Report notes concerns over Chinese company's gains in the mass transit market

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WASHINGTON – Mass transit agencies are being caught in the propwash of the ongoing trade dispute between U.S. and China, according to a report by the Eno Center for Transportation.

The report, published Sept. 26, says that Congress is considering legislation that would ban transit agencies from spending federal funds to purchase street or commuter railcars from China Railway Rolling Stock Corp., now CRRC Corp., a Chinese state-owned enterprise.

Critics complain that CRRC can underbid competitors because of the subsidies it receives from the Chinese government, which is aggressively trying to boost its manufacturing exports. Homeland security experts are concerned that China, already accused of cyber espionage, will extend its reach into railroad technology.

CRRC already has won contracts totaling billions of dollars for new railcars in Boston, Chicago, Los Angeles, and Philadelphia, significantly underbidding other companies, the report says. In Boston and Chicago, the company also offered to set up local manufacturing/assembly plants to boost local jobs.

For example, a CRRC subsidiary's $567 million bid in 2014 bid to build 285 new subway cars for the Massachusetts Bay Transportation Authority was $154 million lower than one from Kawasaki, than the next-lowest bidder. Congressional lawmakers say CRRC may fill contracts it has already won.

CRRC is the largest manufacturer of freight and mass transit cars in the world. It has another subsidiary, Vertex Railcar, which builds freight cars in Wilmington, N.C. U.S. manufacturers have expressed concern that the Chinese company's toehold will lead dominance of the U.S. market.

The U.S. has no domestic manufacturer of street- or subway cars. United Streetcar, a fledgling company that built cars for Portland, Ore., went out of business in 2015. The Eno report lists nine foreign companies that have built cars for the U.S., led by Siemens Alstom and Bombardier.

The Eno Center report says that the Department of Homeland Security and the Committee on Foreign Investment in the United States are analyzing the national-security implications of CRRC's presence in the market, but the economic implications are apparent. On one hand, cash-strapped agencies could pay less for new vehicles. On the other, CRRC may gain a monopoly that could lead to higher prices in the future.

To read the full report, go to www.enotrans.org.
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