China’s Central National Radio (CNR) recently reported that the U.S. company XpressWest unilaterally announced the formal termination of its joint effort with the China Railway International (CRI) to build a high speed railway between Las Vegas and Los Angeles. The contract was signed only nine months ago. XpressWest said that CRI was not able to deliver on its promises on time and could not obtain the required authorizations needed to build the trains. However, CRI explained in their response that XpressWest added new conditions into the signed contract and violated the contractual requirement that they not make public comments without mutual agreement. CNR found out from analysts that the primary road block was that the U.S. Federal regulations required the trains to be made in the U.S., and XpressWest could not get its train suppliers to meet the requirements on the degree of domestic manufacturing. The next step for China should be to take the legal approach since the United States claims to strictly follow the rule of law. In the meantime, China should be more careful about the impact of protectionism on the U.S. investment environment when it considers investing in the United States.
Source: Central National Radio, June 11, 2016