XpressWest cancels rail deal

By Liu Tian Source:Global Times Published: 2016/6/12 0:38:01

Experts blame protectionism for sudden move

The US company XpressWest's unilateral termination of a deal with China Railway International (CRI) regarding a high-speed rail line linking Las Vegas and Los Angeles reflects US trade protectionism directed against Chinese companies, analysts said Saturday.

According to a report by news portal cnr.cn on Saturday, CRI criticized XpressWest's "unilateral cancelation" of the high-speed railway contract as "a mistake" and "irresponsible." The CRI also said that XpressWest had breached a cooperation agreement since it has "unilaterally announced the termination."

Calls to CRI about the issue were not answered by press time.

The criticism came after XpressWest, a private US railway company, said on Thursday that "The decision to terminate the relationship was based primarily upon difficulties associated with timely performance and CRI's challenges in obtaining the required authority to proceed with required development activities," according to an announcement posted on the company's website on Thursday.

XpressWest and CRI released a joint announcement in September  2015, saying they would set up a joint venture company to advance a 370-kilometer high-speed railway project that connects Las Vegas and Los Angeles. The construction work, with an estimated total investment of about $12.7 billion, was originally planned to start in September this year.

"The termination of the contract obviously shows trade protectionism by the US," Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, told the Global Times on Saturday.

"It's not a pure enterprise act but an incident involving the US government that hopes all things related to the railway construction can be localized, such as the building materials and labor," Dong said.

"Our biggest challenge continues to be the federal government's requirement that high-speed trains must be manufactured in the US," Tony Marnell, CEO of XpressWest,  was quoted as saing in the announcement posted on the company's website.

"Another possible reason for this termination is the national security review by the US government," Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, told the Global Times on Saturday, adding that the US government usually cites security reasons on China-related investment issues.

US military and political factors also added to the protectionism, Dong said, "such as military issues in the South China Sea and the ongoing US presidential elections, during which China-related issues are always being brought up."

China has been promoting its high-speed railway technology in overseas markets in recent years. Four projects are planned in addition to the US deal, including one in Pakistan and another in Thailand,  according to the Beijing News' report on Thursday.

"The selling of China's high-speed railways overseas is facing serious challenges, not technically or in price, but hindered by the trade protectionism and other political factors," Dong said.

"Even if China faces Japanese competitors all over the world, China's high-speed railway technology still has an obvious competitive edge due to its maturity and cost advantage," Dong said.

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