BEIJING (TIP): Mexico has suddenly canceled a $3.75 billion contract to buy bullet trains from China. This is a major blow to the Chinese railway manufacturing industry, which is trying to sell high-speed trains to India and other countries. Justifying the decision, Mexican president Enrique Pena Nieto said he wanted to avoid “any doubts about the legitimacy and transparency” of the bidding process. The cancellation came within days of the contract being signed on November 3. Earlier, two other Latin American countries, Brazil and Argentina, postponed their own high-speed rail projects.

The Nieto government came under pressure from local politicians and lawmakers, who said China Railway Construction Corp. has been favored in the deal. The country’s transport ministry said a new auction for the contract would be held soon. The decision, which came soon after the deal was signed, would mean new opportunity for rivals like Germany’s Siemens, Canada’s Bombardier and France’s Alsthom. Japan’s Mitsubishi also expressed an interest in the contract. Reports said their requests for more time to make submissions were refused. Only CRCC and its Mexican partners had submitted a joint proposal by the 15 October deadline.

The issue may come up during discussion when the Mexican president visits Beijing next month. Work on the new line was due to begin in December but it might be delayed now. The project involves building a 210- kilometer high-speed line to connect the capital, Mexico City, with the growing industrial hub of Queretaro to the north by 2017. The goal is to cut travel time from about two and a half hours to less than an hour, with trains traveling at a maximum of 300 km/h.

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