Congressman Lipinski's Opening Statement for the House Transportation and Infrastructure Committee's Hearing on the Impact of Foreign State-Owned Enterprises on the U.S. Public Transit and Freight Rail Sectors (May 16, 2019)

“Thank you Chairman DeFazio and Ranking Member Graves for holding this important hearing about The Impact of Foreign State-Owned Enterprises on the U.S. Public Transit and Freight Rail Sectors.

As we will hear today from our witnesses and from many of our members, including myself, the entry of Chinese State Owned Enterprises has made a lot of companies and public policy makers concerned.  Since 2015, the China Railroad Rolling Stock Corporation, also known as CRRC, has won four large transit rail rolling stock contracts with public transit agencies in the United States, including my home transit agency, the CTA, in Chicago.  Furthermore, recent media reports indicate they may bid on several more contracts, including WMATA, the New York City Subway, and possibly my home commuter railroad, Metra. 

Let me be clear about my own views on the issue.  The entry of Chinese State-Owned Enterprises into this country is a huge threat to America’s economic livelihood and national security.  
Chinese State-Owned Enterprises are a very different entity than a typical foreign corporation.  For example, there is a huge difference between CRRC and Stadler. CRRC is controlled by a government that is competing with us economically, in many cases unfairly, and poses a potential substantial security threat. Last time I checked Mr. Chairman, Stadler was not controlled by the Swiss Government nor are we worried about the Swiss Government being a threat in any way to the United States. 

I want to note I am cognizant of the workers at CRRC’s factories in Chicago and elsewhere. These factories do provide well-paying jobs to hundreds of men and women and I understand from the local unions that CRRC has treated these workers and their unions well. During this process, we should not forget that these workers are our constituents or that our actions could affect their livelihoods and families. 

However, we can’t turn a blind eye to this threat and assume that CRRC or China will continue to play by the rules. The Chinese government has a terrible record when it comes to respecting workers’ rights or competing fairly economically. As General Adams notes in his testimony, the Chinese Government has a “Made in China 2025” initiative, a key component of China’s 13th Five-Year plan, and it identifies the rail manufacturing sector as a top target for Chinese expansion. We should absolutely assume that the ultimate goal of CRRC and the Chinese government is to move into the US freight rail market and that should scare us all. One only has to look at our domestic steel market and the closing of steel plants in communities all across this country and the tremendous hardship that has resulted to see what happens when China decides they want to enter a market and compete unfairly. 

According to testimony we will hear today from Hamilton Galloway, the rail supply industry supports 650,000 mostly middle-income jobs, $74 billion in U.S. GDP, and contributes nearly $17 billion to federal, state, and local taxes. Highlighting the importance of the railway supply industry in this country, my home region of Chicago has numerous railway suppliers that keep American manufacturing strong and employ many thousands in the region. I have heard strong concerns from these companies about their ability to compete with unfairly subsidized state-owned entities, and we absolutely need to be forward thinking and address this potential threat. 

As Mr. Galloway’s testimony indicates, even if a state-owned rail manufacturer adds some jobs, the likely overall effect in the future is a significant decrease in jobs as the domestic supply chain is wiped out and most production is outsourced. The potential future degradation of our domestic supply chain is something we are facing right now.  

It is true that there are no American-based manufacturers of transit rolling stock. However, that does not mean we should just give up and start accepting corporations controlled by adversarial foreign governments. I appreciate Mr. Washington’s testimony that he would like to see the associated design and innovation related to rolling stock occur in the United States. I share that same goal. However, I fail to see how our transit agencies selecting Chinese state enterprises with a history of undercutting bids from other companies using Chinese state subsidies takes us closer to that goal. If anything, it drastically reduces the chances that we will create a thriving domestic market for rolling stock. 

So above all, we need to be focused on protecting our domestic freight supplier industry and also figuring out how to create a thriving domestic transit and bus rolling stock industry right here in the United States. 

I look forward to hearing from our witnesses and other members on how we can accomplish these two critical goals.

Thank you again Mr. Chairman for holding this important hearing and I yield back the balance of my time. 

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