Congressmen Demand Sanctions for Chinese-Military-Linked Railway Giant

L awmakers from both parties are demanding that the Biden administration subject the world’s largest manufacturer of trains to sanctions for its links to the Chinese military, National Review has learned. In a letter sent last week and obtained exclusively by NR, Representatives Mike Gallagher (R., Wis.) and John Garamendi (D., Calif.) asked Treasury secretary Janet Yellen to designate the China Railway Rolling Stock Corporation (CRRC) as a Chinese military company.

“We wrote to inquire why the Department of the Treasury has failed to list CRRC as a state-directed enterprise linked to the People’s Liberation Army (PLA), the military of the People’s Republic of China,” the two legislators said in the October 13 letter. “We request that CRRC be listed as a state-owned and directed enterprise with clear links to the PLA.”

That’s a significant request. CRRC is the largest manufacturer of train cars in the world, supplying subway systems in major American cities such as Chicago, Boston, and Los Angeles, as well as American freight companies. The designation Gallagher and Garamendi seek would restore the prohibition on American investment in the company that was lifted by the Biden administration in June 2021.

Currently, the U.S. government addresses the threat posed by Chinese-military companies in a disjointed way. The Biden administration has required the Pentagon and the Treasury Department to each maintain lists of firms identified to be playing a role in China’s military buildup, although the Treasury’s list is slightly broader than the Pentagon’s, encompassing not just military-linked companies but also those involved in Beijing’s mass-surveillance activities. The Department of Defense designated the CRRC as a Chinese military company earlier this month. While designations by Treasury trigger an investment ban under the current system, those by the Pentagon do not. Consequently, when the Defense Department once again added CRRC to its official list of Chinese military companies on October 5, no real-world penalties followed. Yet the Pentagon’s move still constituted a renewed acknowledgment of the company’s significant role in the Chinese military-industrial complex.

A 2019 report by Radarlock, an independent research group, found that the Chinese Communist Party’s backing has helped CRRC expand globally. Radarlock found and translated a company document that states: “We will implement the military-civil fusion development strategy and expand the application of technology and products.” The railway giant also plays a role in China’s global Belt and Road infrastructure initiative, and its forays into Western democracies have prompted fierce debates about safety and unfair business practices, given its state backing. In February, for instance, Israel rejected a CRRC bid to build a light-rail system.

U.S. trade groups have alleged that CRRC has benefited from state backing to achieve global market dominance. In testimony submitted to Congress in 2020, the Railway Security Association cited CRRC’s own estimates that it controls about 83 percent of the global market. “As a state-owned enterprise, CRRC has access to unlimited state funding that allows them to win transit contracts around the world by underbidding competitors,” the testimony warned, before noting that the company’s entry into Australia had “decimated” that country’s existing rail industry.

In addition to the company’s military ties and its concerning international presence, CRRC’s documented role in human-rights abuses prompted the Gallagher and Garamendi letter. “Additional reporting on CRRC and its supply chains has found a troubling reliance on forced labor, including Uyghurs, and child labor in Madagascar mines,” the congressmen wrote.

Ultimately, Gallagher and Garamendi said, they want American companies that are considering investing with CRRC to know the risks of partnering with a Chinese military firm. State and local governments, the congressmen wrote, “should know that they are signing contracts with an arm of the Chinese military.”