Don’t Let China’s State-Owned CRRC Build NYC’s Subway, State Lawmakers Say

As Congress continues to work on legislation to ban China’s government-owned, controlled or subsidized companies from receiving U.S. tax money to build rail cars and buses, local lawmakers are taking on the issue in their own states.

The latest instance is in New York, where state Assemblymember Michael Cusick (D) is teaming up with state Sen. Diane Savino (D) on a bill to prevent foreign state-owned enterprises, including the China Railway Rolling Stock Corporation (CRRC), from using New York tax money on mass transportation projects.

Like federal lawmakers who have championed this issue, Cusick and Savino say they are worried about the security threats posed by allowing a firm with direct ties to the Chinese state apparatus to build critical infrastructure systems.

They point to recent testimony from former Department of Homeland Security Secretaries Michael Chertoff, Janet Napolitano and Jeh Johnson, who all specifically mentioned critical infrastructure when discussing cyber security threats at a Senate Homeland Security and Governmental Affairs committee field hearing in New York.

“There is wide consensus that allowing CRRC and other state-owned enterprises to have open access to our critical rail infrastructure and mass transportation systems is ill-advised,” Cusick said in a statement. “These contracts create major cybersecurity vulnerabilities in the U.S. The goal should be risk avoidance, not mitigation.”

There’s little doubt about China’s intentions with CRRC.

New research from Radarlock examined the company’s deep ties to China’s government, communist party and military, concluding that CRRC is a key part of China’s plan to dominate global industry. But it’s more than that – CRRC also obtains technology for potentially nefarious purposes, handing everything it gathers from its work abroad to the Chinese state and military.

Cusick and Savino say they are also worried about CRRC’s economic impact, noting that CRRC has nabbed contracts in major cities like Chicago and Los Angeles by “drastically underbidding other railcar manufacturers and using non-market tactics.”

The issue is of critical importance in the Empire State because New York City is looking to upgrade its iconic subway system. CRRC won a 2018 Metropolitan Transit Authority (MTA) contest to design new subway cars – a development that quickly drew the ire of Democratic Senate Leader Sen. Chuck Schumer, who hails from New York.

In a letter to Cusick, MTA Chairman and CEO Patrick J. Foye wrote that the agency supports “the need to ensure that foreign state-owned enterprises do not constitute a cybersecurity threat.”

It's not just about cybersecurity; the state's economic security also is at risk, as CRRC threatens the livelihoods of about 6,000 New Yorkers who are directly employed in the railway supply industry and another 8,000 people whose jobs are supported by it. That’s because while other foreign railcar manufacturers buy U.S. steel and components, CRRC makes its railcars in China and fulfills “low-value assembly in the U.S,” Cusick and Savino argue.

Reasearch backs them up on this: A recent study from Oxford Economics found that every $1 billion given to Chinese state-owned enterprises like CRRC for U.S. municipal railcar projects costs 5,100 American jobs

Cusick and Savino’s effort has the backing of Schumer and Rep. Max Rose (D-N.Y.), who chairs the House Homeland Security Subcommittee on Intelligence and Counterterrorism. “We need to be protecting our critical infrastructure from intrusion by foreign adversaries, not swinging our doors wide open,” Rose said.

Added Schumer: “Given what we know about how cyberwarfare works, and recent attacks that have hit transportation and infrastructure hubs across the country, we must do everything in our power to protect our subway and commuter railroads.”

While Cusick and Savino look to move their bill in New York, down in Washington, D.C., lawmakers continue to work on federal legislation to ban Chinese companies like CRRC from receiving taxpayer money to build rail cars and buses.

The language is included as part of the National Defense Authorization Act (NDAA), which has passed both the Senate and House but is currently held up in conference, where lawmakers from both chambers are trying to work out key differences, including over President Trump’s border wall.

House Armed Services Committee Chairman Adam Smith (D-Wash.) said Friday that “enormous progress” has been made, so a resolution could come soon.


Reposted from AAM