Breaking news! The US intends to ban BYD/CRRC

According to the United Times, as US President Trump's administration seeks to reach an interim trade agreement with China, the US Congress has targeted Chinese buses and trains in a must-pass 2020 National Defense Authorization Act (NDAA 2020).

U.S. media quoted congressional aides familiar with the matter as saying that the U.S. Senate and House of Representatives have reached a consensus on the relevant text of the "National Defense Authorization Act", which will prohibit the use of federal funds to purchase Chinese-made buses and trains, but the ban does not involve existing contracts. This is the second time the United States has targeted Chinese companies after the 2019 National Defense Authorization Act banned government contractors from doing business with Huawei.

The Wall Street Journal reported that the bill will affect the US subsidiaries of two Chinese companies, one of which is China's state-owned railway train manufacturer CRRC Corporation Limited (CRRC), which has been aggressively entering the US market recently, with an estimated annual turnover of US$18 billion (about RMB 126.7 billion) in the US. The other is BYD, which is competing in the US electric bus market.

Data from market research and consulting firm Prescient & Strategic Intelligence show that the U.S. electric bus market is expected to grow from $745 million in 2018 to $1.95 billion in 2024.

Marina Popovic, human resources and general counsel for CRRC's U.S. subsidiary, said she regretted the U.S. Congress' decision. BYD did not immediately comment. The two companies had previously warned that the ban was unfair and would affect American workers at factories in California, Massachusetts and Illinois.

John Garamendi, chairman of the House Armed Services Committee's Readiness Subcommittee, praised the ban, saying he knew many American workers at BYD factories would lose their jobs, but he believed the ban on Chinese buses and trains was necessary for national security and economic reasons.

"It is clear that the Chinese government has a strategic and tactical plan to dominate the train and bus industries, and it has already been executing that plan in Australia and it clearly wants to do it in the United States as well," Garamendi said.

In addition, U.S. lawmakers also intend to ban the U.S. military from purchasing Chinese-made drones, which will pose a challenge to Shenzhen DJI Innovations Technology Co., Ltd. The U.S. is concerned that Chinese equipment may monitor Americans and threaten important infrastructure.

In addition, the National Defense Authorization Act will also prohibit Huawei from being removed from the U.S. Department of Commerce's export blacklist. Other provisions involving China include those aimed at reducing dependence on foreign sources of rare earth minerals and requiring reporting on China's military activities in the Arctic and China's overseas direct investment in the Arctic.