As people all over the U.S. fret over rush hour traffic, crumbling infrastructure, and high gas prices, California may have found a solution. The development of a high-speed rail is underway in the Golden State, keeping smog, choking traffic, and frustration from clouding over the state’s sunny reputation. Instead of looking solely to federally based funding, California is looking across the Pacific.

Credit: istockphoto

Instead of this… Credit: istockphoto

Shifting focus

California is thinking outside of the box of federal projects; already a $1 billion contract has begun under private US- based contractor Tutor Perini. A second project is looking for bids, this time from China. According to Reuters, the state-owned China CNR Corporation is pitching its high-speed rails to California, altogether a $68 billion rail project. These proposed rails, which would be built throughout the state, would connect cities such as Los Angeles and San Francisco with trains traveling as fast as 221 mph. China mutually benefits from this investment as the PRC shifts into high technology exportation, while seeking to become globally competitive in selling its high-speed locomotives abroad.

“cooperation between China’s provinces and municipalities and the American states, acts as a significant river and foundation of China-US relations”

The US High Speed Rail Association states that high-speed rails would bring benefits such as: reducing oil purchase deficit, congestion relief, save lives (from those 43,000 per year dying in car accidents), lower national security risk, create “green” jobs and provide efficient mobility for goods and people.


Boston to NYC in 1 hour, San Francisco to LA in 2. Credit

Projects Derailed
However, other states’ projects have become stagnant while utilizing mainly public funds. This stems from the American Recovery and Reinvestment Act with $8 billion in funds directed towards constructing high-speed rails. Despite the need in many states, federally funded projects have made little headway. The Washington Times noted in August this year, several Republican governors have blocked high-speed rail projects in their state, and often funds were misappropriated towards already established infrastructure, such as Amtrak. For example, in Florida 2010, the newly elected conservative governor Rick Scott derailed the Tampa to Orlando high-speed rail program, followed suit by Ohio and Wisconsin returning allocated federal funds.


America’s collapsing infrastructure Credit

More Than Railroad Ties
Foreign investment is one logical way to spur project development, yet economic policy is still entangled in politics on the national level. Our relationship with China directly influences openness to foreign bids on these projects. In 2013, Premier Li Keqiang with the California Governor Jerry Brown stated that, “cooperation between China’s provinces and municipalities and the American states, acts as a significant river and foundation of China-US relations”.

Perhaps California’s close economic tie is best exemplified by the number of state offices they have in China. That year, Gov. Brown opened a new trade and investment office in Shanghai, while also making plans to open another in Beijing.

Not all states have invested their own close relationships with China. Rather than just looking at the national level of relations with China, we should also look to subnational level. As demonstrated by this positive relationship between China and California with this proposed Chinese investment, other states should look to China as investors than relying on federal funding.

You can address this question and more as part of the Tai Initiative 2015 Conference in Washington DC. Registration opens January 2015.