and quickly dominating markets in other countries, including in the United States.

Rail isn’t the only industry impacted, either. Build Your Dreams (BYD), another Chinese state-owned company, is aiming to do the same thing for electric buses — and potentially the entire auto industry (which would threaten the livelihoods of 5,600 parts suppliers and 871,000 American workers).

“BYD has been plagued by quality issues and a recent OIG investigation by the City of Albuquerque suggests that 'the majority, if not all, parts were manufactured in China and shipped to the United States’ — including the bus frame, chassis, walls, drive train, axels, motor, lights, seating and seat belts, and more,” Paul writes.

“BYD not only aggressively undermines healthy market competition in the electric bus procurement market, it threatens to displace supply chains here in the United States with imported parts and components shipped in from China.”

CRRC and BYD present very real threats to American jobs, key manufacturing supply chains, and national security. We hope more Members of Congress will support this vital legislation.

Read AAM's letter to Congress here.