China has termed the cancellation of a contract by a US firm with a Chinese rail consortium to build a prestigious high speed railway line linking Las Vegas, Nevada and Los Angeles as a “mistake” and warned of legal action.
The China Railway, reacting to the news of cancellation of the contract, said that the Las Vegas-based XpressWest’s “unilateral cancellation” of a high-speed railway contract with its subsidiary is “a mistake” and “irresponsible”.
The China Railway said in a statement that the US company had breached a cooperation agreement by unilaterally announcing the termination.
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It opposed the US company’s decision and has been dealing with the case according to law, state-run Xinhua news agency reported.
The US private company said on Thursday that it had “terminated its joint venture activities with CRI (China Railway International USA Co Ltd regarding high-speed passenger rail” between Las Vegas and Los Angeles.
In September last year, XpressWest and CRI announced to establish a joint venture to build the Southwest Rail Network that will connect Las Vegas, Nevada and Los Angeles in California.
The two sides planned to start construction on the 370 km line in September 2016 with an initial investment of USD 100 million.
XpressWest said the decision to end the relationship has been taken due to problems with “timely performance” and challenges that had come with the Chinese companies being grouped under a consortium called CRI.
The merger faced problems in “obtaining required authority to proceed with required development activities”.
The cancellation is a major blow to China’s ambitious plans to market its bullet train technology outside the country.
Already the USD 5.5 billion deal to build Chinese high speed train in Jakarta.
China is actively lobbying to build bullet trains in India, Malaysia and Singapore. Chinese railway is conducting feasibility study for High Speed train between Chennai and New Delhi.