Chinese firms sign L.A-Las Vegas high-speed rail project

By MoneyTimes

Sep 22, 2015 08:08 AM EDT

Marking a major development in US-China business relations, a group of firms from the world's second largest economy signed a deal with the US partner XpressWest to build a high-speed rail link between Los Angeles and Las Vegas.

China's CRRC Corp's unit along with its peers from China will implement the rail corridor project at an estimated cost of $5billion. The project will be announced next week during the scheduled US visit of China President Xi Jinping.

The construction works on the high-speed rail project is expected to begin in 2016 subject to clearance from the government departments and other approvals.

After 10 years of working on the Los Angeles to Las Vegas railway project, the high-speed rail corridor is taking off. CRRC has been established out of the merger of two largest rain makers. CRRC is the world's biggest train maker by revenues.

The unit of CRRC is one of the other Chinese rail firms that became part of the deal with XpressWest, a company owned by casino developer Marnell Companies and Las Vegas-based hotel. 

The 230-mile (370km) long high-speed rail network will open many opportunities along the route. A Hong Kong-based research firm said that the project is likely to offer long-term benefits. Though it's little financial benefits for Chinese firms, in the long run, it'll encourage bilateral trade.

Competing with global giants German-based Siemens AG and Alstom SA of France, CRRC is poised to make a major impact on the world high-speed rail projects market. CRRC has already secured rail projects in Indonesia, Russia and Mexico. But, bureaucratic hurdles spoiled two projects in the latter.

As part of the Los Angeles-Las Vegas high-speed rail project, running at a speed of 150mph, the train will cover the 230-mile distance within 80 minutes. The construction works are likely to begin in 2016. This will depend upon regulatory and government approvals. 

After four years of negotiations, the deal was signed with Chinese firms. With an initial capital of $100 million, the project will take off. In last October, China bagged its first rail order deal from the US as a $567-mn contract for supplying trains for Boston's subway system was signed.  

China has been competing with Japan in getting high-speed rail projects in the Asian market. Japan's largest bullet train maker JR Central was evinced interest in Los Angeles-Las Vegas high-speed rail project few years ago. China and Japan are expected to compete for supplying train cars for the high-speed rail project. 

The ticket fare for the journey is forecast at $89. The high-speed train will have stops at Victorville, Nevada and Palmdale, California. The passengers will taste the Las Vegas experience while in the train loaded with entertainment club cars. Passengers can enjoy a drink or meal in the train. 

As part of the efforts to boost bilateral trade between the US and China, both the governments are encouraging companies to explores business opportunities.

The computer major Dell Inc has decided to invest $125 billion in China. New bilateral investments treaty offers have already been exchanged recently as part of the bilateral trade relations. 

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