New Study Outlines Rail Car Maker CRRC’s Deep Ties to China’s Authoritarian Government

An Orange Line train on the MBTA subway in Massachusetts. MBTA has awarded CRRC MA, a branch of an enormous Chinese state-owned enterprise, more than $840 million in contracts for train cars since 2014. | Getty Images

Will a bill banning Chinese state-owned companies from winning federal contracts become law?

It’s hard to believe, but 2019 is heading to a close. In just about two months we'll bust out the champagne, sing Auld Lang Syne and welcome in 2020. But there's work left to do in Washington, like a handful of key bills that must be passed before the year ends — including the National Defense Authorization Act (NDAA).

We’ve been writing about the NDAA a lot lately, as it’s the legislation that Congress could use to ban China’s state-owned, controlled or subsidized companies (SOEs) from receiving taxpayer money to build American rail cars or buses. The House passed a version of the legislation that applied only to rail cars, while the Senate passed much stronger legislation covering all forms of transit rolling stock, including buses.

The NDAA is now in conference, where negotiators from the House and Senate will iron out a final bill. But the NDAA is massive, and there are a lot of controversial items in it — including stuff tied up with President Trump’s border wall. That’s making negotiations difficult.

So now there’s talk that legislators are considering moving forward with a “skinny” version of the NDAA (if you can call 1,200 pages skinny) that would pull out the biggest sticking points (like the wall stuff). What’s unclear is whether the part about China’s SOEs and transit will make the final cut.

A ban on contracts for China's SOEs needs to be in whatever version of the NDAA that Congress ends up passing.

Banning China’s SOEs from receiving taxpayer funds to build America’s rail cars and buses shouldn’t be controversial. The current NDAA legislation is modeled after the Transit Infrastructure Vehicle Security Act (TIVSA), a bipartisan bill that enjoyed widespread support in both chambers.

Meanwhile, evidence continues to mount about the economic and national security risks in allowing these SOEs to get these contracts. We’ve known for quite some time that China’s ultimate goal is to use companies like China Railway Rolling Stock Corporation (CRRC) and Build Your Dreams (BYD) to dominate global industries as part of its Made in China 2025 plan.

But as the weeks roll on, we’re finding out even more about the dangers these companies pose. New research released by Radarlock on Friday details just how connected CRRC is to the Chinese authoritarian government.

Researchers Emily de La Bruyere and Nate Picarsic outline the depths of CRRC’s allegiance to the Chinese government, military, and ruling Chinese Communist Party, including the company’s role as national champion in rail and emerging transportation systems.

CRRC is one of the 10 most subsidized companies in China and receives far more government-backing that previous reports have suggested. It plays a key role in initiatives like China’s military-civil fusion strategy, One Belt One Road, and of course, Made in China 2025 — all of which are designed to ensure China’s SOEs eliminate competition around the world and create virtual monopolies.

CRRC uses its role as an international company to gather new technology via methods such as mergers and acquisition, overseas research and development centers … and then hands over all that tech to China’s government and military.

But it’s more than that — the researchers also highlight how CRRC obtains its technology for potentially nefarious purposes. CRRC uses its role as an international company to gather new technology via methods such as mergers and acquisition, overseas research and development centers … and then hands over all that tech to China’s government and military. CRRC also collects data abroad, sharing it with state and military affiliates.

CRRC also partners with other Chinese companies (like Huawei, which has faced bans of its own) to build technologies and information systems that threaten individual and data security. Meanwhile, CRRC’s executives “wear dual hats,” the researchers note, as “most of the managers are directly appointed for political purposes.”

The whole study is worth a read, as is similar Radarlock research on Chinese automaker BYD.

One thing that the research makes clear: There shouldn’t be any controversy about what is at stake here.

China’s SOEs like CRRC and BYD are part of China’s plan to dominate entire industries, and pose major economic and national security threats. U.S. taxpayer money shouldn’t be used to subsidize the ambitions of the Chinese state. Whether Congress passes a full NDAA or the slimmed-down version, it’s time for lawmakers to ban Chinese SOEs from building rail cars and buses.