98-485 F
CRS Report for Congress
Received through the CRS Web
China: Possible Missile Technology Transfers
from U.S. Satellite Export Policy - Background
and Chronology
Updated August 13, 1998
Shirley A. Kan
Specialist in National Security Policy
Foreign Affairs and National Defense Division
Congressional Research Service ˜ The Library of Congress

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Abstract
Members of Congress are concerned about whether U.S. firms have provided technology
or expertise to China for use in its ballistic missile program and whether a series of
decisions by the Clinton Administration on satellite exports have facilitated legal or illegal
transfers of missile-related technology to China. The New York Times reported in April
1998 that the Justice Department is conducting an ongoing criminal investigation into
whether Loral Space and Communications (of New York), and Hughes Electronics (of Los
Angeles) violated export control laws. The firms are alleged to have shared their findings
with China on the cause of a Chinese rocket’s explosion while launching a U.S.-origin
satellite in February 1996. In sharing their conclusions, the companies are said to have
provided expertise that China could use to improve its ballistic missiles, including their
guidance systems. This CRS report provides detailed background information, significant
Congressional action, and a comprehensive chronology. The events summarized here, based
on various open sources and interviews, pertain to various aspects of U.S. foreign and
security policy. This report may be updated if there are significant developments.
NOTE
This CRS study was initiated at the
request of the Committee on International
Relations of the House of Representatives and
is adapted for general Congressional use with
permission of the Committee.

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China: Possible Missile Technology Transfers
From U.S. Satellite Export Policy —
Background and Chronology
Summary
Congress is investigating whether U.S. firms have provided expertise to China
for use in its ballistic missile and space programs and whether a series of decisions
by the Clinton Administration on satellite exports have facilitated legal or illegal
transfers of military-related technology to China. Critics are concerned that the
Clinton Administration relaxed export controls and monitoring of commercial
satellites in moving the licensing authority from the State Department to Commerce
Department. The concerns were prompted by New York Times reports in April 1998
that the Justice Department is conducting an ongoing criminal investigation into
whether Loral Space and Communications Ltd. and Hughes Electronics Corp.
violated export control laws. The firms are alleged to have shared their findings with
China on the cause of a Chinese rocket’s explosion while launching a U.S.-origin
satellite in February 1996. In sharing their conclusions, the companies are said to
have provided expertise that China could use to improve the accuracy and reliability
of its ballistic missiles, including their guidance systems. News report have cited at
least three classified reports as saying that U.S. national security has been harmed.
In addition, the press reports alleged that President Clinton in February 1998 issued
a waiver for sanctions that undermined the investigation by allowing the issuance of
licenses for the export of assistance similar to that in question. Moreover, the Times
article alleged that political considerations may have influenced the Administration’s
decision, since Loral’s chairman was the largest personal donor to the Democratic
National Committee for the 1996 election.
Loral issued a statement on May 18, 1998, denying allegations that it provided
missile guidance technology to China. Loral denied that it and Hughes conducted an
independent investigation to determine the cause of that launch failure. However, the
company acknowledged that it formed a committee to review the Chinese
investigation and that, contrary to its policies, “the committee provided a report to
the Chinese before consulting with State Department export licensing authorities.”
Administration officials say that export licensing procedures and strict security
measures (including monitoring by the Department of Defense) preclude any
assistance to the design, development, operation, maintenance, modification, or
repair of any launch facility or rocket in China. Moreover, effective export controls
on dual-use technology (with military and civilian applications) allow U.S. exporters
to compete while protecting U.S. security interests. Officials have publicly disputed
that there were objections within the executive branch to allowing recent satellite
exports to China.
This CRS report provides detailed background information, significant
Congressional action, and a comprehensive chronology. The events summarized
below, based on various open sources and interviews, pertain to various aspects of
U.S. foreign and security policy, including missile nonproliferation, export controls
on technology useful for missiles and/or satellites, and Presidential waivers of
sanctions imposed on China after the Tiananmen crackdown.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
China Great Wall Industry Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Missile Technology or Expertise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Security Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Loral’s Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Applicability of Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Hearings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Chronology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

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China: Possible Missile Technology Transfers
From U.S. Satellite Export Policy —
Background and Chronology
Introduction
Members of Congress are concerned about allegations that U.S. firms provided
expertise to China that could be used in its ballistic missile and space programs and
that a series of decisions by the Clinton Administration on satellite exports have
facilitated legal or illegal transfers of sensitive military-related technology to China.
The New York Times reported in April 1998 that the Justice Department is
conducting an ongoing criminal investigation into whether Loral Space and
Communications Ltd. (of New York), and Hughes Electronics Corp. (of Los
Angeles) violated export control laws. The firms are alleged to have shared thei
1
r
findings with China, without approval from the U.S. government, on the cause of a
Chinese rocket’s explosion while launching a U.S.-origin satellite in February 1996.
In sharing their conclusions, the companies are said to have provided expertise that
China could use to improve the accuracy and reliability of its ballistic missiles,
including their guidance systems. Several classified government studies reportedly
concluded that the U.S. technical assistance provided to China damaged U.S. national
security by helping the Chinese to improve the guidance systems on their ballistic
missiles.
In addition, the media reports allege that President Clinton in February 1998
issued a waiver of sanctions that undermined the investigation by allowing the
issuance of licenses for the export of technology or expertise similar to that in
question — despite “strong opposition” from Justice. Moreover, political
considerations are alleged to have influenced the Administration’s decision, since
Loral’s chairman was the largest personal donor to the Democratic Party in 1996.
This CRS report provides detailed background information, significant
Congressional action, and a comprehensive chronology. The events summarized
below, based on various open sources and interviews, pertain to various aspects of
U.S. foreign and security policy:
! Presidential waivers for exports of satellites, including the latest waiver for
Chinasat-8 (built by Loral) during an ongoing criminal investigation into
1 Gerth, Jeff. “Companies are Investigated for Aid to China on Rockets,” and “Aerospace
Firms’ Ties with China Raise Questions,” New York Times, April 4 and 13, 1998.

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CRS-2
alleged assistance by Loral and Hughes to China’s missile program; waivers
are for sanctions imposed after China’s Tiananmen Square crackdown;
! sanctions imposed for missile proliferation by China’s space launch company,
China Great Wall Industry Corporation;
! quotas on Chinese launches of satellites;
! controls on exports of U.S.-origin satellites and/or satellite technology;
! export controls to prevent technology transfers that could contribute to
China’s ballistic missile force and/or military satellites.
Background
China Great Wall Industry Corporation
China Great Wall Industry Corporation (CGWIC, or China Great Wall) has been
China’s commercial space launch company since 1986. It is a state-owned
corporation in China’s defense-related aerospace industry. China Great Wall is a
subsidiary of the China Aerospace Corporation (abbreviated by China as CASC),
which oversees China’s space as well as missile research and development
establishment. CASC and its subordinate companies, research academies, and
factories develop and produce strategic and tactical ballistic missiles, space launch
vehicles, surface-to-air missiles, cruise missiles, and military (reconnaissance,
communications, or other) and civilian satellites. CASC was established in 1993. It
was previously known as the Ministry of Aerospace Industry, which was also known
as the Seventh Ministry of Machine Building.
China reportedly launched its first satellite, Dongfanghong (“East is Red”) on
April 24, 1970. By the end of 1997, China reportedly had launched 40 domestic
satellites: 17 retrievable reconnaissance satellites, 3 meteorological satellites, 8
communications and broadcasting satellites, and 12 “experimental” (possibly
military) satellites. China is using the satellites and space technology to enhance its
national defense, economy, and international prestige. On April 7, 1990, Chin
2
a
Great Wall launched a foreign satellite, Asiasat, for the first time.3 Since then, the
company has expanded its foreign business, especially with U.S. firms such as
Hughes Electronics, Lockheed Martin, and Loral Space and Communications. China
probably seeks foreign capital and technology to apply to its domestic satellite
research and development efforts, in part to lessen reliance on purchasing foreign
satellites. For example, the president of the Chinese Academy of Space Technology
said that the Chinese Dongfanghong (East is Red) satellites match the capacities of
advanced satellites built by Hughes, but are backward in satellite navigation and
Chou
2
Kuan-wu, “China’s Reconnaissance Satellites,” Kuang Chiao Ching (in Hong Kong),
March 16, 1998; translated in FBIS.
3 For commercial space launches in general, see CRS Issue Brief 93062, Space Launch
Vehicles: Government Requirements and Commercial Competition, and CRS Report 98-575,
China’s Space Program: A Brief Overview Including Commercial Launches of U.S.-Built
Satellites, by Marcia S. Smith.

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CRS-3
stabilization technologies. The Academy hopes to sell its satellites at world
standards by 2000.4
China has experienced a number of embarrassing and costly failed satellite
launches. In 1992, a Chinese rocket stalled while attempting to launch the Optus-B1
satellite and another rocket exploded and destroyed the Optus-B2 satellite (both built
by Hughes). In 1995, A Long March rocket exploded and destroyed the Apstar-2
satellite (built by Hughes). In 1996, another Chinese rocket exploded and destroyed
the Intelsat satellite (built by Loral). Aside from the dramatic explosions, other
problems have prevented the Chinese rockets from successfully launching satellites
into the correct orbits.
China’s aerospace industry has shifted from denying all responsibility in failed
launches of foreign satellites to expressing willingness to work with foreign
companies in determining the causes of explosions and other failures. This practice
may have been a strategy to learn from foreign companies methods to improve
China’s rockets, satellites, and other related space technology. China may also have
been requested by insurance companies and satellite manufacturers to share
information about problems in Chinese rockets to show that the problems were being
solved.
Missile Technology or Expertise
Security Concerns. One question in
the controversy involves the applicability
of satellite-launch technology to the
Corresponding Designations
modernization of China’s ballistic missiles.
China Great Wall uses the Long March
U.S.
Chinese
series of rockets to launch satellites.
ICBM:
CSS-3
DF-4
China’s “Long March (LM)” (“Chang
ICBM:
CSS-4
DF-5A
Zheng”) space launch vehicles (SLVs) are
SLV:
LM
CZ
related to its “East Wind” (“Dong Feng”
(DF)) intercontinental ballistic missiles
(ICBMs). China has used the LM rockets
to launch its own satellites (since 1970) and foreign satellites (since 1990). The Long
March boosters are also produced as China’s CSS-3 (DF-4) and CSS-4 (DF-5A)
ICBMs deployed in the Second Artillery, the strategic missile force of the People’s
Liberation Army (PLA), China’s military. China’s launch facilities, such as the
Xichang Satellite Launching Center in Sichuan province, are at PLA bases.
A review of open sources finds agreement that the first Long March rockets
used to launch satellites were derived from ballistic missiles developed earlier and
that there has been parallel research and development for the modernization of the
SLVs and ICBMs. The CSS-3 IC
5
BM has also been produced as the booster for the
4Parker, Jeffrey. “China to Expand Rocket Production,” Reuters, August 25, 1993.
5 Defense Intelligence Agency, Handbook of the Chinese People’s Liberation Army,
November 1984; John Wilson Lewis and Xue Litai, China Builds the Bomb (Stanford
(continued...)

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CRS-4
LM-1 SLV. The CSS-4 ICBM has also been used as the booster for the LM-2, LM-3,
and LM-4 series of SLVs. In a 1984 publication, the Defense Intelligence Agency
(DIA) called the LM-1 SLV the “booster variant” of the CSS-3, and LM-2 the
“booster variant” of the CSS-4. Indeed, this factor has made it difficult to accurately
count the numbers of ICBMs that China has produced and allows for China to
increase the potential number of ICBMs available for deployment.
Future developments in China’s ICBM program are believed to be related to that
in the space launch program. U.S. intelligence reportedly has gained information
about developments in China’s ICBMs from information about Chinese SLVs.6
Jane’s Space Directory 1997-98 notes that China is not known to use liquid
oxygen/kerosene engines that are used extensively in other countries, “reflecting the
space variants’ parallel development alongside storable propellant long range
missiles.” China has used a variant of the LM-2C with a smart dispenser to launch
two Iridium satellites from one rocket, in several launches. In addition, China
reportedly will add a new solid-propellant third stage (TS) to introduce a new LM-
2E/TS SLV. This third stage may have a multiple-satellite dispenser to launch up to
12 satellites. China reportedly is developing new land-mobile, solid-fuel DF-31 and
DF-41 ICBMs for deployment in the next century. China’s ICBMs are not believed
to have MIRVs (multiple independently targeted reentry vehicles), although such a
capability is reportedly in development.7
When the Reagan Administration first decided to allow China to launch U.S.-
origin satellites, it cited the need to protect “legitimate U.S. national security
interests” and promised Congress that an agreement would be concluded with China
to safeguard U.S. technology from “possible misuse or diversion.” Such a
8
n
agreement on technology safeguards was signed on December 17, 1988, but
apparently required renegotiation. A new agreement was signed on February 11,
1993. One question concerns whether China has abided by these agreements.
Loral’s Case. Specifically, the focus of the investigation is on Space
Systems/Loral (SS/L), Loral's subsidiary in Palo Alto, CA, which chaired a review
5(...continued)
University Press, 1988); Lennox, Duncan, “China’s Development of Ballistic Missiles,”
Jane’s Intelligence Review, August 1991; Phillip S. Clark, “Chinese Launch Vehicles —
Chang Zheng 1,” “Chinese Launch Vehicles — Chang Zheng 2,” “Chinese Launch Vehicles
— Chang Zheng 3,” “Chinese Launch Vehicles — The Rest of the Story,” “Chinese Launch
Vehicles — Further Details,” Jane’s Intelligence Review, November 1991, May 1992,
August 1992, October 1992, June 1993; John Wilson Lewis and Hua Di, “China’s Ballistic
Missile Programs,” International Security, Fall 1992; Iris Chang, Thread of the Silkworm
(BasicBooks, 1995); “People’s Republic of China: Offensive Weapons, Jane’s Strategic
Weapon Systems, September 1997; Jane’s Space Directory 1997-98.
Pincus,
6
Walter, “U.S. Gains Intelligence Data in China Launches,” Washington Post, June
13, 1998.
7 On China’s ICBMs currently deployed and under development, see: CRS Report 97-391,
China: Ballistic and Cruise Missiles, by Shirley A. Kan and Robert D. Shuey.
8 “Export of U.S. Satellite to China for Launch,” Department of State Bulletin, November
1988.

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CRS-5
committee on the launch failure of February 1996. As for Loral’s case, Acting
Undersecretary of State John Holum confirmed on April 9, 1998, that after the
accident in February 1996, the Department of State “became aware that there may
have been a violation.” The case was referred to the Department of Justice for
investigation. He said that there are “strong legal remedies” for violations of export
control laws, including a denial of future licenses.
Loral issued a statement on May 18, 1998, saying that allegations that it
provided missile guidance technology to China are false. Loral also says that it did
not advise China “on how to fix any problems with the Long March rocket.” The
company states that “the Chinese alone conducted an independent investigation of
the launch failure [in February 1996] and they determined that the problem was a
defective solder joint in the wiring — a `low-tech’ matter.” Loral denied that it and
Hughes conducted an independent investigation to determine the cause of that launch
failure. However, at the insistence of insurance companies, which required non-
Chinese confirmation of resolutions of problems with Long March rockets, Loral
formed a committee of several satellite companies, including Hughes, to review the
Chinese investigation. According to Loral, the review committee obtained
information from the Chinese and was not formed to help them solve their problems.
The review agreed with the Chinese conclusion (that a defective solder joint was
responsible), without performing tests or providing any test data to the Chinese. The
committee did note that further tests by China would be required to establish
certainty. Loral says that, during the review, it discussed the committee’s work with
U.S. officials. As far as Loral’s engineer’s can determine, the statement says, “no
sensitive information — no significant technology — was conveyed to the Chinese.”
Loral has further explained that in April 1996, at China's request, Dr. Wah L.
Lim, a Senior Vice President and engineer at Loral, chaired a review committee to
study China's technical evaluation of the cause of the accident on Feb. 15, 1996.
Loral says China had identified the problem as residing in the inertial measurement
unit (IMU) of the guidance system of the rocket. Loral believed that it did not have
to request a U.S. government license and monitoring. The first meeting was held in
Palo Alto, CA, and the second, in China. The Chinese participated in the reviews.
Nevertheless, Loral admitted that, contrary to its policies, “the committee
provided a report to the Chinese before consulting with State Department export
licensing authorities.” According to Loral, as soon as its executives found out in
May 1996, the company notified the Departments of State and Defense. In June
1996, Loral provided to the U.S. government a detailed, written report concerning all
communications with China. Loral adds that it is in full cooperation with the Justice
Department in its investigation and with Congressional committees. Loral concludes
that based upon its own review, it “does not believe that any of its employees dealing
with China acted illegally or damaged U.S. national security.” In addition, the
statement says that Loral’s chairman, Bernard Schwartz, was not personally involved
in any aspect of this matter. “No political favors or benefits of any kind were
requested or extended, directly or indirectly, by any means whatever.” Loral also
denies any connection between the launch failure in February 1996 and the
Presidential waiver for another Loral-built satellite in February 1998. The export
license for the latest launch (for Chinasat-8) “applied the strictest prohibitions on
technology transfer and specified that any new launch failure investigation would

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CRS-6
require a separate license.” Loral stresses that it complies strictly with export control
laws and regulations.
Administration officials say that export licensing procedures and strict security
measures (including monitoring by the Defense Department of pre-launch meetings
and the launches) preclude any assistance to the design, development, operation,
maintenance, modification, or repair of any launch facility or rocket in China.
Moreover, Undersecretary of Commerce William Reinsch testified to Congress on
April 28, 1998, that effective export controls on dual-use technology (with military
and civilian applications) allow U.S. exporters to compete while protecting U.S.
security interests. He disputed that there were objections within the executive branch
to allowing recent satellite exports to China, saying that since November 1996 (when
the licensing jurisdiction was transferred from the Department of State to
Commerce), the Commerce Department has issued three export licenses for satellites
to be launched from China — with the concurrence of all agencies.
However, at least three classified studies have found serious concerns about the
U.S. firms' assistance to China's ballistic missile modernization program. A
classified report at the Department of Defense’s Defense Technology Security
Administration (DTSA) reportedly concluded on May 16, 1997, that Loral and
Hughes transferred expertise to China that significantly enhanced the guidance and
control systems of its nuclear ballistic missiles and that “United States national
security has been harmed,” according to the New York Times (April 13, 1998 and
June 27, 1998). These concerns were first raised in a classified report at the Air
Force's National Air Intelligence Center (NAIC) in March 1997 and supported by the
State Department's Intelligence and Research Bureau (INR), according to the
Washington Post (June 7, 1998). These reports apparently prompted the Justice
Department's investigation.
Also, the Justice Department had expressed concerns about the February 1998
Presidential waiver for the Chinasat-8 satellite. A memorandum, dated February 12,
1998, written by National Security Adviser Samuel Berger for President Clinton,
acknowledged that the Justice Department “cautioned” that such a waiver “could
have a significant adverse impact on any prosecution that might take place” in Loral’s
case.9 Finally, there is little public information on the export licenses issued by the
State Department for technical assistance agreements (TAAs) concerning the transfer
of technical assistance and data needed to mate satellites to launch vehicles.
Applicability of Technology. Beyond the 1996 incident involving Loral and
Hughes, there are wider concerns that the policy of allowing China to launch U.S.-
built satellites effectively subsidizes and assists China’s modernization of its ballistic
missiles. Observers point out that the same Chinese companies are involved in both
civilian and military programs and much of the technology used in launching
satellites can be used in military programs, such as modernization of ballistic
missiles. The Justice Department is now also investigating Hughes' report on the
9 The memorandum was printed in the New York Times, May 23, 1998.

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CRS-7
launch failure on January 26, 1995, a report that the Commerce Department approved
for release to China without consulting the Pentagon.
10
Some are especially concerned about Chinese launches in 1995 and 1996 of
three satellites built by Hughes which were not monitored by the Defense
Department. On June 18, 1998, Jan Lodal, Principal Deputy Under Secretary of
Defense for Policy, testified to a joint hearing of the House National Security and
International Relations Committees that there were three launches that were not
monitored by the Defense Department, because the satellites did not require State
Department licenses and monitoring had been tied to licenses from the State
Department for Munitions List items. The Director of DTSA, Dave Tarbell, testified
to the Senate Select Committee on Intelligence on July 15, 1998, that the three
unmonitored launches took place in January 1995 (Apstar-2), July 1996 (Apstar-1A),
and August 1996 (Chinasat-7). The Department of Defense then concluded that full
monitoring should be required for satellites licensed by the Commerce Department,
and the requirement was added after late 1996, he said. Nevertheless, Tarbell stated
that "we are not aware of any transfer of technology from these unmonitored launches
that contributed to China's missile or military satellite capabilities." Hughes responds
that its security measures prevented unauthorized technology transfers. In addition,
Senator Kyl reported on July 16, 1998, that there was no monitoring of pre-launch
technical exchanges on the mating of satellites to the launch vehicles for three
satellite projects: Optus B-3 (Hughes), Echostar-1 (Martin Marietta), and Chinastar-1
(Lockheed Martin). Critics say that monitoring of these technical meetings is more
crucial than monitoring the launches.
Beyond the question of whether sensitive technology or technical expertise in
connection with satellite launches was transferred to China, there is disagreement on
the extent to which such transfers have military benefit in the context of China’s
current modernization of its nuclear-armed ballistic missiles and space systems.
Some, including officials in the Clinton Administration, stress differences between
the Chinese SLVs and ICBMs and that there have been no authorized missile
technology transfers to China. Jan Lodal, Principal Deputy Under Secretary of
Defense for Policy, testified that there is “an important distinction between the space
launch vehicles and the military ICBMs, which are different items. And the ICBMs,
which are deployed today, have technologies in them that are considerably different
from those technologies that are in the space launch vehicles. They have some
overlapping technologies, of course. But we ... do not believe that there has been any
transfer of these sensitive technologies. We don’t have any evidence that there’s
been transfer of these sensitive technologies to their military programs that have
made an impact on the Chinese military programs.”11
John Pike, Director of the Space Policy Project at the Federation of American
Scientists, also argues that there are significant differences between China’s ballistic

10 Anselmo, Joseph C. and James R. Asker, "U.S. Broadens Probes of China Tech Transfer"
and "Hughes Defends China Security," Aviation Week and Space Technology, June 29 and
July 6, 1998.
1 1 Joint Hearing of the House National Security and International Relations Committees,
“U.S. Policy Regarding Export of Satellites to China,” June 18, 1998.

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CRS-8
missiles and the Long March SLVs. He says that the Long March SLVs are longer
12
than the CSS-4 ICBM, so they flex more during ascent. They also have bigger nose
cones to hold satellites that are bigger than warheads. These characteristics have
resulted in stresses on the Long March. He also says that deploying two satellites
from one Long March (as China has done for Iridium) is very different from
launching MIRVs. Warheads, unlike satellites, are designed to survive greater
vibrations and the heat of reentering the atmosphere.
Other experts stress that there are commonalities between the technology as well
as technical expertise used in rockets and missiles. A Senate subcommittee provided
a graphical comparison of the applicability of technology in SLVs and ballistic
missiles prepared by the Central Intelligence Agency (CIA). In general terms, the
13
CIA compared 11 categories of technology and equipment. Six, or more than half,
of the categories are the same for the SLV and ICBM; four categories are similar;
while only missiles contain warheads.
Technology and equipment generally unique to ballistic missiles:
! warhead
Technology and equipment that are similar in SLV and ICBM
(comparison requires case-by-case analysis):
! reentry vehicle
! payload separation
! inertial guidance and control systems
! strap-on boosters
Technology and equipment that are same in SLV and ICBM:
! staging mechanisms
! propellants
! air frame, motor cases, liners, and insulation
! engines or motors
! thrust vector control systems
! exhaust nozzles
Henry Sokolski (Executive Director of the Nonproliferation Policy Education
Center and a Defense official in the Bush Administration) argues that “all of our
satellite transfers have helped China perfect its military rocketry.” He also writes that
“intangible technology” is critical to the timely, reliable, and accurate placement of
satellites into space as well as launches of warheads against targets by ballistic
missiles. Intangible technologies include: coupling load analysis, guidance data
packages, upper-stage solid rocket propellant certification, upper-stage control design
validation, lower-stage design validation, and general quality assurance. Also, multi-
satellite dispensers, or smart dispensers, can be used as multiple-warhead dispensers,
12 “The China Satellite Debate,” Proliferation Brief, June 23, 1998.
13Hearing of the Senate Governmental Affairs Subcommittee on International Security,
Proliferation, and Federal Services, “The Benefits of Commercial Space Launch for Foreign
ICBM and Satellite Programs,” May 21, 1998.

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CRS-9
thus assisting China’s reported efforts to develop a capability in MIRVs for its
ICBMs. China has used such dispensers to launch multiple satellites for Iridium.
14
Two experts at the Monterey Institute of International Studies also point out that
a significant portion of the components, technology, and expertise used in the
research and development of SLVs are “virtually interchangeable” with that of
ballistic missiles. These overlaps include: launching multiple satellites from a single
SLV and delivering multiple warheads on a single missile. Similar technology
involves upper stage control systems (separation and ignition of the upper stage,
attitude control, and spin release of satellites), satellite dispensers (delivery of
multiple satellites to separate orbits), coupling load analysis (to assure launches
without damaging payloads), upper stage solid-fuel engines, and kick motors (to
deliver satellites into correct orbits).
15
Nevertheless, they also argue that having the capability to launch multiple
satellites does not translate into having a military capability to deliver MIRVs.
Delivering multiple reentry vehicles into planned trajectories is more difficult than
launching multiple satellites into orbit. MIRV capability requires greater precision.
Reentry vehicles, unlike satellites, do not have their own kick motors. A MIRV
capability requires rocket motors that can stop and restart.
However, Jane’s Space Directory 1997-1998 reported that China developed a
restartable, cryogenic (extremely low temperature) stage 3 for the LM-3 SLV. A
classified study by the Air Force's National Air Intelligence Center (NAIC) reportedly
concluded that the new Chinese-developed "smart dispenser," an upper-stage booster
used to launch two satellites for Iridium on one LM 2C/SD rocket, could be modified
to deploy multiple re-entry vehicles, according to the Washington Times, July 14, 1998.
Nevertheless, the report noted that there is no evidence that China is using the
dispenser for warheads. A Pentagon spokesman said on July 14, 1998, that
Motorola provided data to allow the Chinese to attach satellites to the dispenser that
they designed without U.S. help and that releasing multiple satellites and targeting
multiple warheads require different technology.
Sanctions
China Great Wall has been affected by two categories of sanctions imposed on
China: those imposed after the Tiananmen crackdown and those imposed for missile
proliferation. In 1990, the United States imposed post-Tiananmen sanctions as
required in the Foreign Relations Authorization Act for FY1990 and FY1991 (P.L.
101-246). Sec. 902(a) requires suspensions in programs related to: (1) Overseas
Private Investment Corporation, (2) Trade and Development Agency, (3) exports of
Munitions List items, (4) exports of crime control equipment, (5) export of satellites
for launch by China, (6) nuclear cooperation, and (7) liberalization of export controls.
Suspensions (3) and (5) affected export of satellites to China. Sec. 902(b) allows
14 Sokolski, Henry, “US Satellites to China: Unseen Proliferation Concerns,” International
Defense Review, April 1994; “Selling China the Rope...,” Weekly Standard, June 1, 1998.
1 5 Lamson, James A. and Wyn Q. Bowen, “`One Arrow, Three Stars:’ China’s MIRV
Program,” Jane’s Intelligence Review, May 1997.

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CRS-10
Presidential waivers of those suspensions by reporting that “it is in the national
interest” to terminate a suspension.
As for sanctions related to missile proliferation, on April 30, 1991, the Bush
Administration denied licenses for the export of U.S. parts for a Chinese satellite, the
Dongfanghong-3, citing “serious proliferation concerns.” On May 27, 1991,
President Bush declared sanctions on China for transferring to Pakistan technology
related to the M-11 short-range ballistic missile. These sanctions, required by Sec.
73(a) of the Arms Export Control Act (P.L. 90-629) and Sec. 11B(b)(1) of the Export
Administration Act (P.L. 96-72), were intended to enforce the Missile Technology
Control Regime (MTCR). These sanctions, which took effect on June 16 and 25,
1991, denied export licenses and waivers of sanctions for: (1) high-speed computers
to China, which can be used for missile flight testing; (2) satellites for launch by
China; and (3) missile technology or equipment. They affected two Chinese
aerospace corporations: China Great Wall and China Precision Machinery Import
Export Corporation. President Bush waived these sanctions on March 23, 1992, after
China agreed to abide by the MTCR guidelines.
The Clinton Administration had to impose similar sanctions on August 24,
1993, after China was again determined to have transferred M-11 related equipment
to Pakistan. A total of 11 Chinese defense industrial companies were sanctioned,
including China Great Wall again. Beginning in 1993, the U.S. aerospace industry
and aerospace company executives lobbied against sanctions and for expansion of
satellite exports to China. China, on October 4, 1994, agreed not to export ground-
to-ground missiles inherently capable of delivering at least 500 kg to at least 300 km
— an understanding the U.S. side sought to include the M-11 missiles under the
MTCR. On November 1, 1994, the Clinton Administration waived those sanctions.
Waivers
Since sanctions were imposed after the Tiananmen crackdown in 1989,
Presidents Bush and Clinton have issued 13 waivers for 20 satellite projects (each
project may involve more than one satellite), based on “national interest,” on a case-
by-case basis, to allow the export to China of U.S.-origin satellites or components
subject to export controls. (See Table below.) Waivers have been increasingly
issued for satellites used by China — not just launched from China. Some waivers
under P.L. 101-246 have specified whether sections 902(a)(3) and 902(a)(5), on
Munitions List items and satellites, applied; others simply referred to section 902 or
902(a).
Also, the policy of allowing China to launch U.S.-built satellites has been tied
to the missile nonproliferation policy, because the same company was involved in
both. Nevertheless, during the two periods of sanctions on China Great Wall and
other Chinese companies for missile proliferation, one Presidential waiver of post-
Tiananmen sanctions was issued (on July 13, 1994) for China Great Wall to launch
U.S.-built satellites. The Clinton Administration has considered supporting China
as a partner in the MTCR, issuing a blanket waiver of sanctions on satellites, and
increasing the quota on the numbers of satellites China is allowed to launch — in

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CRS-11
return for further cooperation in missile nonproliferation, according to a Secret
March 12, 1998, National Security Council memo printed in the Washington Times.16
1 6 See: CRS Issue Brief 92056, Chinese Proliferation of Weapons of Mass Destruction:
Current Policy Issues, by Shirley A. Kan.

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CRS-12
Table: Presidential Waivers of Post-Tiananmen Sanctions
for Exports of Satellites or Parts to China
Satellite Project
End-User
Manufacturer
Waiver
(may have multiple
satellites per project)
Asiasat-1
Asia Satellite
Hughes
12/19/89
* Asia Satellite Telecommunications is a consortium based in Hong Kong and owned
by China International Trust and Investment Corporation (CITIC) of China, Cable
and Wireless of Britain, and Hutchison Telecommunications Ltd. Of Hong Kong.
Aussat (Optus)
Australia
Hughes
4/30/91
Freja
Sweden
various U.S.
* In the first waiver, President Bush had waived sanctions for Aussat satellites, but
he reissued a new waiver and licenses. He also denied export licenses for U.S.
components for a Chinese satellite, Dongfanghong-3 (waived later).
Asiasat-2
Asia Satellite
Martin Marietta
9/11/92
Apsat (or Apstar)
APT Satellite
Hughes and Loral
Intelsat-708
Intelsat
Loral
Starsat
(canceled)
AfriSat (AfriStar)
Afrispace
Alcatel
Dongfanghong-3
China
China
Iridium
Iridium
Lockheed Martin
7/2/93
Intelsat-8
Intelsat
Lockheed Martin
Echostar
Echostar
Martin Marietta
7/13/94
Mabuhay (Agila 2)
Philippines
Loral
2/6/96
Chinastar-1 (Zhongwei-1)
China
Lockheed Martin
2/6/96
* Used by China Oriental Telecom Satellite Co.
Chinasat-7
China
Hughes
2/6/96
Asia Pacific Mobile
APT Satellite
Hughes
6/23/96
Telecommunications (APMT)
* Various Chinese state-owned companies invest in the project.
Globalstar
Globalstar
Loral/Alcatel
7/9/96
Fengyun 1
China
China
11/19/96
SinoSat-1
China
Alcatel/
11/23/96
Aerospatiale
* Cooperative product between Daimler-Benz Aerospace and China Aerospace Corp.
Chinasat-8
China
Loral
2/18/98

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CRS-13
Congressional Action
Hearings
Since the Reagan Administration’s decision in September 1988 to begin to
allow U.S.-built satellites to be launched from China, Members of Congress have
expressed concerns about the implications for U.S. national security. After the press
reports in April 1998, several Congressional committees have held open and closed
hearings:
Joint Economic Committee, April 28, 1998.
Senate Governmental Affairs Subcommittee on International Security, Proliferation,
and Federal Services, May 21, 1998.
Senate Intelligence Committee, June 4, 1998.
Senate Intelligence Committee, June 5, 1998.
Senate Intelligence Committee, June 10, 1998.
Senate Foreign Relations Committee, June 11, 1998.
House National Security/International Relations Committees, June 17, 1998.
House National Security/International Relations Committees, June 18 and 23, 1998.
Senate Foreign Relations Subcommittee on East Asian/Pacific Affairs, June 18,
1998.
Senate Governmental Affairs Subcommittee on International Security, Proliferation,
and Federal Services, June 18 and July 8, 1998.
Senate Intelligence Committee, June 24, 1998.
House Science Committee, June 25, 1998.
Senate Foreign Relations Committee, June 25, 1998.
Senate Governmental Affairs Committee, June 25, 1998.
Senate Intelligence Committee, July 8, 1998.
Senate Armed Services Committee, July 9, 1998.
Senate Intelligence Committee, July 15, 1998.
Senate Governmental Affairs Subcommittee on International Security, Proliferation,
and Federal Services, July 29, 1998.
Investigations
In addition, House Speaker Gingrich announced on May 19, 1998, that he
wanted to create a select committee, headed by Congressman Cox, to investigate the
various allegations concerning this case. The House voted on H.Res. 463 (Solomon)
(409-10) on June 18, 1998, to create a Select Committee on U.S. National Security
and Military/Commercial Concerns with the People’s Republic of China. The Select
Committee has nine members: five Republicans (Representatives Cox, Goss, Hansen,
Bereuter, and Weldon) and four Democrats (Representatives Dicks, Spratt, Jr.,
Roybal-Allard, and Scott). The special panel plans to conclude its investigation and
issue a report by January 2, 1999.17
17 Also see CRS Report 98-549, Transfer of Missile and Satellite Technology to China: A
Summary of H.Res. 463 Authorizing a House Select Committee, by Stephen W. Stathis;
Francesca Contiguglia, “China Panel Hires Staff, Starts Meeting,” Roll Call, June 29, 1998.

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CRS-14
On May 20, 1998, Senate Majority Leader Lott announced the creation of a
Task Force, led by Senator Shelby (chairman of the Intelligence Committee) and
includes Senators Thurmond, Helms, Thompson, Cochran, Kyl, and Hutchinson. On
May 29, Senate Democratic Leader Daschle approved a Democratic Task Force, with
Senators Kerrey, Biden, Sarbanes, Glenn, Leahy, Levin, Kerry, and Feinstein.
On July 14, 1998, Senator Lott made a floor statement on interim findings that
sensitive U.S. technology relating to satellite exports has been transferred to China
and that those transfers provided military benefits. He reported five "major interim
judgments:"
! the Clinton Administration's export controls on satellites are wholly
inadequate;"
! sensitive technology related to satellite exports has been transferred to China;
! China has received military benefit from U.S. satellite exports;
! the Administration has ignored overwhelming information regarding Chinese
proliferation and has embarked on a de facto policy designed to protect China
and U.S. satellite companies from sanctions under U.S. proliferation laws;
! new information has come to light about China's efforts to influence the U.S.
political process.
Senator Shelby stated on July 14, 1998, that "some of the tendencies of the
evidence tend to support" Senator Lott's statement, but that "the Intelligence
Committee has not reached any preliminary judgment." The Pentagon's spokesman,
Kenneth Bacon, responded to Senator Lott by saying that this Administration has
submitted requested documents to Congress and had inherited safeguards from
previous Administrations that prevent inappropriate technology transfers to China.
Legislation
The House-passed National Defense Authorization Act for FY 1999 (H.R.
3616) includes amendments (sections 1206-1209) passed on May 20, 1998, that
expresses the sense of Congress that the United States should not enter into new
agreements with China involving space or missile-related technology (Spence, agreed
417-4); prohibits U.S. participation in investigations of Chinese launch failures
(Bereuter, agreed 414-7); prohibits transfers of missile equipment or technology to
China (Hefley, agreed 412-6); and prohibits the export or re-export of U.S. satellites
to China (Hunter, agreed 364-54). Also, section 1212 would return control over
licensing export of satellites from the Commerce Department to the State Department
(under the Munitions List controlled under the Arms Export Control Act).
On June 4, 1998, Senator Hutchinson submitted an amendment to the Senate-
passed Defense Authorization Act for FY 1999 (S. 2057), which was ordered to lie
on the table. It sought to amend the language authorizing Presidential waivers of
post-Tiananmen sanctions by substituting a narrower basis (“in the vital national
security interest”) for the current language (“in the national interest”), and add a
requirement for the President to submit a detailed justification for each waiver.
On July 22, 1998, Senator Hutchinson filed but did not offer Amendment 3250
to the Senate-passed Defense Appropriations Act for FY 1999 (S. 2132/H.R. 4103)
to transfer the export control of satellites back to the State Department and require

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CRS-15
a detailed justification for Presidential waivers of post-Tiananmen sanctions for
exports of satellites or defense articles. On July 30, 1998, Senator Kyl proposed
Amendment 3398 to this bill to limit the use of funds pending the establishment of
the position of Deputy Under Secretary of Defense for Technology Security Policy
who would also serve as the director of DTSA.
Chronology
Note:18
Date
Event
1988
9/9/88
The Reagan Administration notified Congress that it will approve the
first export licenses for the use of Chinese space launch services (for
one Asiasat and two Aussat satellites).
12/17/88
The United States and China signed an agreement to establish
security procedures to safeguard U.S. satellite technology.
1989
Jan. 1989
The United States and China signed an agreement for six years under
which China agreed to charge prices for commercial launch services
“on a par” with Western competitors and to allow China to launch
nine U.S.-built satellites through 1994.
6/4/89
Crackdown on peaceful, political demonstrators in Beijing.
12/19/89
President Bush waived sanctions for export of Aussat-1, Aussat-2,
and Asiasat communications satellites for launch from China, under
sec. 610 of the Department of Commerce, Justice, and State, the
Judiciary, and Related Agencies Appropriations act 1990 (P.L. 101-
162).
1990
2/16/90
P.L. 101-246 enacted to require post-Tiananmen sanctions, including
suspensions in approving exports to China of Munitions List items
and satellites.
4/7/90
China Great Wall Industry Corporation, using a LM-3 rocket,
launched a foreign satellite, Asiasat (built by Hughes), for the first
time.
1991
1 8 For overview of U.S.-China relations, see CRS Report 97-484, China-U.S. Relations:
Chronology of Developments During the Clinton Administration, by Kerry Dumbaugh.

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CRS-16
4/30/91
President Bush waived sanctions under Sec. 902(b) of P.L. 101-246
to allow exports of Aussat-1 and -2 and Freja satellites for launch
from China in part because China was not the end-user. President
Bush denied a license to export U.S. satellite components for a
Chinese satellite, Dongfanghong-3, citing “serious proliferation
concerns.” In addition, Space News (May 6-12, 1991) reported that
President Bush’s denial was to punish China for attempting to obtain
classified missile-related technology. The license to export parts for
Dongfanghong-3 was requested by a German firm, but the U.S.
components were produced by M/A-COM, Inc. (Burlington, MA).
6/16/91
The Bush Administration announced sanctions to be imposed on
China for transferring missile related technology to Pakistan. The
sanctions affected high technology trade with China, covering (1)
high performance computers, (2) satellites for launch from China
(except for the Freja and Aussat satellites), and (3) sanctions for
missile proliferation as required by the Arms Export Control Act and
Export Administration Act (imposed on China Great Wall Industry
Corp. and China Precision Machinery Import/Export Corp.). The
U.S. sanctions were intended to enforce the MTCR.
6/25/91
The sanctions on the two Chinese state-owned companies for missile
proliferation in Pakistan took effect.
11/21/91
After Secretary of State James Baker visited Beijing, the Chinese
foreign ministry issued a vague statement that China “intends to
abide” by the MTCR.
1992
2/1/92
According to the Bush Administration, the Chinese foreign minister
sent a secret letter to the U.S. Secretary of State promising to abide by
the MTCR.
2/22/92
The Chinese foreign ministry issued a statement saying that “China
will act in accordance with the guidelines and parameters of the
existing missile and missile technology control regime in its export
of missiles and missile technology,” after the United States
effectively lifts the June 1991 sanctions.
3/22/92
Aborted launch of Aussat (Optus-B1) satellite from China after LM-
2E rocket malfunctioned and the rocket stalled on the launch pad.
Beijing Review (Nov. 2-8, 1992) reported that the rocket’s
malfunction was caused by a fault in the ignition system which
triggered an emergency shut-down.
3/23/92
The Bush Administration effectively waived the sanctions imposed
in June 1991 on China for missile proliferation.
8/14/92
China successfully launched the Optus-B1 satellite (built by Hughes).

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CRS-17
9/11/92
President Bush waived sanctions under P.L. 101-246 to allow exports
of five satellites (Asiasat-2, Apsat, Intelsat-7A, Starsat, and AfriStar)
for launch from China and parts for China’s Dongfanghong-3.
10/23/92
Under the Bush Administration, the State Department issued a rule to
amend section 38 of the Arms Export Control Act. The rule
transferred commercial communications satellites that do not have
certain sensitive characteristics (under nine categories) to the export
licensing control of the Commerce Department. Military satellites
and communications satellites with any of the nine categories of
sensitive characteristics remained on the State Department's
Munitions List.
Nov. 1992
China may have supplied M-11 short-range ballistic missiles or
related technology to Pakistan, according to President Clinton’s
report to Congress submitted in May 1993. This transfer may have
been taken in retaliation for President Bush’s decision in September
1992 to sell F-16 fighters to Taiwan.
12/21/92
A Chinese LM-2E launch vehicle exploded and destroyed the
Australian Optus-B2 satellite (built by Hughes) it was carrying.
After the explosion, Chinese officials denied that Chinese rockets
were responsible, blaming the satellite built by Hughes. Aviation
Week and Space Technology (Jan. 30, 1995) reported that Hughes and
China Great Wall Industry Corp. agreed to declare the cause of that
failure to be undetermined. Some experts, however, reportedly
identified the premature opening of the launch vehicle’s payload
fairing as causing the accident.
1993
2/11/93
After renegotiating security procedures, the United States and China
signed a new agreement on satellite technology safeguards,
superseding the agreement of 12/17/88.
5/28/93
President Clinton decided to extend most-favored-nation trade status
to China with conditions on human rights, but no linkage to weapons
proliferation. Nonetheless, after persistent reports that China was
continuing to transfer missile components to Pakistan — if not
complete M-11 short-range ballistic missiles, the President also
reported to Congress that “at present, the greatest concern involves
reports that China in November 1992 transferred MTCR-class M-11
missiles or related equipment to Pakistan.”
7/2/93
President Clinton waived sanctions under P.L. 101-246 to allow
exports to China of Iridium and Intelsat-8 satellites for launch from
China.

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CRS-18
8/16/93
Hughes and CGWIC issued a joint statement after seven months of
“vigorous and cooperative investigation” into the cause of the
explosion on 12/21/92. The statement did not identify a cause, with
each side denying blame.
8/24/93
The Clinton Administration determined that China had shipped M-11
related equipment (not missiles) to Pakistan and imposed sanctions
required by the Arms Export Control Act and Export Administration
Act. The sanctions were imposed on Pakistan’s Ministry of Defense
and 11 Chinese defense industrial aerospace entities, including China
Great Wall Industry Corp. The sanctions denied U.S. government
contracts and export licenses for missile equipment or technology
(items in the MTCR annex) for two years. Exports of satellites were
affected because of components such as “kick motors” used on
missiles and installed on some satellites to boost them into orbit.
8/26/93
The U.S. aerospace industry lobby, including the Aerospace
Industries Association, called on the Clinton Administration to
weaken the missile proliferation sanctions.19
8/31/93
One week after imposing sanctions, Assistant Secretary of State
Winston Lord said that “we’re ready at any time to sit down with the
Chinese, both to try to find a way to lift the sanctions if they
cooperate but also to explain more fully the MTCR and its revised
guidelines.”
9/25/93
National Security Adviser Anthony Lake told the Chinese ambassador
that the Clinton Administration was willing to negotiate a waiver of
the sanctions, but a more formal and binding Chinese commitment
than the one made in November 1991 was needed.
10/20/93
The Washington Post reported that top executives of U.S. satellite
manufacturers, Martin Marietta Corp. and Hughes Aircraft Co., were
lobbying intensively for the Clinton Administration to waive the
export ban for satellites. Reportedly due to these objections from
private industry (which were supported by the Commerce
Department), the National Security Council (NSC) reviewed the
decision to implement the sanctions. In September 1993, Norman R.
Augustine, chairman of Martin Marietta, wrote a letter to Vice
President Al Gore, arguing that the sanctions “present U.S. companies
as an unreliable supplier.” Some Members of Congress supported the
export of satellites for launch from China.
11/9/93
The CEO of Hughes Aircraft Company, C. Michael Armstrong,
delivered a speech in which he objected to the inclusion in the
1 9 “Statement by Don Fuqua, President of the Aerospace Industries Association, on the
Imposition of U.S. Economic Sanctions on China,” August 26, 1993; Steven Greenhouse,
“Aerospace Industry Seeks Weaker Sanctions on China,” New York Times, August 28, 1993.

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CRS-19
sanctions of commercial communications satellites. He also said that
he “asked the President of the United States to review the situation.”
11/16/93
National Security Adviser Anthony Lake wrote a memo to President
Clinton proposing the NSC's interpretation of the sanctions imposed
in August to allow the export of two satellites controlled by the
Commerce Department, but not the five controlled by the State
Department. State had argued that all satellite licenses were
suspended under the sanctions, but Commerce argued that sanctions
did not cover any licenses. The President approved the NSC's
recommendation.
11/19/93
President Clinton met with Chinese President Jiang Zemin at the
Asian Pacific Economic Cooperation (APEC) meeting in Seattle. On
the eve of the meeting, press reports said that the Administration had
formally proposed waiving the sanctions in return for another Chinese
promise, in more detail and with more authority, not to export
MTCR-class missiles.
1994
1/6/94
The Clinton Administration announced a new policy exempting
commercial communication satellites from sanctions for missile
proliferation imposed on 8/24/93, facilitating export licenses for one
Hughes and two Martin Marietta satellites.
4/2/94
A Chinese weather satellite exploded in a plant.
7/13/94
President Clinton waived sanctions under P.L. 101-246 for the
Echostar satellite to be exported for launch from China.
7/21/94
A Chinese LM-3 rocket launched the Apstar-1 satellite (built by
Hughes).
8/28/94
A Chinese LM-2E rocket launched Australia’s Optus-B3 satellite
(built by Hughes).
Sept. 1994
Secretary of Commerce Ron Brown led trade delegation to China,
including Bernard Schwartz, Loral’s chairman.
10/4/94
Secretary of State Warren Christopher and Foreign Minister Qian
Qichen issued a joint statement in which the United States agreed to
waive the August 1993 sanctions (for missile proliferation) and China
agreed not to export “ground-to-ground missiles” that are “inherently
capable” of delivering at least 500 kg to at least 300 km (an important
understanding meant in part to include the M-11 missiles under the
MTCR guidelines).
11/1/94
The Administration’s waiver of the sanctions for missile proliferation
took effect.

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CRS-20
11/30/94
China launched its Dongfanghong-3 satellite, but failed to launch it
into the correct position due to a fuel leak.
Dec. 1994
President Clinton selected Armstrong of Hughes to head the Export
Council.
1995
1/26/95
A Chinese LM-2E launch vehicle exploded after liftoff, destroying
the Apstar-2 satellite (built by Hughes) it was carrying. Hughes and
China Great Wall Industry Corporation were reported as planning to
determine the cause of the explosion. (Aviation Week and Space
Technology, Jan. 30, 1995)
2/9/95
The Wall Street Journal reported that Chinese aerospace industry
officials contradicted an official Chinese newspaper’s account that
blamed Hughes for the explosion on January 26, 1995. Instead of
blaming Hughes, as Ta Kung Pao (in Hong Kong) did, officials from
China Great Wall Industries Corp. and the China National Space
Administration said that the article did not reflect China’s official
view and that the investigation had not concluded. A spokesman for
Hughes said that a thorough investigation into the cause of the
explosion would take months to complete.
3/13/95
The United States and China concluded a new agreement for 7 years
to allow China to launch up to 11 new satellites to geostationary orbit
at prices not less than 15 percent below that charged by Western
competitors.
7/21-28/95
The PLA Second Artillery test-fired M-9 short-range ballistic missiles
toward Taiwan, after Taiwan’s president visited Cornell University
in June.
7/25/95
Hughes and CGWIC issued a joint statement on separate findings of
six-month investigations into the cause of the explosion on 1/26/95.
CGWIC blamed strong winds for shaking Hughes’ satellite apart,
while Hughes said that severe winds caused the Chinese rocket’s
fairing to collapse.
8/15/95
Hughes provided to the Department of Commerce the final report on
the investigation of the launch failure of Apstar-2. The report
included a summary of information conveyed to China Great Wall
during several meetings that took place from February to June 1995.
10/9/95
Secretary of State Warren Christopher initialed a classified
memorandum to retain the State Department’s licensing authority
over commercial communications satellites (cited in New York Times,
May 17, 1998).

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CRS-21
11/28/95
A Chinese LM-2E rocket launched the Asiasat-2 satellite (built by
Martin Marietta), but the bumpy launch knocked the satellite’s
antenna-feed horns out of alignment, resulting in a loss of signal
power. Asiasat company claimed $58 million in insurance for the
damage. (Flight International, Oct. 2-8, 1996).
12/6/95
President Clinton issued Executive Order 12981 giving the
Departments of State, Defense, and Energy, and the Arms Control
and Disarmament Agency authority to separately review export
license applications submitted to the Department of Commerce under
the Export Administration Act and relevant regulations.
12/28/95
A Chinese LM-2E rocket launched the Echostar-1 satellite (built by
Martin Marietta).
1996
2/6/96
President Clinton waived sanctions under P.L. 101-246 for the
Chinasat-7 satellite to be exported for launch from China.
2/6/96
President Clinton waived sanctions under P.L. 101-246 for 2 Cosat
(later called Chinastar) satellites to be exported for launch from
China.
2/6/96
President Clinton waived sanctions under P.L. 101-246 for the
Mabuhay satellite to be exported for launch from China.
2/15/96
A LM-3B rocket exploded after liftoff, destroyed the Intelsat-708
satellite (built by Loral), and smashed into a village. The death toll
was probably higher than the official report of six deaths and 57
injured.
3/8-15/96
Despite the dramatic explosion of a Chinese rocket one month before,
the PLA’s Second Artillery again test-fired M-9 short-range ballistic
missiles toward targets close to Taiwan’s ports, on the eve of
Taiwan’s first presidential election.
3/10-11/96
In further deterioration of U.S.-China relations, the United States
deployed two carrier battle groups to waters off Taiwan, calling
China’s live-fire exercises “reckless” and “risky.”
3/12/96
President Clinton approved a memo written by then deputy national
security adviser Samuel R. Berger to reverse Secretary Christopher's
decision of October 1995 and transfer export control authority over
commercial satellites from the State Department to the Commerce
Department (New York Times, July 18, 1998).
3/14/96
The Clinton Administration announced a decision to move
commercial communications satellites from the Munitions List to the
Commerce Control List of dual-use items, so that the export license

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CRS-22
jurisdiction was moved from the Department of State to the
Department of Commerce (implemented in November 1996).
April 1996
At China's request, Dr. Wah L. Lim, a Senior Vice President and
engineer at Loral, chaired a review committee to study China's
technical evaluation of the cause of the accident on Feb. 15, 1996.
Loral says China had identified the problem as residing in the inertial
measurement unit (IMU) of the guidance system of the rocket. Loral
believed that it did not have to request a U.S. government license and
monitoring. The first meeting was held in Palo Alto, CA, and the
second, in China. The Chinese participated in the two meetings.
5/7/96
A draft preliminary report of the review committee was sent to all
participants of the meetings. The report confirmed that the cause of
the accident was an electrical flaw in the electronic flight control
system. The report allegedly discussed weaknesses in the Chinese
rocket’s guidance and control systems. (New York Times, April 13,
1998)
5/10/96
Loral's executive in charge of export controls told Dr. Wah Lim not
to send the report to China.
5/13/96
Loral’s executives provided the report to the Departments of State
and Defense.
6/17/96
Loral provided a voluntary disclosure to the Department of State,
concerning all communications with China. The company argues that
its policy of consultation with the Department of State was not
implemented, but it did not violate U.S. laws.
6/23/96
President Clinton waived sanctions under P.L. 101-246 for the Asia
Pacific Mobile Telecommunications (APMT) satellite to be exported
for launch from China.
7/3/96
China launched the Apstar-1A satellite (built by Hughes) on a LM-3
rocket.
7/9/96
President Clinton waived sanctions under P.L. 101-246 for a
Globalstar satellite to be exported for launch from China.
8/18/96
China failed to launch its Chinasat-7 satellite (built by Hughes) into
the correct orbit, after the third stage of the LM-3 rocket shut down
early, reported the Far Eastern Economic Review (Aug. 29, 1996).
10/15/96
President Clinton issued an Amendment to Executive Order 12981
(issued on 12/6/95) concerning export licensing procedures for
commercial communications satellites and hot-section technologies
for commercial aircraft engines that are transferred from the State
Department’s Munitions List to the Commerce Department’s
Commerce Control List (of dual-use items).

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CRS-23
10/21/96
The Bureau of Export Administration of the Department of
Commerce issued regulations to implement the transfer of
commercial satellites from control under the Munitions List to the
Commerce Control List.
11/5/96
The Department of State issued regulations to implement the transfer
of commercial satellites from control under the Munitions List to the
Commerce Control List, even if the satellites include individual
components or technologies on the Munitions List.
20
11/19/96
President Clinton waived sanctions under P.L. 101-246 for U.S. parts
for the Chinese Fengyun-1 (FY-1) meteorological satellite. The
waiver cited suspensions under sections 902(a)(3) and 902(a)(5),
indicating that technologies controlled under the Munitions List were
involved.
11/23/96
President Clinton waived sanctions under P.L. 101-246 for the
Sinosat satellite to be exported for launch from China. The waiver
cited suspensions under sections 902(a)(3) and 902(a)(5), indicating
that technologies controlled under the Munitions List were involved.
1997
March 1997
The Air Force's National Air Intelligence Center (NAIC) reportedly
concluded in a classified report that Loral and Hughes provided
expertise that helped China to improve the guidance systems on its
ballistic missiles and that U.S. national security was damaged
(Washington Post, June 7, 1998). NAIC's report was sent to DTSA,
the State Department, and the Justice Department.
5/12/97
China successfully launched its Dongfanghong-3 communications
satellite, built by China Aerospace Corp. on a LM-3A rocket,
prompting personal congratulations from top government and military
leaders.
5/16/97
A classified report at DTSA concluded that Loral and Hughes had
transferred expertise to China that significantly enhanced the
reliability of its nuclear ballistic missiles and “United States national
security has been harmed” (New York Times, April 13, 1998 and June
27, 1998).
May 1997
The U.S. Trade Representative (USTR) reported that China had
violated the pricing provisions of a bilateral agreement on the
Mabuhay launch.
Also
20
see GAO report GAO/NSIAD-97-24, Export Controls: Change in Export Licensing
Jurisdiction for Two Sensitive Dual-Use Items, January 1997.

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CRS-24
6/10/97
China successfully launched its Fengyun-2, a second-generation
Chinese meteorological satellite, on a LM-3 rocket.
8/19/97
China launched the Agila 2 (formerly called Mabuhay) satellite (built
by Loral).
9/1/97
China launched two test satellites for Iridium to demonstrate the
technical viability of the new Long March variant, LM-2C/SC.
9/10/97
The Washington Times, citing Israeli and U.S. intelligence sources,
reported that China Great Wall Industry Corporation was supplying
key telemetry equipment (for sending and collecting guidance data
during flight tests) to Iran for its development of the Shahab-3 and
Shahab-4 medium-range ballistic missiles.
Sept. 1997
Likely prompted by DTSA’s report, the Department of Justice began
its criminal investigation into allegations that Loral and Hughes
illegally passed technical assistance to China. The investigation is
still ongoing.
10/17/97
China launched Asia Pacific Telecommunications Satellite (ApStar-
2R) (built by Loral) on LM-3B rocket.
10/27/97
The USTR announced that the United States and China agreed on
new provisions for the Bilateral Agreement on Space Launch Services
(signed in 1995). The new provisions set clear terms for Chinese
pricing of launch services to low earth orbit.
Nov. 1997
After a summit in Washington, Chinese President Jiang Zemin visited
a Hughes satellite plant in California.
12/8/97
China launched two satellites for Iridium (built by Motorola) on one
Long March 2C/SD rocket to low earth orbit. The rocket had two
stages and a smart dispenser on top that deployed the two satellites.
1998
2/12/98
National Security Adviser Samuel Berger wrote a memorandum for
President Clinton on whether to waive post-Tiananmen sanctions for
the export of a Loral-built Chinasat-8 satellite. Berger noted that the
Department of State, with the concurrence of the Department of
Defense and the Arms Control and Disarmament Agency,
recommended the waiver. However, “the Criminal Division of the
Justice Department has cautioned that a national-interest waiver in
this case could have a significant adverse impact on any prosecution
that might take place, based on a pending investigation of export
violations” by Loral. (printed in the New York Times, May 23, 1998)

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CRS-25
2/18/98
President Clinton waived sanctions under P.L. 101-246 for the
Chinasat-8 satellite (built by Loral) to be exported to China. Loral
says that it is the most powerful satellite that China has ever bought.
3/12/98
Gary Samore, Special Assistant to the President and Senior Director
for Nonproliferation and Export Controls in the National Security
Council, wrote a Secret memo proposing to support Chinese
membership in the MTCR, issue a “blanket waiver” of the post-
Tiananmen sanctions to cover all future satellite launches, and
increase the number of space launches from China — in return for
Chinese cooperation in missile nonproliferation. (The classified
memo was printed in the March 23, 1998, Washington Times.)
3/16/98
Loral Space and Communications signed an agreement with China
Great Wall Industry Corp. to launch five of Loral’s communication
satellites between March 1998 and March 2002 using Long March-3B
rockets.
3/22/98
China Aerospace Corp. kicked off a Quality Promotion Plan to help
ensure success in its commercial launch business in research,
production, and testing.
3/26/98
China launched two Iridium satellites, built by Motorola, on a LM-
2C/SD rocket. (According to China, this launch was China’s 15th
“successful” commercial launch for foreign customers since 1990.)
3/26/98
John Holum, Acting Under Secretary of State for Arms Control and
International Security Affairs, concluded his visit to China and
confirmed that he discussed increasing the quota on the number of
satellite launches from China.
3/29/98
A Hong Kong newspaper owned by the Chinese government reported
that China Aerospace Corporation found in its investigations into past
failed launches of satellites that all the failures were caused by
problems in production and management related to quality control.
A previous explosion of an LM-3B rocket (on 2/15/96) was found to
have been caused by a defect in a power pack nodal point which
caused a short circuit when the rocket ignited, resulting in a
malfunction in the inertial platform.
4/3/98
China’s official news agency quoted Zhang Haiming, general-
manager of a division of Lockheed Martin, as saying that the
company is “consulting with the Chinese on satellite manufacturing.”
4/4/98
The New York Times reported that a Federal grand jury is
investigating whether Loral Space and Communications of New York
and Hughes Electronics of Los Angeles provided expertise to China
that “significantly advanced” the guidance systems of its ballistic
missiles in studying the accidental destruction in February 1996 of a
satellite built by Loral. Administration officials reportedly said that

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CRS-26
the Department of Justice, fearing that its criminal investigation
would be undermined, opposed the President’s February 1998 waiver
and approval for export of similar technology to China (for Chinasat-
8). Loral’s chief executive was reported as the largest personal donor
to the Democratic National Committee for the 1996 election.
4/9/98
John Holum, Acting Undersecretary of State for Arms Control and
International Security Affairs, stressed that exports of satellites to
China for launch occur with an export license and strict security
measures to “preclude assistance to the design, development,
operation, maintenance, modification or repair of any launch facility
or rocket in China, and we monitor that very carefully.” He also
confirmed that after the accident in February 1996, the Department of
State “became aware that there may have been a violation.” The case
was referred to the Department of Justice for investigation. He said
that there are “strong legal remedies” for violations of export control
laws, including a denial of future licenses.
4/13/98
The New York Times again reported on the criminal investigation of
Loral and Hughes, adding that a highly classified Pentagon report
concluded in May 1997 that the companies had transferred expertise
to China that “significantly improved” the reliability of China’s
nuclear ballistic missiles.
4/15/98
Loral’s president and chief operating officer, Gregory Clark, stated
that Loral “did not divulge any information that was inappropriate.”
4/16/98
A Chinese Foreign Ministry spokesman stated that “the exchange of
technical information about satellite launchings between U.S.
companies and the Chinese aerospace department was a normal
activity and fell under international rules.” He also said that the
companies “did not provide technical information about missile
technology.”
4/21/98
Loral’s chairman and CEO, Bernard Schwartz, said that “we have
done our own internal investigation, and I’m satisfied that our people
acted well — good behavior and in compliance [with U.S. export
control regulations].”
4/28/98
Under Secretary of Commerce for Export Administration William
Reinsch testified to the Joint Economic Committee that satellite
exports to China have shown how effective dual-use export controls
allow U.S. exporters to compete and “win without risk to our national
security.” He said that controls on satellite exports to China are
extensive and include measures to “reduce the risk” of illicit
technology transfers. Since November 1996 (when the licensing
jurisdiction was transferred from the Department of State to
Commerce), Commerce issued three export licenses for satellites to
be launched from China — “with the concurrence of all agencies.”

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CRS-27
4/30/98
A spokesman at the State Department, James Foley, denied a
Washington Times report that the Administration presented China
with a draft agreement for space cooperation. He admitted, however,
that officials have considered scientific space cooperation as one way
to encourage Chinese cooperation in missile non-proliferation. He
also stressed that “there still is not any U.S. plan or proposal to offer
China access to missile technology.”
5/2/98
A Chinese Long March 2C/SD rocket launched two Iridium satellites
(built by Motorola) to low earth orbit.
May 1998
The Justice Department began a preliminary inquiry into whether
political donations influenced President Clinton’s approval of
satellites to China.
5/15/98
The New York Times reports that fund-raiser Johnny Chung told the
Justice Department that part of his donations to the Democratic Party
in the summer of 1996 came from the PLA through Liu Chaoying, a
PLA lieutenant colonel (possibly retired) and a senior manager and
vice president for China Aerospace International Holdings, Ltd. (a
subsidiary of China Aerospace Corporation in Hong Kong). She is
also a daughter of retired General Liu Huaqing, formerly a vice
chairman of the PLA’s command, the Central Military Commission,
and formerly a member of the Standing Committee of the Politburo.
5/18/98
Loral issued a statement saying that allegations that it provided
missile guidance technology to China are false. The company states
that “the Chinese alone conducted an independent investigation of the
launch failure [in February 1996] and they determined that the
problem was a defective solder joint in the wiring — a `low-tech’
matter.” Loral denied that it and Hughes conducted an independent
investigation to determine the cause of that launch failure. It was at
the insistence of insurance companies, which required non-Chinese
confirmation of resolutions of problems with Long March rockets,
that Loral formed a committee of several satellite companies,
including Hughes, to review the Chinese investigation. However,
Loral admitted that, contrary to its policies, “the committee provided
a report to the Chinese before consulting with State Department
export licensing authorities.” Loral adds that it is in full cooperation
with the Justice Department in its investigation and with
Congressional committees. Loral concludes that based upon its own
review, it “does not believe that any of its employees dealing with
China acted illegally or damaged U.S. national security.” In addition,
the statement says that Loral’s chairman, Bernard Schwartz, was not
personally involved in any aspect of this matter. “No political favors
or benefits of any kind were requested or extended, directly or
indirectly, by any means whatever.” Loral also denies any connection
between the launch failure in February 1996 and the Presidential
waiver for another Loral-built satellite in February 1998. The export
license for the latest launch (for Chinasat-8) “applied the strictest

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CRS-28
prohibitions on technology transfer and specified that any new launch
failure investigation would require a separate license.” Loral stresses
that it complies strictly with export control laws and regulations.
5/30/98
China launched its Chinastar-1 (Zhongwei-1) (built by Lockheed
Martin) on a LM-3B rocket.
June 1998
The Justice Department expanded its investigation to examine
whether Hughes violated export control laws in transmitting a report
to China on the launch failure on January 26, 1995 that destroyed the
Apstar-2 satellite. The Commerce Department had approved Hughes'
report.
7/2/98
The State Department suspended the license issued in 1996 for
Hughes that permitted Shen Jun, son of a Chinese lieutenant general,
to work on a $500 million satellite deal for Asia Pacific Mobile Tele-
communications (APMT) consortium. Lt. Gen. Shen Rongjun has
been a Deputy Director of the Commission on Science, Technology,
and Industry for National Defense (COSTIND) since 1985. The
Administration is re-examining the APMT project, in part because the
Chinese governmental investors include those with ties to the
military: COSTIND, China Launch and Tracking Control, China
Aerospace Corp., Ministry of Information and Industry, and China
Telecommunications Broadcasting Satellite Corp. (Chinasat). Some
are concerned about that the APMT satellite could be used by the
Chinese military to improve command and control and that the
satellite contains sensitive technologies, including a huge 40-ft.-wide
antenna and on-board digital processor, also used in Hughes'
classified, communications satellites used by the U.S. military.21
7/18/98
China launched Sinosat-1 (built by French companies, Alcatel and
Aerospatiale) on a LM-3B rocket.

21 Also see: CRS Report 96-889, China: Commission of Science, Technology, and Industry
for National Defense (COSTIND) and Defense Industries, by Shirley A. Kan; Bruce
Dorminey and Michael Mecham, "China-led Asian Team Buys Hughes Geomobile
Satellites," Aviation Week & Space Technology, May 18, 1998; Jeff Gerth, "Administration
Rethinking $650 Million China Satellite Deal," New York Times, June 18, 1998; John Mintz,
"Hughes Corp. Pressing White House to Clear New Deal with China," Washington Post,
Aug. 9, 1998; Steven D. Dorfman, Vice Chairman of Hughes, July 13, 1998, letter to the
State Department.

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