Chinese Place Victorville-Las Vegas
XpressWest High-Speed Rail
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High-speed train units under construction in China.

September 17, 2015

Credit: Quartz

      China has signed its first high-speed railway contract in the US, days ahead of President Xi Jinping’s visit to Washington D.C.  A consortium led by state-owned China Railway Group and US company XpressWest will set up a joint venture to build a 370-kilometer (230-mile) high-speed line linking Las Vegas and Los Angeles.

      China’s leading group on financial and economic affairs announced the deal at a press conference on Thursday (Sept. 17), and said construction will begin next September (2016).  The project comes after four years of negotiations and will be supported by $100 million in initial capital, though the source of that capital was not specified, nor was the project’s expected cost and competition date.  But 21st Century Business Herald and other Chinese papers reported the project will cost $12.7 billion and take three years.

      The Las Vegas-Los Angeles project will bring new technology, manufacturing and construction jobs to the region, a Chinese official said at the press conference, but did not provide more specifics.  XpressWest’s website said it plans a high-speed rail project to link Victorville, CA, outside of Los Angeles, with Las Vegas in just 80 minutes.

      About one-quarter of Las Vegas’s 41 million visitors in 2014 came from Southern California, according to the Las Vegas Convention and Visitors Authority, many via a several hour highway drive.

      XpressWest is a private company by a Las Vegas-based hotel and casino developer, while China Railway International USA, is owned by a consortium made up of subsidiaries from Chinese state firms including China Railway Group and China Railway Rolling Stock Corporation (CRRC Corp).

     The deal is the latest example of China’s high-speed rail initiative overseas. CRRC Corp, merged from two Chinese state train makers in June, was created to become more competitive in selling its high-speed rail to the rest of the world.

Local Commentary

      The Chinese, in completing much of their own interior infrastructure of high-speed rail, are looking for new markets.  The XpressWest proposal offers a short route for the Chinese high-speed rail industry to get their foot into the United States.

      $100-million initial investment capital appears filmsy for a project estimated to cost conservatively $12.7-billion.  As the source of the $100-million has not been disclosed, even that is questionable.

     The U.S. market is very different than the Chinese mainland.  The Victorville-Las Vegas route is not going to be financially viable unless extended and eventually connected to the California High-Speed Rail system.  The $100-million appears to be little more than seed money attempting to ignite interest and stir potential investors in the ill-fated project.  If the proposed high-speed line is placed into operation, it is going to require subsidizing.

      President Obama and Chinese President Xi Jinping will be getting cooperative mileage from the announcement made shortly before Jinping's first state visit to the United States.

      Expect to hear from Senator Harry Reid and other promoters of the Victorville-Las Vegas line shortly.

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