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House-passed NDAA includes amendment blocking federal funds from being used to purchase Chinese stat

The United States House of Representatives passed the National Defense Authorization Act (NDAA) on the afternoon of July 12 that included an amendment prohibiting the use of federal transit funds to purchase vehicles manufactured by Chinese State-Owned Enterprises (SOEs) and other state-supported companies.

“China’s ‘Made in China 2025’ initiative is an unmistakable effort to harm American manufacturers by subsidizing Chinese rail and bus industries,” said Rep. Harley Rouda (D-CA-48), who sponsored the amendment in the House bill“Chinese companies misrepresent themselves as benevolent actors, but let’s be clear: this is an attack on our economy and national security. I thank my colleagues on both sides of the aisle for coming together to stop the flow of Americans’ taxpayer dollars to Chinese state-owned or state-supported companies.”

Rouda and the amendment’s co-sponsors charge the Chinese government’s use of “predatory practices” to support its ascension in certain sectors of the U.S. economy, such as rail car and bus manufacturing, which are included in China’s “Made in China 2025” initiative.

Rouda says Chinese state-owned and state-supported enterprises have used subsidized “bargain prices” well-below competitive market price to win contracts throughout the United States.

While not named in the bill specifically, CRRC Corporation Limited has seen growing success in the North American transit market and reported in April that it has been awarded more than 1,600 subway car and commuter train car orders in Boston, Chicago, Los Angeles and Philadelphia since entering the U.S. market in 2014. CRRC Corporation Limited’s parent company, CRRC Corp., is a Chinese SOE.

Rouda believes Chinese SOEs and state-supported enterprises have increased security vulnerabilities and create new risks for rolling stock procurements. To counteract these risks, the amendment included in the NDAA would specifically prohibit financial assistance to be used in awarding a contract or subcontract to an entity for the procurement of rail rolling stock for use in public transportation if the manufacturer is owned, controlled by or legally or financially related to corporations under certain conditions identified in the bill that designate the corporation to be a state-sponsored or owned enterprise located in adversarial non-market economies such as China.

The U.S. Senate passed its version of the NDAA on June 27, which also included an amendment with the same provision.

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