Chinese consortium set to build 370-kilometer line says 'announcement violates agreement'

A private US railway company abruptly backed out of a deal with a Chinese consortium on Wednesday to build a high-speed rail line from Los Angeles, California, to Las Vegas, Nevada.

XpressWest Enterprises, a passenger rail venture supported by a Las Vegas hotel and casino developer, announced nine months ago that China Railway International USA Co would build the line. CRI is made up of State-owned railway equipment subsidiaries and service providers.

The sudden change of direction caught many by surprise, including CRI, which said breaking the deal was irresponsible and a violation of the agreement it had signed last year with XpressWest.

In a statement posted online, XpressWest said it was constrained by US government regulations.

"Our biggest challenge continues to be the federal government's requirement that high-speed trains must be manufactured in the United States," it said. "As everyone knows, there are no high-speed trains manufactured in the United States. This inflexible requirement has been a fundamental barrier to financing high-speed rail in our country."

XpressWest and CRI agreed in September to advance the substantial work already completed by XpressWest.

The 370-kilometer XpressWest high-speed railway project — also called the Southwest Rail Network — would connect Southern California with the Nevada gambling mecca using advanced tracks and equipment.

"The unilateral announcement violates the cooperation framework agreement signed by the two sides, which stipulates that one side should not release related information without approval by the other. The executive is responsible for the joint venture," said an official at CRI who did not want to be named.

The official said China Railway Corp Group, the main shareholder and the country's railway service provider, will take all necessary measures to ensure that its interests in the US are protected.

CRI, is a consortium of China Railway Construction Corp, China Railway Corp Group, China Railway Rolling Stock Corp, China State Construction Engineering Corp and China Railway Eryuan Engineering Group.

Construction work was planned to start as early as September this year, with total investment estimated at $12.7 billion.

"Traditionally, a weak global economy generates additional demand for all types of protectionism," said Luo Renjian, a researcher at the Institute of Transport Research at the National Development and Reform Commission. "China is especially targeted as a primary manufacturing rival and a serious threat to US industrial jobs in the manufacturing, transportation and telecommunication sectors."

Luo said such protectionism should not be allowed to pressure Chinese railway equipment providers and infrastructure construction companies.

Both CRI and XpressWest said their governments have much to talk about, especially regarding global and regional challenges and fair opportunities for US companies to choose global partners.

Ma Yu, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing, said there has been an obvious rise in global trade protectionism, in particular from the United States and its close trading partners, including Turkey, India and the European Union.