US firm 'irresponsible' for scrapping rail joint venture

China media slams XpressWest for cancelling LA-Vegas project

BEIJING • China's state media yesterday slammed a private US company for unilaterally cancelling a joint venture with a Chinese rail consortium amid concerns over the effectiveness of Beijing's use of rail projects to extend its diplomatic reach.

"XpressWest's irresponsible decision has stymied the realisation of a high-speed rail line linking Los Angeles to Las Vegas at an early date, which could shorten the travel time substantially and boost the economy of the West Coast and Nevada's desert region," Xinhua said in a commentary yesterday.

The cancellation of the project, announced in September ahead of President Xi Jinping's visit to the US, has not only hurt the interests of China Railway International (CRI), but also threatened any future cooperation in the area, Xinhua added.

The commentary came two days after Las Vegas-based XpressWest called off the deal, citing "difficulties associated with timely performance and CRI's challenges in obtaining required authority to proceed with required development activities".

XpressWest said its biggest challenge in implementing the project was a federal government requirement that high-speed trains must be built in the United States, according to Agence France-Presse. "As everyone knows, there are no high-speed trains manufactured in the US," the company said in a statement. "This inflexible requirement has been a fundamental barrier to financing high-speed rail in our country."

In response, Xinhua said yesterday that the "pretext" given by XpressWest "sounds ridiculous since both signatories of the contact are responsible for pushing forward the project with joint efforts".

The two sides said last year that CRI would provide US$100 million (S$138 million) in initial capital, but few other details about the project were given.

CRI on Friday called the cancellation "a mistake" and "irresponsible", adding that it had been dealing with the case according to the law.

XpressWest is one of at least three privately financed high-speed trains proposed to be built in the US over the next few years.

Firms in Texas and Minnesota also plan to tap on global investors, with help from foreign train makers and governments eager to export train technology, Reuters reported.

The US has lagged far behind China, Japan and Europe in high-speed rail development. China has blazed ahead, building 17,000km of railway in the 12 years since it began constructing bullet trains.

The project is the latest setback for China as it seeks to boost rail exports after delays, cancellations or the suspension of projects in Mexico, Indonesia and Thailand over financing and other issues, the South China Morning Post said yesterday.

"It will be more effective if China just exports its equipment to other nations," said Beijing Jiaotong University professor Zhao Jian.

"But China should avoid giving out massive loans and gaining operating rights for such projects. Many nations consider railway operations as a sovereignty issue, and it's not easy for China to get involved."

A version of this article appeared in the print edition of The Sunday Times on June 12, 2016, with the headline 'US firm 'irresponsible' for scrapping rail joint venture'. Print Edition | Subscribe