Senators Want to Ban Chinese State-Owned Companies From Building U.S. Trains & Buses

By Elizabeth Brotherton-Bunch
Mar 19 2019 |
A regional rail commuter train in Philadelphia. | Photo by Getty Images

New bill would stop federal funds from being given to firms with close ties to China’s government.

Back in 2017, the Southeastern Pennsylvania Transportation Authority (SEPTA) was looking to buy 45 new railcars to ease crowding on its Philadelphia-area commuter rail system.

SEPTA received three bids. Ultimately, the agency went with the China Railroad Rolling Stock Corporation (CRRC), a firm with relatively new operations in the United States – but with extensive ties to the Chinese government.

Cost was key. With a bid of $137.5 million, the company outbid its next closest competitor, Canadian company Bombardier, by $34 million. And CRRC’s bid was $47.2 million lower than Hyundai Rotem, a South Korean company that had a manufacturing presence in Philadelphia.

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

Similar stories played out in Boston, Los Angeles, and Chicago. It could soon happen in Washington, D.C., Atlanta, and Miami. And that’s drawn the attention of a bipartisan group of lawmakers who introduced legislation last week to prevent federal funds from being used by transit agencies to purchase rail cars or buses made by China’s state-owned, controlled or subsidized companies like CRRC.

Sponsored by Sens. John Cornyn (R-Texas), Tammy Baldwin (D-Wis.), Mike Crapo (R-Idaho), and Sherrod Brown (D-Ohio), the Transit Infrastructure Vehicle Security Act is designed to address the extensive security concerns and risks to American companies and workers from China’s growing presence in U.S. transportation infrastructure.

“China poses a clear and present danger to our national security and has already infiltrated our rail and bus manufacturing industries,” Cornyn said in a statement. “The threat to our national security through the exploitation of our transportation and infrastructure sectors is one we should take seriously.”

Echoed Brown: “Federal dollars should not support Chinese state-controlled enterprises that want to undermine U.S. manufacturers and overtake our supply chain.”

China’s ascension in this area is deliberate, part of its “Made in China 2025” initiative to gain “global dominance in areas that the Chinese government considers most strategic to its global aims,” according to the Senators. Chinese companies like CRRC are heavily subsidized by China’s government, allowing them to win bids that companies operating in a free and open market simply cannot match.

This not only is unfair to the companies bidding for the contracts, it also damages the supply chains that support U.S. public transportation agencies, putting tens of thousands of American jobs at risk.

“China has made clear its intent to dismantle U.S. railcar manufacturing in its ‘Made in China 2025’ plan—our economic and national security demands that we address Chinese attempts to dominate industries that build our nation’s critical infrastructure,” Baldwin said.

It’s not just rail that’s impacted, either; the electric bus industry is also in Beijing’s sights.

BYD, or Build Your Dreams, assembles electric buses in the United States. But BYD has been plagued by quality issues, and a recent investigation by the city of Albuquerque found 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.

Then there are security concerns. As Governing reported this week, multiple U.S. transit systems have faced cyber attacks in recent years. While China wasn’t named in those incidents, there’s growing concern (and evidence) that China is hacking U.S. government agencies and American businesses to steal intellectual property and trade secrets.

Here at the Alliance for American Manufacturing, we think the new legislation is a necessary step in addressing this behavior. AAM President Scott Paul even voiced his support in a letter sent to Members of Congress on Tuesday, writing:

“It is vital that the United States act to prevent the destruction of the U.S. competitive landscape for rolling stock manufacturing before it is too late. America’s tax dollars should not be used to support Chinese state-owned firms seeking to undermine market competition.”

There’s more that Congress can do to support U.S. companies and workers who are ready and able to help build America’s transit systems, including passing a robust infrastructure investment package that will support the domestic manufacturing base and ensure that these types of projects have guaranteed funding.

But in the meantime, making sure that federal tax dollars aren’t used to help a Chinese state-owned company build the next generation of U.S. transit – while endangering the livelihoods of American workers and companies – seems like a logical thing to do.