Posted on 10/21/2022 4:59:54 AM PDT by MtnClimber
China Railway Rolling Stock Corporation is a Chinese state-owned company controlled by the People’s Liberation Army. So why are American cities contracting with them for their rail cars?
Several large American cities have contracted with a Chinese state-owned rail car manufacturer to design and manufacture subway cars for their subway systems, raising serious cybersecurity and human-rights concerns. Over the past eight years, China Railway Rolling Stock Corporation (CRRC) has secured more than $2.6 billion in federal transit contracts to provide passenger railcars in Los Angeles, Boston, Chicago, and Philadelphia.
Lawmakers from both parties have taken notice, and are now demanding that the Biden Administration take action to prevent a company that has links to the Chinese military from dominating the railcar market in the United States.
CRRC, the world’s largest rolling stock manufacturer, has a headquarters in Springfield, Massachusetts (CRRC MA), and a production facility in Chicago (CRRC Sifang America). The Chinese state-owned company is reportedly controlled by the communist People’s Liberation Army (PLA), and has been identified as a threat to U.S. economic and national security. CRRC also has been called out repeatedly for human rights and labor violations.
CRRC’s use of brutal, anti-competitive tactics has given it the ability to offer bargain-basement prices that U.S. transportation agencies have found irresistible. The company allegedly uses the slave labor of Uyghur Muslim minorities in its factories, and child labor to mine for a mineral used in manufacturing its railcars.
In April 2019, retired U.S. Army Brigadier General John Adams wrote an op-ed in the Washington Post advising the Washington Metropolitan Area Transit Authority to reject CRRC’s bid for its next series of rail cars.
Adams and other national security experts were concerned that China could “plant listening devices or malicious software in rail cars as a way to conduct surveillance or allow sabotage of trains traveling beneath or near the Capitol, Pentagon and White House.”
The retired general argued that city governments that use the company are putting “short-term savings over long-term national and economic security.”
CRRC’s aggressive show of force hinges on anti-competitive bidding practices and only serves the long-term strategic and technological aims of the Chinese government. CRRC contracts also come with serious cybersecurity risks. After all, rail cars are no longer just big metal boxes. They are computerized smart cars with sensors that transmit billions of instructions per second and are prone to the same kinds of cyberattacks as a 5G network.
Due to these cybersecurity concerns, the D.C. Metro ultimately rejected CRRC’s proposal.
Congress passed the Transportation Infrastructure Vehicle Security Act (TIVSA) in December 2019 barring transit agencies from making such purchases. President Donald Trump signed TIVSA into law just before Christmas that year. The law stipulates that transit agencies “can purchase only from domestic companies or companies based in countries approved by the Tariff Act and Trade Act.” TIVSA bans federal taxpayer dollars from being used to purchase rolling stock from foreign state-owned or controlled companies.
The Federal Transit Administration (FTA) requires that 70 percent of the cost of the components for rolling stock be produced in the United States.
U.S. trade groups allege CRRC may be skirting federal law by insourcing its assembly work at its plants in the United States, while allowing more components than allowed under law to come from China.
Those same groups complain that CRRC’s state-backed, aggressive anti-competitive tactics have helped the company achieve global market dominance.
In September 2020, the House of Representatives’ Ways and Means Subcommittee on Trade held a hearing on “Enforcing the Ban on Imports Produced By Forced Labor in Xinjiang.”
In testimony submitted for the hearing, Rail Security Alliance (RSA) Vice President Erik Olson called for increased scrutiny by legislators on companies such as CRRC.
“As a state-owned enterprise, CRRC has access to unlimited state funding that allows them to win transit contracts around the world by underbidding competitors,” Olson said. This has included its “aggressive and alarming incursions into the U.S. rail market using state-backed financing, below-market pricing, and other anti-competitive tactics.”
Alarmingly, “CRRC was recently named one of 20 companies by the Department of Defense that it says is owned or controlled by China’s People’s Liberation Army,” Olson added.
Olson called on Congress “to ensure products manufactured with forced and child labor not be allowed to be imported into the U.S. Section 307 of the Tariff Act of 1930 specifically prohibits these types of imports and should be applied to CRRC railcars and parts that are currently entering the U.S.”
Olson also urged members of the Democrat-led subcommittee to ask Customs and Border Patrol (CBP) to “open an investigation into these imports and take proper action.”
Nevertheless, many Democrat-run cities have embraced CRRC because it offers the cheapest product.
As part of a systemwide expansion plan, the Los Angeles County Metropolitan Transportation Authority (L.A. Metro) in December 2016 awarded a contract to CRRC MA to design and manufacture its new subway cars. In April 2017, L.A. Metro and CRRC signed a $647 million framework agreement for the supply of 282 metro cars with an initial order for the delivery of 64 rail cars valued at $178 million. According to the framework, the remaining 218 railcars could be ordered through five options.
“CRRC had the overall best value proposal, with the highest rated technical offer and lowest price,” CRRC said in a post announcing its partnership with LA’s Metro.
Due to delays stemming from the COVID pandemic shutdowns, CRRC wasn’t able to deliver any cars to L.A. Metro until August, according to L.A. Metro’s June update to the Federal Transit Administration (FTA). Metro also reported it would not be exercising options for the remaining 218 more cars.
I have a better idea. How about China actually pay on their Imperial Railroad bonds they haven’t paid American investors on in half a century?
If they try taking over the NYC subway trains, they’re in for some rude surprises.
Maybe cuz the Korean ones Philly bought last time broke in half.
Way too many people in this country who are American in name only these days.
DC had issues with the cars bought by Metro when they didn’t have access to the Italian’s software.
I can’t imagine what would happen with a Chinese sourced car.
Maintenance can be a staggering problem with subway cars. Door mechanisms and HVAC come to mind.
I too have what I think might be a better idea & that is to no longer do business with a Communist nation. I remember many years ago when the idea of trading with China in a large way first came up & I questioned it whether it might not be a mistake. Beginning to think more so ever since then.
I'll take bribery and intimidation for $500, Alex.
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