Congress Must Act After New Evidence Links CRRC and BYD to Chinese Government and Military

Washington, D.C. – New research publicly unveiled today directly links the China Railway Rolling Stock Corporation (CRRC) to China's government, military, and the ruling Chinese Communist Party (CCP). Congress must now move forward with legislation to ensure taxpayer dollars do not subsidize China's plan to dominate the rail car manufacturing industry and threaten our national security.

CRRC is a state-owned enterprise and, according to the just-released Radarlock report, the company is clear in its mandate about where its obligations lie. This Chinese national champion is a centerpiece of Beijing's long-term economic and industrial strategies, including Made in China 2025 and the One Belt One Road initiative. To that end, it receives significant state subsidies and other forms of support. The report describes in alarming detail how CRRC works directly with China’s military and companies like Huawei that are deemed strategically important to Party leaders to obtain technology and data from the United States.

The Radarlock team recently released another paper on Build Your Dreams, or BYD, a Chinese electric bus company that is both deeply subsidized by Beijing and working hand-in hand with Party leaders, China’s military, and Huawei to penetrate the U.S. market.

Alliance for American Manufacturing (AAM) President Scott Paul said:

“Lawmakers now have irrefutable evidence that CRRC and BYD are simply an arm of China’s military and government. No tax dollars should go to CRRC or other Chinese companies such as BYD.  We hope this report strengthens the resolve of lawmakers to defend our transit market against the economic and security threats presented by CRRC and BYD."

Legislation passed by the Senate as part of the National Defense Authorization Act would ban CRRC, BYD, and any other Chinese state-owned, -controlled or -subsidized companies from receiving federal taxpayer dollars to supply buses and rail cars to U.S. cities. The House version of the bill applies only to rail cars, while the stronger Senate version applies to all forms of transit rolling stock including buses.The legislation is modeled after the bipartisan Transit Infrastructure Vehicle Security Act (TIVSA).

The TIVSA legislation is now in conference as part of the annual defense policy measure. Given the wealth of new evidence linking CRRC and BYD to China’s “military-civil fusion” regime that leverages China’s commercial and military capabilities in an effort to dominate the U.S. market, Congress should move ahead with the Senate version of the legislation. It is vital that both rail equipment and buses are covered in the final legislation.

On Thursday, AAM joined experts from the Rail Security Alliance, Railway Supply Institute and Securing America’s Future Energy for a Capitol Hill briefing to discuss the report and importance of the pending TIVSA legislation.

In the report, “CRRC and Beijing’s Dash for Global Rolling Stock Dominance,” researchers Emily de La Bruyère and Nathan Picarsic outline the depths of CRRC’s allegiance to the Chinese government. Specific findings include:

  • CRRC is Beijing’s national champion in rail and emerging transportation systems, and its officials and corporate documents cite the military-civil fusion strategy (MCF), Made in China 2025, One Belt One Road, and other central plans as CRRC’s chief mandate.
  • CRRC is consistently one of the 10 most subsidized companies in China, and it receives far more government backing than its English-language annual reports suggest.
  • CRRC obtains its technology through “reverse spillovers.” This self-declared “sponge model” of international cooperation, mergers and acquisition, and overseas R&D centers allows it to “continuously acquire emerging technologies from host countr[ies].”
  • CRRC also collects data abroad, as Beijing sees CRRC products as globally proliferated sensors. The company shares data and technology with State and military affiliates through MCF zones, the CCP’s “two in one integration platform,” CRRC’s MCF Investment fund, and technology exchanges.
  • CRRC partners with now-banned Huawei – as well as BeiDou, a Chinese satellite navigation system – in building technologies and information systems that threaten individual and data security.
  • Executives at CRRC wear dual hats as corporate and as communist party leaders, as “most of the managers are directly appointed for political purposes.”

Click here to read the full report.