When Mexican President Enrique Pena Nieto arrives in China this week for the Asia-Pacific Economic Co-operation summit, he will face a country as outraged as it is perplexed over his decision to suddenly cancel a high-speed rail contract with a Chinese-led consortium.
As social-media users mocked Mexico, a raft of Chinese government and industry voices spoke in defence of the uncontested bid by China Railway Construction Corp. (CRCC), which had joined forces with several Mexican construction companies. Last week, Mexico suddenly revoked a contract as suspicions of dirty dealing caused a domestic outcry.
The Chinese company, for its part, declared itself "extremely shocked" and laid the blame on Mexican authorities, who pulled the bid out of concerns that it was tainted. "The Mexican side bears whole responsibility for scrapping the deal. It has nothing to do with our company. We are closely watching any further developments," the CRCC said in comments reported by state media.
The company, which has built projects in Nigeria, Turkey and Tanzania, vowed a legal battle with Mexico, and pledged to participate in the next round of bidding.
Others in China, meanwhile, lashed out at what happened. The powerful National Development and Reform Commission, said in an online statement it was "surprised" by the Mexican decision, saying the Chinese firm had "abided by the Mexican government bidding procedures and requirements."
In Mexico, the cancellation was cheered by political opponents of the government, who declared it a step forward in fighting dirty deals. The fact only one bid was made for the contract only served to underscore suspicions that the winner had been selected in advance. Three of the four Mexican firms involved in the bid also had ties to the President, local media have reported. In addition, competing companies had failed in their efforts to persuade Mexico to extend an application window they said was far too brief.
The rail project would place passengers on new trains roaring 210 kilometres from Mexico City to Queratero at speeds of up to 300 kilometres an hour. Mr. Pena Nieto has made the rejuvenation of the Mexican rail system a cornerstone of his new presidency, calling passenger rail "a symbol of modernity."
China has become a global leader in ultra-fast rail, rapidly building a science fiction-worthy network of bullet trains that fly through the countryside at eye-popping speeds. It continues to build at a rapid pace, with some 11,085 kilometres of high-speed rail installed by the end of 2013, and ambitions to lengthen that to 25,000 kilometres by 2020.
The World Bank, in a report this year, said China's low labour cost and use of standardized designs allowed it to build at a cost one-third lower than other countries, and on Chinese social media, people heaped scorn on Mexico for spurning an offer most believe other companies would find tough to beat. The Chinese bid also came with a Beijing-backed commitment to 20 years of credit at rates that beat what the Mexico government itself can get. Its $3.75-billion (U.S.) construction price tag was also well below earlier estimates of $4.5-billion.
Bombardier Inc. said Monday it remains interested in the contract, but is waiting to see the new request for tender before making a final decision to bid.
The new tender might not be the same as the old one, so the company wants to study its contents before committing to a bid, said Bombardier Transportation spokesman Marc Laforge.
"We're going to be looking at it and see what we want to make of it," Mr. Laforge said. "We really don't know what they'll come up with."
He declined to comment on the way the situation has unfolded in Mexico. But he noted, however, that Bombardier has been involved in several bidding processes that were later cancelled by the client, only to be revived later on. That in itself is not unusual, he said.
Bombardier has long been present in the Mexico market, landing its first rail equipment contract in the country in 1981.