China Looks to Invest in California's High Speed Rail

Published 6 January 2011

China looks to add California’s extensive high-speed rail project to its resume; with experience in rail projects both at home and throughout Asia, China can also bring financing to the table as well as project expertise

China is eagerly eyeing California’s burgeoning plans to build an 800-mile high-speed rail system in the hopes that it can help construct the systems and provide trains and investment capital.

China, home of the world’s most extensive network of high-speed rail, is keen on exporting its technology and expertise to the rest of the world. As reported by the Times of India, China already has plans to help build high-speed rail projects in countries throughout Asia including Singapore, Thailand, Myanmar, and Laos.

California is expecting to spend roughly $43 billion over the next decade to build its rail network and is actively courting investors to help finance the project. In 2008, voters approved a $9.9 billion bond measure to help pay for development and the federal government is expected to contribute $17 to $19 billion dollars. This leaves California with a shortfall of $14 to $16 billion that the state must raise on its own.

We’ve made it clear from Day One that we expect anybody — foreign or American — to bring financing to the table,” said Jeffrey Barker, the deputy executive director of the California High-Speed Rail Authority.

Barker stated, “We want as many entities as possible offering financing or incentives, the best technology for the lowest cost.”

Currently, eight other nations besides China have agreements with California’s High-Speed Rail Authority to provide information with each hoping for its future business. It is too early to know which countries will be chosen as partners, however China is well positioned to make a strong bid with its enormous cash reserves and technological expertise.

According to Usha Haley, a professor of international business at Massey University and expert on China’s global business interests, “China is cash-flush, and its highly subsidized industries are bankrolled with surplus government funds.” Haley was fairly certain that China would obtain the contract, since “they’re investing in infrastructure around the world … and if they’re bidding in an open-bid process, China will get that bid.”

In December 2010, China further paved the way for its entry into the U.S. market by establishing a joint venture with General Electric (GE) and China’s CSR Corporation Limited with an initial investment of $50 million.

In a statement, GE said the new company would be the first U.S. manufacturer ready to supply high-speed rail trains for projects in Florida and California in addition to creating 250 jobs in the U.S. by 2012. The company will also manufacture medium speed passenger trains and transit rail vehicles for urban areas across the United States.

Construction on the rail project is set to begin in 2012 and run through 2017, with test runs beginning as early as 2015. The project is currently facing fierce political opposition from politicians, local residents, and farmers that has caused delays and made critical details, like the train’s route, difficult to establish.

The rail network would eventually connect San Francisco, Los Angeles, San Diego, and Sacramento as well as several other major cities.