Private U.S. railway firm XpressWest abruptly announced several days ago that it would unilaterally end a joint venture with China Railway International to build a high-speed rail line in California, citing a U.S. government regulation that high-speed trains be manufactured domestically. This is an exceedingly irresponsible decision on the part of XpressWest as it comes under pressure from political elements, and will only be a detriment to itself and others. Not only will Americans be denied an alternative option for convenient, expeditious transportation, but the overall landscape of trade cooperation between the United States and China will suffer immensely as well. Accordingly, the United States should take a sober assessment of the grave consequences brought by this development, and take substantive action to protect and nurture its mutually beneficial cooperative trade relations with China.
The U.S.-Chinese joint venture to construct a high-speed rail line connecting Las Vegas and Los Angeles was an official agreement signed by XpressWest and China Railway International prior to Chinese President Xi Jinping’s visit to the United States in September of last year. The project was to span 230 miles in length with total investment valued at $12.7 billion, and was hailed as a major breakthrough in trade relations between the United States and China, imbuing it with considerable symbolic value. And truth be told, the reason why Chinese high-speed rail was regarded so highly by the U.S. backers of the project was its strong competitive advantage. According to the findings of World Bank research, the infrastructural costs of Chinese high-speed rail companies average from $8.7 million to $12.9 million per mile, while other countries’ average costs are placed at over $30 million per mile. Moreover, Chinese high-speed rail companies have refined the core technologies required for such projects and possess a high level of construction and operational experience, having succeeded over the past 12 years in building the world’s largest high-speed rail network, a network that now extends over 12,000 miles. In contrast, U.S. high-speed rail builders can claim few accolades of their own, and have fallen far behind China, Japan and Europe, making practical cooperation between the United States and China in the field of high-speed rail easily the most optimal and mutually beneficial course.
Consequently, it is regrettable that not even a year after the project was agreed on, it has been derailed by the many obstacles put in its path by the U.S. government. The statement issued by XpressWest indicated that the most significant impediment to the project’s progress would have come from a U.S. government regulation requiring that high-speed trains be produced within the United States. As there are currently no U.S. domestic producers of high-speed trains, adhering to that regulation would be an impossibility. From this, we can see that such a rigid demand is, in truth, an artificially-constructed hurdle placed by the U.S. government due to political considerations. Clearly, certain factions within the United States are quite unwilling, for a number of factors, to see trade cooperation between the United States and China deepen and expand. With one excuse or another, they have continually sought to hinder and obstruct mutually-beneficial joint ventures, and for many years, Chinese efforts to invest in the United States have consistently run aground on artificially-created political barriers, barriers that have more often than not proved insurmountable. China has made its position clear at each successive U.S.-China Strategic and Economic Dialogue in the hope that Washington will address the issue. This most recent U.S.-Chinese joint venture on high-speed rail running off track is only the newest of many prototypical examples to occur.
The United States and China share a broad swathe of collective interests and have set a foundation for cooperation, and trade relations between the two countries have always served as both ballast and propellant for their strategic relationship. Extending cooperation on trade and exploring large-scale joint ventures that will be to each party’s benefit is the pillar which supports practical economic collaboration, and is of vital significance to not only U.S. and Chinese development, but global prosperity. The people would urge the U.S. government and any relevant private firms to not lose sight of the big picture in U.S.-Chinese trade cooperation, work on both sides to eliminate political obstacles to transnational partnerships, respect the spirit of contractual agreements, and mend irresponsible behavior so that projects already agreed upon can continue to progress. It is believed that the American people, as well, look forward to soon having access to comfortable, speedy and safe Chinese high-speed rail, raising both their efficiency and quality of life.
Articles like this make me cringe. To me ‘mutually beneficial’ cooperative trade relations with China usually means the exact opposite. This case is no different. Basically this is a straightforward export deal: China will manufacture everything in China, bring it over on a boat, sell it for tens of billions and go home. Thousands of jobs in China will be created, U.S. gets absolutely nothing. The fact is requiring local manufacture is smart policy. In the 80s Japan wanted to do the same thing: load up a bunch of corollas and civics on a boat, sell them here, take the profit home. We finally said no. We weren’t going to protect domestic automakers, but said you are welcome to straight up export your cars too – with a hefty tariff. So what did they do? They started making hondas and toyotas in the U.S. creating thousands of jobs and truly offering a fair trade outcome. That is what you call win-win. And guess who have been that policies most aggressive practitioners of that kind of policy? The Chinese! Thats right, you can’t just make a Beoing in St. Louis sell it and go home. No – the Chinese required local manufacture with local workers and demanded a massive technology transfer (read rip off) for the privilege to sell in the their market. Sector after sector (autos, technology, telecoms, etc.) its the same story. Bottom line is, you can sell so much as a clothes pin in China without a local partner, giving away ALL your technology on how you made it, and making it China. Underhanded slogans like ‘win-win’ cooperation and mutual benefit usually means China get’s 90% of the benefit and U.S gets a gut punch in the face. Chinese investment in the U.S. isn’t all bad (Haier), but much of it should be scrutinized very carefully. We need to be asking ourselves, what is the TRUE benefit to the U.S.? Is there reciprocity (are our companies treated the same and fairly in reverse situations)? Then there are the many, many bad actors that this insulting ‘win-win’ cooperation brings. State sponsored hacking of private companies for trade secrets and government data. Ravenous programs to steal U.S. military secrets. Using state directed institutions like the Confucius institute as a front and sham to silence Chinese dissidents living in the U.S. and trying to quash commentary the CPC finds objectionable (like discussing the Tiananmen sure massacre) ‘Innocently’ trying to buy a wind far near a sensitive U.S. military base for spying purposes. This list goes on and on and on. I couldn’t believe that after 30 years of piracy of U.S. soft content like movies and film, we just let them buy AMC, a movie theatre chain with 6000 screens. Yet China demands and we have agreed to a quota of 30+ films. What a terrible, terrible deal. I mean, who on the U.S. side agreed to that?
My view is that China is a ‘frenemy’ and if you broke that down it would probably be 25% friend, 75% enemy. You get the feeling that there is a reverse containment policy which calls for undermining the U.S. at any and every opportunity. Steal trade secrets and technology. Use trading rules to dump excess capacity on the U.S.market. Getting the U.S. to agree to lopsided trade deals. Massive trade imbalances. I could go on for hours and hours. Smiles and handshakes at White House and State Dept. photo ops while state controlled press at home troll, vilify, and denigrate the U.S. daily.
So again I say be very wary when a Chinese official starts talking about ‘win-win’ cooperation or ‘mutual benefit’. Look carefully at what they are proposing and why. A good number of cases that is the case, but in most it is not.