Update | US firm ends link with Chinese company helping it build high-speed rail link from Las Vegas to Los Angeles
A high-speed railway project that was seen as a landmark deal in China’s export of advanced technology to the United States has fallen apart over performance and American regulatory issues.
The break between Nevada-based XpressWest and China Railway International (CRI) over the deal for the link between Las Vegas and Los Angeles has triggered concerns over whether Beijing should review its strategy of using rail projects to extend its diplomatic reach.
The 370km link was announced just before President Xi Jinping made his state visit to the United States last September. At the time, officials hailed the joint venture as a landmark in China’s efforts to export its high-speed railway technology to advanced economies.
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However, in a statement late on Wednesday, XpressWest said it had terminated the deal because of difficulties that CRI had experienced in meeting performance deadlines and obtaining the required authority to proceed.
Our ambitions outpace CRI’s ability to move the project forward timely and efficiently
“Our ambitions outpace CRI’s ability to move the project forward timely and efficiently,” the statement said.
The project faced challenges because of a US requirement that high-speed trains must be manufactured domestically, the statement said, adding the requirement had become a “fundamental barrier” to financing such deals.
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The Chinese company said the US partner had been “premature and irresponsible” in making the announcement as talks were ongoing. It added it reserved the right to take action to protect its interests.“XpressWest kept adding new demands in the talks, some of which were unacceptable to the Chinese side,” Xinhua quoted CRI management as saying.
Wang Mengshu, a rail expert and a member of the Chinese Academy of Engineering, said the Chinese and US companies had differences over the use of technology and equipment.
The project is the latest setback for China as it seeks to boost rail exports, following the delay, cancellation or suspension of projects in Mexico, Indonesia and Thailand over disagreements in financing and transparency.
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“It will be more effective if China just exports its equipment to other nations,” said Zhao Jian, a professor at Beijing Jiaotong University. “But China should avoid giving out massive loans and gaining operating rights for such projects. Many nations consider railway operation as a sovereignty issue, and it’s not easy for China to get involved.
“Such projects are costly, and not many nations have a sufficient population to generate profits. The demand is not enough to ensure long-term viability.”
Wang Yiwei, an American studies expert at Renmin University, said the US was cautious about competition in high-end technology related to national security, and the deal was seen as a potential threat to jobs.
Additional reporting by Associated Press and Catherine Wong
