Order Code 98-485 F
CRS Report for Congress
Received through the CRS Web
China: Possible Missile Technology Transfers
from U.S. Satellite Export Policy –
Actions and Chronology
Updated September 5, 2001
Shirley A. Kan
Specialist in National Security Policy
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

China: Possible Missile Technology Transfers from
U.S. Satellite Export Policy – Actions and Chronology
Summary
Congress has been concerned about whether U.S. firms, in exporting satellites,
provided expertise to China for use in its ballistic missile and space programs and
whether the Administration’s policies might facilitate transfers of military-related
technology to China. This CRS Report discusses security concerns, policy changes,
congressional action, and a chronology of major developments since 1988.
Some critics opposed satellite exports to China, while others were concerned
that the Clinton Administration relaxed export controls and monitoring of commercial
satellites in moving the licensing authority from the State Department to Commerce
in 1996. A range of concerns were prompted by New York Times reports in April
1998 that the Justice Department began a criminal investigation into whether Loral
Space and Communications Ltd. and Hughes Electronics Corp. violated export
control laws. The firms allegedly shared their findings with China on the cause of a
rocket’s explosion while launching a U.S.-origin satellite in February 1996. The
companies are said to have provided expertise that China could use to improve the
accuracy and reliability of its future ballistic missiles, including their guidance systems.
At least three classified studies reportedly found that U.S. national security was
harmed. Congress and the Justice Department have also investigated Hughes’ review
of China’s launch failure on January 26, 1995. Also, the press reports alleged that
President Clinton in February 1998 issued the latest waiver of sanctions (for Loral’s
Chinasat-8) that undermined the investigation by allowing licenses for the export of
assistance similar to that in question.
In the fall of 1998, Congress passed the FY1999 National Defense Authorization
Act that transferred licensing authority over satellites back to the State Department
(effective March 15, 1999). On December 30, 1998, the Cox Committee unanimously
approved a classified report concluding that China’s technology acquisitions over the
past 20 years, not only that associated with satellite launches, have harmed U.S.
national security. The Senate Intelligence Committee released its unclassified report
on May 7, and the Cox Committee issued a declassified report on May 25, 1999. On
October 5, 1999, the President signed into law the FY2000 National Defense
Authorization Act (P.L. 106-65) in which Congress addressed export controls relating
to missile technology, satellites, and other issues. In April 2000, the State
Department charged Lockheed Martin Corp. with violating export controls, but they
agreed in June to a settlement involving penalties of $13 million. On November 21,
2000, the State Department announced a new missile nonproliferation agreement with
China that resumed considering satellite export licenses and extension of a bilateral
space launch agreement (to expire end of 2001).
Congress may watch for possible legal action or settlements for Loral and
Hughes (based on investigations begun in 1997), new Presidential waivers or licenses
for exports of satellites, and review of U.S. policy to export satellites to China. H.R.
1707
(Berman) seeks to shift jurisdiction over satellite exports back to Commerce,
and the language was added to the House Export Administration Act (H.R. 2581).
The State Department imposed proliferation sanctions on September 1, 2001.

Contents
Introduction and Issues for Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Security Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
China Great Wall Industry Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Missile Technology or Expertise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Security Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Loral’s Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Beyond the Loral Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Motorola . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Hughes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Lockheed Martin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Military Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Administration and Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Policies on Sanctions and Space Launch Agreement . . . . . . . . . . . . . . . . . 15
Tiananmen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Proliferation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
November 2000 Agreement and Space Launch Agreement . . . . . . . . 17
September 2001 Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Waivers for Post-Tiananmen Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Hearings of the 105th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Cox Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Clinton Administration’s Response . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Senate Task Force . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Clinton Administration’s Response . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Export Controls and Intelligence . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Senator Specter’s Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Legislation to Revise Export Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
105th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
106th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
107th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Denied and Pending Satellite Exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Role of Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
APMT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Chinasat-8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Chronology of Major Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
List of Tables
Table 1. Comparison of SLVs and Missiles . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Table 2. Presidential Waivers of Post-Tiananmen Sanctions
for Exports of Satellites or Parts to China . . . . . . . . . . . . . . . . . . . . . . . . 19

China: Possible Missile Technology
Transfers from U.S. Satellite Export Policy –
Actions and Chronology
Introduction and Issues for Policy1
Members of Congress have been concerned about allegations that U.S. firms
provided expertise to the People’s Republic of China (PRC) that could be used in its
ballistic missile and space programs and that the Clinton Administration’s policies on
satellite exports facilitated legal or illegal transfers of military-related technology to
China. The New York Times reported in April 1998 that the Justice Department began
a criminal investigation into whether Loral Space and Communications Ltd. (of New
York), and Hughes Electronics Corp. (of Los Angeles) violated export control laws.2
The firms were alleged to have shared their findings with China, without approval
from the U.S. government, on the cause of a PRC rocket’s explosion while launching
a U.S.-origin satellite in February 1996. In sharing their conclusions, the companies
allegedly 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 PRC to improve the guidance
systems on its ballistic missiles.
In addition, the media reports alleged 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 allegedly influenced the Administration’s decision, with Loral’s
chairman being the largest individual donor to the Democratic Party in 1996.
Congressional investigations also led to media reports in early 1999, confirmed
by U.S. intelligence in April and the Cox Committee’s declassified report in May
1 This CRS study was initiated at the request of the Committee on International Relations of
the House of Representatives of the 105th Congress and has been adapted for general
congressional use with permission of the Committee.
2 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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1999, that the PRC obtained secret information on U.S. nuclear weapons.3 Members
are concerned about the PRC’s modernization of its ballistic missiles.4
There are also congressional concerns about the U.S. satellite industry in general
and on worldwide space launches, aside from questions about China.5
This CRS Report discusses security concerns, significant congressional and
administration action, and a comprehensive chronology pertaining to satellite exports
to the PRC. The events summarized below, based on various open sources and
interviews, pertain to various issues for U.S. foreign and security policy (including
that on China and weapons nonproliferation):
! What are the benefits and costs of satellite exports to China for U.S.
economic and security interests?
! Should the United States continue, change, or cease the policy in
place since the Reagan Administration that has allowed exports of
satellites to China (for its launch and – increasingly – for its use)?
! Do satellites include military technology?
! Have U.S. firms contributed intentionally or unintentionally to
China’s development of ballistic missiles in ways that harmed U.S.
national security, and what should be the government’s response to
findings of such alleged transfers of U.S. technology?
! Should the Presidential waiver (of post-Tiananmen sanctions) for
Loral’s Chinasat-8 have been issued during an ongoing criminal
investigation into alleged assistance by Loral and Hughes to China’s
missile program?
! Are there adequate controls and monitoring on exports of U.S.-
origin satellites and/or satellite technology, and on technical
exchanges with PRC engineers that could contribute to China’s
programs on missiles or military satellites?
! Should commercial space cooperation, especially allowing China to
gain the economic benefits of satellite launches, be used as leverage
in U.S. policy on weapons nonproliferation? Should sanctions for
missile proliferation be imposed on China’s space launch company,
China Great Wall Industry Corporation, and other companies, to
improve China’s nonproliferation practices?
! Should Congress exercise strong oversight of the Administration’s
satellite exports, including ensuring congressional review?
3 See also CRS Report RL30143, China: Suspected Acquisition of U.S. Nuclear Weapon
Data
, and CRS Report RL30220, China’s Technology Acquisitions: Cox Committee’s
Report — Findings, Issues, and Recommendations
, by Shirley A. Kan.
4 See CRS Report 97-391, China: Ballistic and Cruise Missiles, by Shirley A. Kan.
5 On worldwide commercial space launches in general, see CRS Issue Brief IB93062, Space
Launch Vehicles: Government Activities, Commercial Competition, and Satellite Exports
,
by Marcia S. Smith.

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Security Concerns
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 markets the use of rockets
developed by the China Academy of Launch Vehicle Technology (CALT) and other
aerospace academies. China Great Wall and CALT are part of China’s defense-
related aerospace industry under the China Aerospace Corporation (abbreviated by
China as CASC). CASC, established in 1993, oversees space as well as missile
research and development. 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 previously known as the
Ministry of Aerospace Industry, also known as the Seventh Ministry of Machine
Building. Since April 1998, China’s military, the People’s Liberation Army (PLA),
has exercised control over PRC satellite launches under the new General Equipment
Department.
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.6 On April 7, 1990, China Great Wall
launched a foreign satellite, Asiasat, for the first time. 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. The
president of the Chinese Academy of Space Technology said that the PRC’s
Dongfanghong (East is Red) satellites match the capacities of advanced satellites built
by Hughes, but are backward in satellite navigation and stabilization technologies.
The Academy hopes to sell its satellites at world standards by 2000.7
China experienced a number of embarrassing and costly failed satellite launches
until 1996. In 1992, a PRC 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 PRC rocket exploded and destroyed the
Intelsat satellite (built by Loral). Aside from the dramatic explosions, other problems
prevented the PRC rockets from successfully launching satellites into the correct
orbits. However, since the launch of a “scientific” satellite on October 20, 1996,
6 Chou Kuan-wu, “China’s Reconnaissance Satellites,” Kuang Chiao Ching (in Hong Kong),
March 16, 1998; translated in FBIS.
7 Parker, Jeffrey. “China to Expand Rocket Production,” Reuters, August 25, 1993.

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China has enjoyed over 20 consecutive, successful satellite launches, raising questions
as to whether U.S. technology contributed to this achievement.8
China’s aerospace industry has shifted from denying all responsibility in failed
launches of foreign satellites to a 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 tried to reassure
foreign insurance companies and satellite manufacturers that it can solve problems
with the Long March rockets.
Missile Technology or Expertise
Security Concerns. One question in the
controversy involves the applicability of satellite-
Corresponding
launch technology to the modernization of China’s
Designations
ballistic missiles. China Great Wall uses the Long
March series of rockets to launch satellites.
U.S.
PRC
China’s “Long March (LM)” (“Chang Zheng”)
ICBM:
CSS-3
DF-4
space launch vehicles (SLVs) are related to its
ICBM:
CSS-4
DF-5A
“East Wind” (“Dong Feng” (DF)) intercontinental
SLV:
LM
CZ
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 PLA’s missile force. China’s launch facilities,
e.g., 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.9 The CSS-3 ICBM has also been produced as the booster for the LM-1
SLV. The CSS-4 ICBM has also been used as the booster for the LM-2, LM-3, and
8 Zhang Xinxia, president of China Great Wall Industry Corporation, confirmed in a speech
at the International Space Symposium in Washington on October 26, 2000, that the Long
March series achieved 20 consecutive successes since October 1996, according to excerpts
in Space News (November 20, 2000).
9 Defense Intelligence Agency, Handbook of the Chinese People’s Liberation Army,
November 1984; John Wilson Lewis and Xue Litai, China Builds the Bomb (Stanford
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.

CRS-5
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.
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.”10 Such an
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.
After the end of the Cold War and with increase in U.S.-China trade, some say
that national security interests need not be sacrificed by commercial interests. Within
the current controversy, some argue that launching satellites from China is in the U.S.
national security interest because of the benefits to U.S. satellite manufacturers.11
Loral’s Case. Specifically, the Department of Justice’s investigation looks at
Space Systems/Loral (SS/L), Loral’s subsidiary in Palo Alto, CA, which chaired a
review committee on the launch failure of the Intelsat-708 satellite in 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-PRC
confirmation of resolutions of problems with Long March rockets, Loral formed a
committee of several satellite companies, including Hughes, to review the PRC
investigation. According to Loral, the review committee obtained information from
the PRC and was not formed to help them solve their problems. The review agreed
with the PRC conclusion (that a defective solder joint was responsible), without
performing tests or providing any test data to the PRC. The committee did note that
further tests by China would be required to establish certainty. Loral says that, during
10 “Export of U.S. Satellite to China for Launch,” Department of State Bulletin, November
1988.
11 Hirsh, Michael (Newsweek), “The Great Technology Giveaway?” Foreign Affairs,
Sept./Oct. 1998; Clayton Mowry (executive director of the Satellite Industry Association),
“Satellites Do No Good Stuck on the Earth,” Washington Times, Sept. 8, 1998.

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the review, it discussed the committee’s work with U.S. officials. As far as Loral’s
engineers can determine, the statement says, “no sensitive information — no
significant technology — was conveyed to the Chinese.”
Loral further explained that in April 1996, at China’s request, Dr. Wah L. Lim,
then 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, but the second, in China. Notably, PRC aerospace engineers attended
the meetings.12
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
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.
12 Briefings for CRS by Douglas Feith, of Feith and Zell, lawyers for Loral, July 1998.

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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.”13
Significantly, the U.S. firms are suspected of helping China in improving quality
control and diagnostic techniques that would enable its aerospace engineers to detect
problems in guidance systems applicable to missiles. 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).14 Also, analysis by CIA at the time did not find “proliferation
concerns.” These reports apparently prompted the Justice Department’s criminal
investigation that began in September 1997.
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.15 Finally, there is little public information on the export licenses issued by the
State or Commerce Department for technical assistance agreements (TAAs)
concerning the transfer of technical assistance and data needed to mate satellites to
launch vehicles (so-called “form, fit, and function” technical data).
While Loral’s case continued to be under investigation by a federal grand jury,
two incidents occurred with some embarrassment for the Clinton Administration. On
March 16, 2000, U.S. Ambassador Joseph Prueher hosted a dinner in Beijing for
representatives of Loral, Lockheed Martin, Hughes, CASC, and ChinaSat. The
Embassy denied that the subject of an export license for ChinaSat 8 was discussed.16
On July 17, 2000, the Defense Security Service issued an award for “outstanding
security performance and practices” to Loral and 49 other companies, but then
rescinded the award for Loral after realizing it remains under investigation.17
Meanwhile, the Justice Department’s campaign finance task force reportedly
found no evidence that Loral’s chairman Bernard Schwartz corruptly influenced
President Clinton in his decision to approve Loral’s export of a satellite to China in
13 Gerth, Jeff, “Aerospace Firms’ Ties with China Raise Questions,” New York Times, April
13, 1998; Eric Schmitt, “Report Outlines Damage to National Security in Companies’
China Dealings,” New York Times, June 27, 1998.
14 Pincus, Walter, “Pentagon, CIA Differ on Missile Threat,” Washington Post, June 7,
1998.
15 The memorandum was printed in the New York Times, May 23, 1998.
16 Gertz, Bill, “Envoy Hosted Satellite Firms in China,” Washington Times, April 4, 2000.
17 Pincus, Walter, “Defense Award Rescinded From Firm Being Probed,” Washington Post,
July 18, 2000.

CRS-8
1998, according to the contents of an internal memo and related documents disclosed
by the press.18 At a Senate Judiciary Subcommittee hearing on May 2, 2000, Senator
Specter referred to this memo, written to Attorney General Janet Reno in the summer
of 1998 by Charles LaBella, then chief of the task force. According to Senator
Specter, Schwartz had donated $1.5 million to the Democratic National Committee.
LaBella is said to have written that Schwartz’ case “was a matter which likely did not
merit any investigation.” Nonetheless, LaBella recommended that Reno appoint an
independent prosecutor to dispose of the case, because the allegations of political
favors involved the President. LaBella reportedly also criticized Justice Department
officials for ordering the investigation of Schwartz while excluding President Clinton.
Reno denied LaBella’s recommendations for the special counsel.
In the summer of 2001, under the George W. Bush Administration, Loral and
Hughes reportedly have negotiated possible civil settlements with the State
Department, rather than face criminal charges from the Justice Department.19
Beyond the Loral Case. 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 missile modernization.
Observers point out that the same PRC companies and engineers work in both civilian
and military programs and that much of the technology used in launching satellites can
be used in military programs on missiles, satellites, and other areas.

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 PRC SLVs.20 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.”
There have been concerns that China may deploy ICBMs with multiple
independently targetable reentry vehicles (MIRVs) in the future. In 1999, the House
Select Committee on U.S. National Security and Military/Commercial Concerns with
the People’s Republic of China (popularly known as the “Cox Committee”) judged
that, by 2015, the PLA could deploy up to 100 ICBMs with as many as 1,000
thermonuclear warheads.
The Director of Central Intelligence (DCI)’s unclassified damage assessment of
the PRC’s suspected acquisition of U.S. nuclear weapon secrets found that China
18 Rempel, William C. and Alan C. Miller, “Internal Justice Memo Excuses Loral From Funds
Probe,” Los Angeles Times, May 23, 2000. Also see: David Johnston, “Memo Shows
Another Push For Clinton Inquiry,” New York Times, May 3, 2000.
19 Pasztor, Andy and David Cloud, “Loral Nears Civil Settlement With U.S. Over Sharing
Technology With China,” Wall Street Journal, August 31, 2001.
20 Pincus, Walter, “U.S. Gains Intelligence Data in China Launches,” Washington Post, June
13, 1998.

CRS-9
already has the “technical capability” to develop a MIRV system for the currently
deployed ICBM but has not deployed MIRVs. Nonetheless, the DCI warned that
“U.S. information acquired by the Chinese could help them develop a MIRV for a
future mobile missile.”21 China first decided to develop MIRVs for deployment in
1970. Development was in part stalled, however, by a lack of capability to
miniaturize warheads.22 The priority for the project on MIRVs was lowered in March
1980, but research and development on MIRVs resumed on November 10, 1983, as
part of the DF-5 modification program. Also, 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. Jane’s Space
Directory 1997-1998
reported that China developed a restartable, cryogenic
(extremely low temperature) stage 3 for the LM-3 SLV.
Motorola. There had been concerns that Motorola’s use of a PRC-developed
multi-satellite dispenser (called “Smart Dispenser”) on a variant of the LM-2C to
launch two Iridium satellites at a time helped the PRC to develop MIRV capability.
The Washington Times reported that a December 1996 classified study by the Air
Force’s National Air Intelligence Center (NAIC) concluded that the new PRC-
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. Nevertheless, the report noted that there is no evidence that China is using
the dispenser, built in 1996, for warheads and that the PRC multiple warhead system
would be less accurate than U.S. and Russian systems.23 A Pentagon spokesman said
on July 14, 1998, that Motorola provided data to allow the PRC to attach satellites
to the dispenser that it designed without U.S. help and that releasing multiple satellites
and targeting multiple warheads require different technology. Moreover, the Cox
Committee concluded that “Motorola did not provide the PRC with information on
how to design the Smart Dispenser; but the PRC built the Smart Dispenser
indigenously to Motorola’s specifications.”24
Hughes. Some are especially concerned about PRC 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
21 CIA, “The Intelligence Community Damage Assessment On the Implications of China’s
Acquisition of U.S. Nuclear Weapons Information on the Development of Future Chinese
Weapons,” (unclassified release), April 21, 1999. See also: CRS Report RL30143, China:
Suspected Acquisition of U.S. Nuclear Weapon Data
, by Shirley A. Kan.
22 CRS Report 97-1022.
23 Gertz, Bill, “U.S. Technology Builds ‘Bridge’ for China Missile,” Washington Times, July
14, 1998.
24 Cox Committee’s declassified report, released on May 25, 1999; see CRS Report RL30220,
China’s Technology Acquisitions: Cox Committee’s Report – Findings, Issues, and
Recommendations
, June 8, 1999, by Shirley A. Kan.

CRS-10
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.
However, Air Force Lieutenant Colonel Al Coates, a former Pentagon official
who monitored launches in China until he resigned in November 1998, says that even
with monitoring, Hughes employees were more concerned about successful launches
and were often careless about discussing sensitive information with the PRC. Coates
says he did not get responses from superiors in the Pentagon to his reports of security
problems, but has now told Congress and the Justice Department.25
Some experts say that monitoring of technical exchanges is more crucial than
monitoring the launches. Senator Kyl said on July 16, 1998, that, in addition to the
three unmonitored launches, 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).26
Congress and the Justice Department are now also investigating Hughes’ review
of the PRC launch failure on January 26, 1995 (of the Apstar-2 satellite).27 Testifying
before a joint hearing of the House National Security and International Relations
Committees on June 18, 1998, Under Secretary of Commerce for Export
Administration William Reinsch acknowledged that, in the 1995 case, his department
alone had allowed Hughes to provide launch failure analysis to China. He stated that
after the Apstar-2 launch failure in 1995,
the company involved [Hughes] conducted an analysis without the participation
of the Chinese launch service provider. The analysis was written in order to
satisfy insurance requirements. The analysis was reviewed by the Department of
Commerce, which determined that it contained only information already authorized
for export under the original Commerce license issued in February 1994. The
unclassified report was provided first to a consortium of Western insurance
companies and later to the Chinese launch service provider.
At that hearing, David Tarbell, Director of the Defense Technology Security
Administration (DTSA), confirmed that the Department of Defense (DOD) did not
25 “Did U.S. Companies Share Technology with China?” ABC News, 20/20 Program,
December 3, 1998.
26 Congressional Record, July 16, 1998; Aerospace Daily, July 21, 1998.
27 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.

CRS-11
monitor the launch or the launch failure analysis. Reinsch acknowledged that the
Commerce Department did not consult with either the Department of State or DOD.
The decision to release the report to the PRC was made solely by a Commerce
Department licensing officer.28 Reinsch also acknowledged, however, that the
authority for an additional license to conduct launch failure analysis was later specified
to be the Department of State, not Commerce, when the licensing jurisdiction was
transferred to Commerce in 1996.
At the request of Congress, DOD’s DTSA and NAIC prepared and issued, on
December 7, 1998, an initial assessment of the documents concerning Hughes’ 1995
investigation that the Department of Commerce provided to DOD in July 1998. The
unclassified report says that Commerce did not consult with DOD or State (although
the technical assistance constituted a “defense service” under State’s export control
jurisdiction and subject to DOD’s monitoring) nor disclosed the documents until the
June 1998 Congressional hearings. The report concluded that Hughes’ technical
exchanges with the PRC raise national security concerns regarding violating standards
of not improving PRC satellite or missile capabilities and “potentially contributing to
China’s missile capabilities.” While the report adds that the benefits likely did not
alter the U.S.-China “strategic military balance,” the report did not look at whether
China used the information for the PLA. DOD and State further examined whether
the transferred information benefitted China’s military.29 On December 18, 1998, the
State Department’s Office of Defense Trade Controls (DTC) completed a sensitive
but unclassified report, concluding that Hughes, in reviewing the January 1995 launch
failure of Apstar-2, provided technical lessons that are “inherently applicable” to PRC
missile as well as satellite launch programs.30
DOD says that, from February to August 1995, Hughes conducted the
investigation closely and jointly with the PRC, specifically, CALT and China Great
Wall, that included “significant interaction” and meetings in China. Hughes gave PRC
aerospace engineers specific information to make their rockets more reliable.
According to DOD, Hughes provided “sufficient know-how to correct the overall
deficiencies” of “oversimplified” mathematical models used in designing launch
vehicles, modifications for launch operations, details about satellite designs, as well
as “insights” into U.S. diagnostics for improving rocket and satellite designs.
Specifically, Hughes showed China how to improve its coupled loads analysis that is
“critically important” for ensuring the integrity of the rocket during flight and “serious
flaws” in PRC modeling of aerodynamic loads on the rocket fairing (the top part of
28 Transcript of continuation of hearing on June 23, 1998.
29 Fulghum, David A. and Joseph C. Anselmo, “Pentagon Plans New Look At China Tech
Transfer,” Aviation Week & Space Technology, December 14, 1998.
30 For text of the Department of State’s memo, see the Cox Committee’s declassified May
1999 report, volume II, p. 76-84. Gerth, Jeff, “C.I.A. Ignored Report of Payments To Chinese
For Satellite Contracts,” New York Times, December 24, 1998; Warren Ferster, “Export Plan
Shrinks Role For Commerce,” Space News, January 18, 1999.

CRS-12
the rocket that covers payloads). Hughes denies advancing China’s missiles and says
that its report was approved by the Commerce Department.31
A task force formed by Hughes in December 1999 to assess its export
compliance program issued its report on July 25, 2000. Former Senator Sam Nunn
and former Undersecretary of Defense Paul Wolfowitz led the task force. They
recommended 12 “best practices” for ensuring compliance with export controls.32
Lockheed Martin. On April 4, 2000, the Department of State charged
Lockheed Martin Corporation with 30 violations of the Arms Export and Control
Act.33 The charges were civil charges and did not involve criminal law. The
maximum penalties involved $15 million and a prohibition against exporting satellites
or satellite technology for up to three years.
Lockheed Martin denied that it violated export control laws and said that Martin
Marietta (later acquired by Lockheed) had obtained a license from the Department of
Commerce before it assessed, in 1994, a PRC kick motor for the Asiasat-2 satellite.
A kick motor is fired after launching a satellite to send it into its final orbit. Asiasat-2
is owed by the Asia Satellite Telecommunications Company, based in Hong Kong,
that is partly owned by the China International Trust and Investment Corporation
(CITIC), a PRC state-owned enterprise. Lockheed said that it had sent its 50-page
technical assessment to the Department of Defense for review and removal of
sensitive information before sending copies of the study to Asiasat and China Great
Wall Industry Corporation. China also denied the charge, claiming that it had
developed the kick motor by “entirely relying on its own efforts.”34
However, the State Department charged that Lockheed had sent the unedited
version to Asiasat, before the Defense Department blacked out all but five pages of
the report. The charges also alleged that Lockheed failed to inform the Pentagon that
it had already sent 10 unedited copies of the report to Asiasat, until the U.S. Customs
Service discovered them. The State Department also said that sharing even the
redacted version with China Great Wall violated export controls by sharing technical
assistance that might enhance the PRC’s space launch vehicles. Lockheed was also
charged with identifying flaws in PRC testing procedures, confirming the results of
31 “Department of Defense Initial Assessment of Certain Documents Concerning An
Investigation by Hughes Space and Communications Company Into the Failure of the Launch
of the Apstar II on China’s Long March 2E Launch Vehicle,” December 7, 1998. Also see:
Pincus, Walter and John Mintz, “Report Faults Hughes On Data Given China,” Washington
Post
, December 9, 1998; Jeff Gerth, “Pentagon Inquiry Faults Missile Maker’s China Aid,”
New York Times, December 9, 1998; David S. Cloud and Robert S. Greenberger, “Commerce
Department is Also Criticized in Pentagon Report of Hughes’ Dealings,” Wall Street Journal,
December 10, 1998.
32 Singer, Jeremy, “Study Puts Satellite Export Law Compliance Over Sales,” Defense News,
August 7, 2000; for report, see [http://www.hughes.com].
33 Loeb, Vernon, “Lockheed Aided China on Rocket Motor, U.S. Says,” Washington Post,
April 6, 2000.
34 Xinhua, April 10, 2000.

CRS-13
PRC tests that identified faulty insulation, and identifying problems with U.S. solid
rocket motor technologies.
On June 14, 2000, the Department of State announced that it had reached a
consensual settlement with Lockheed Martin that involved total penalties of $13
million. Lockheed agreed to pay $8 million over four years and use $5 million to set
up a comprehensive computer control system to which the Departments of Defense
and State will have access over the next four years and improved oversight
procedures. The State Department said “we think that the information that was
transferred was inappropriate, and that the reports that were transferred were not
appropriate, and that there was a serious problem here that information had the
potential to be used to be applied to missile development.”35
Military Benefit. 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 modernization of its nuclear-armed ballistic missiles and space
systems. As for satellites with military applications, the PRC’s military newspaper
reported President Jiang Zemin as declaring in June 1991 that “in such a big country
as ours, as it is neither possible nor necessary to build separate telecommunications
systems for military use and civil use respectively, we should take such a road as
building a telecommunications system usable for both military and civil purposes,
which meet both peacetime and wartime needs.”36
China reportedly is developing new land-mobile, solid-fuel DF-31 and DF-41
ICBMs for deployment in the early part of the 21st century.37 In charging Lockheed
Martin in April 2000 with violating the Arms Export Control Act by assessing a PRC
kick motor for the Asiasat-2 satellite, the State Department spokesman declared that
“any assistance to China that enhances its capabilities in space launch has the potential
to be applied to missile development.”38
Some, including officials in the Administration, stressed that there are differences
between the PRC SLVs and ICBMs and there have been no authorized missile
technology transfers to China. On September 17, 1998, Principal Deputy Assistant
Secretary of Defense Franklin Miller testified only about authorized significant
technology transfers and that satellite launches have not provided any benefits to
current generation PRC ICBMs. He was not able to elaborate publicly on potential
improvements to new PRC ICBMs under development.39 Admiral Joseph Prueher,
Commander in Chief of U.S. Pacific forces, said on October 23, 1998, that any
35 Department of State, press briefing by Richard Boucher, June 14, 2000; David E. Sanger,
“U.S. Fines Lockheed $13 Million in China Satellite Case,” New York Times, June 14, 2000.
36 Jiefangjun Bao [Liberation Army Daily], September 27, 2000, translated by FBIS.
37 See CRS Report 97-391, China: Ballistic and Cruise Missiles, by Shirley A. Kan.
38 Loeb, Vernon, “Lockheed Aided China on Rocket Motor, U.S. Says,” Washington Post,
April 6, 2000.
39 Hearing of the Senate Committee on Commerce, Science, and Transportation, “Transfer of
Missile Technology to China,” September 17, 1998.

CRS-14
transfers of missile technology or know-how in connection with launching U.S.
satellites in China have improved PRC ICBMs “only incrementally, not by any
quantum leaps and bounds” and “accelerated solution of a technical guidance problem
for one of their missiles.”40
John Pike, Director of the Space Policy Project at the Federation of American
Scientists, argued that there are significant differences between China’s ballistic
missiles and the Long March SLVs.41 He said that the Long March SLVs are longer
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 argued 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 stressed 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).42 In general
terms, the 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.
Table 1. Comparison of SLVs and Missiles
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
40 Capaccio, Tony, “U.S. Firms Marginally Helped China ICBMs,” Defense Week, October
26, 1998; “China Benefitted From Tech Transfer, Adm. Prueher Says,” Aerospace Daily,
October 26, 1998.
41 “The China Satellite Debate,” Proliferation Brief, June 23, 1998.
42 Hearing 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.

CRS-15
! 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) argued that “all of our
satellite transfers have helped China perfect its military rocketry.” He also wrote 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 can modified as multiple-warhead dispensers, thus assisting
China’s reported efforts to develop a capability in MIRVs for its ICBMs.43 China
used such dispensers to launch multiple satellites for Iridium.
Experts at the Monterey Institute of International Studies also pointed 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).44
Nevertheless, they also argued 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.
Administration and Congressional Action
Policies on Sanctions and Space Launch Agreement
Tiananmen. 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
43 Sokolski, Henry, “US Satellites to China: Unseen Proliferation Concerns,” International
Defense Review
, April 1994; “Selling China the Rope...,” Weekly Standard, June 1, 1998.
44 Lamson, James A. and Wyn Q. Bowen, “‘One Arrow, Three Stars:’ China’s MIRV
Program,” Jane’s Intelligence Review, May 1997.

CRS-16
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 Presidential waivers of those suspensions by reporting that “it is
in the national interest” to terminate a suspension.
Proliferation. 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 PRC
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 (category II), but not for
the transfer of complete missiles (category I). 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 PRC 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 imposed similar, category II sanctions on August 24,
1993, after China was again determined to have transferred M-11 related equipment
to Pakistan, but not complete missiles. A total of 11 PRC defense industrial
companies were sanctioned, including China Great Wall again. In 1993-1994, the
U.S. aerospace industry and aerospace company executives, including then-CEO of
Hughes, C. Michael Armstrong, lobbied against sanctions and for expansion of
satellite exports to China.45 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 Administration waived those sanctions.
Still, questions persisted for 6 years about how to respond to persistent reports
of PRC missile proliferation and whether new U.S. sanctions should be imposed for
reported PRC missile proliferation in countries such as Pakistan and Iran, including
the suspected transfer of complete M-11 missiles to Pakistan in November 1992.46
In preparing for the 1998 U.S.-PRC summit, the Clinton Administration reportedly
proposed supporting China as a partner in the MTCR, issuing a blanket waiver of
post-Tiananmen sanctions on satellites, and increasing the quota on the numbers of
45 CRS Report 96-767, Chinese Proliferation of Weapons of Mass Destruction: Background
and Analysis
, by Shirley A. Kan; John Mintz, “White House Papers Trace Hughes
Executive’s Pressure for China Deals,” Washington Post, July 27, 1998.
46 See CRS Issue Brief IB92056, China’s Proliferation of Weapons of Mass Destruction
and Missiles: Current Policy Issues
, by Shirley A. Kan.

CRS-17
satellites China is allowed to launch – in return for further cooperation in missile
nonproliferation, according to a Secret March 12, 1998, National Security Council
memo printed in the March 23, 1998 Washington Times.
November 2000 Agreement and Space Launch Agreement. Then, on
November 21, 2000, the State Department announced a new U.S.-PRC agreement on
missile nonproliferation. On the same day, the PRC Foreign Ministry first issued a
statement that “China has no intention of assisting any country in any way in the
development of ballistic missiles that can be used to deliver nuclear weapons (i.e.,
missiles which can deliver an effective payload of at least 500 kilograms a distance of
at least 300 kilometers).” Additionally, the ministry stated that “China will further
improve and strengthen its export control system in keeping with its own missile non-
proliferation policies and export control practices, and this will include issuing a
comprehensive export control list for missile-related items, including dual use
items.”47 Following that statement, the U.S. State Department announced that the
United States had determined that PRC entities had contributed to missile
proliferation in Pakistan (Category I and II items) and Iran (Category II items), and
that U.S. sanctions would be waived on PRC entities for the past transfers, but
imposed on Pakistani and Iranian ones. Furthermore, the United States agreed to
resume processing of licenses for exporting satellites to and launching satellites from
China. Thirdly, the United States agreed to resume discussions on extending the 1995
U.S.-China Agreement Regarding International Trade in Commercial Launch
Services.48 (It will expire on December 31, 2001.)
September 2001 Sanctions. After the George W. Bush Administration
began, the U.S. Trade Representative (USTR) led the U.S. team to hold consultations
on the space launch agreement in Beijing in March 2001. Then on July 28, 2001,
visiting Beijing ahead of President Bush’s travels there in October, Secretary of State
Powell confirmed that there are “outstanding issues” about China’s fulfillment of the
November 2000 missile nonproliferation agreement and reported that expert talks
would be held on nonproliferation. The expert talks were held on August 23 in
Beijing, but the State Department reported that additional work was needed to
“clarify China willingness to implement fully” that agreement, while “the results have
been mixed.” Then on September 1, 2001, the State Department imposed sanctions
on a PRC company, the China Metallurgical Equipment Corporation (CMEC), for
proliferation of missile technology (Category II items of the MTCR) to Pakistan. The
sanctions also applied to Pakistan’s National Development Complex.49 The sanctions
have the effect of denying licenses for the export of satellites to China for use or
launch by its aerospace entities, because the Category II sanctions deny U.S. licenses
to transfer missile equipment or technology (MTCR Annex items) to any PRC
“person,” which is defined by the so-called Helms Amendment as any PRC
government activity related to missiles, electronics, space systems, or military aircraft,
47 PRC FM Spokesman on Non-Proliferation, Xinhua, November 21, 2000, in FBIS.
48 Department of State press briefing, November 21, 2000.
49 Sipress, Alan, “Chinese Arms Firm Faces U.S. Sanctions,” Washington Post, September
1, 2001.

CRS-18
and the State Department considers that satellites are covered by the MTCR Annex
since satellite parts are listed there.
Waivers for Post-Tiananmen Sanctions
After sanctions for the Tiananmen crackdown were imposed in 1989, Presidents
Bush and Clinton issued 13 waivers for 20 satellite projects (projects may involve
multiple satellites), 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 the 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).
The policy of allowing China to launch U.S.-built satellites has been tied to the
missile proliferation issue, partly because the same PRC companies are involved in
both. Nevertheless, just before the Bush Administration issued missile proliferation
sanctions on May 27, 1991, the President issued a waiver of post-Tiananmen
sanctions a month before for Australian and Swedish satellites, while denying an
export license for U.S. parts for a PRC satellite. The Clinton Administration again
imposed missile proliferation sanctions on August 24, 1993, but President Clinton first
issued a waiver of post-Tiananmen sanctions on July 2, 1993, for the export of
Iridium and Intelsat-8 satellites to China. Then, even while sanctions were in place
on China Great Wall and other PRC companies for missile proliferation, President
Clinton issued another waiver of post-Tiananmen sanctions on July 13, 1994.

CRS-19
Table 2. 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 PRC 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/Motorola
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 PRC 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

CRS-20
Hearings of the 105th Congress
Since the Reagan Administration’s decision in September 1988 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 initial press
reports in April 1998, the 105th Congress held a number of open and closed hearings
to examine the allegations of corporate misconduct and weaknesses in U.S. policy,
including those by the following committees.
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.
Senate Commerce, Science, and Transportation Committee, September 17, 1998.
Investigations
Cox Committee. In addition to those hearings in the 105th Congress, 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 the Select Committee on U.S. National Security and
Military/Commercial Concerns with the People’s Republic of China, popularly known
as the “Cox Committee.”50 The committee had nine members: five Republicans
(Representatives Cox, Goss, Hansen, Bereuter, and Weldon) and four Democrats
(Representatives Dicks, Spratt, Jr., Roybal-Allard, and Scott). The panel held
numerous closed hearings and received wide-ranging briefings. The committee
expanded its investigations to include policies before the Clinton Administration, other
50 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.

CRS-21
dual-use technology exports, including high-performance computers and machine
tools,51 and suspected acquisitions of U.S. nuclear weapons secrets.

On December 30, 1998, Rep. Cox and Dicks, the chair and ranking Democrat,
said in a news conference that the bipartisan committee unanimously approved a 700-
page, classified report on its broad, six-month investigation. The committee was
extended for the first three months of the 106th Congress to work with the
Administration on a declassified version.52 Meanwhile, the White House revealed the
recommendations in its February 1, 1999 response.
There were then disagreements between the Select Committee and the White
House on how much to declassify, particularly about the cases at the nuclear weapon
labs. Representative Cox said on March 3, 1999, that the House may vote during the
week of March 22 to release an edited, unclassified version of the report, if there were
no agreement with the Administration. However, Representative Dicks described
such a move as a “dangerous precedent” to release classified information over the
President’s objections.53 The House did not vote to release the report without the
Administration’s approval, and on March 24, 1999, passed H.Res. 129 to further
extend the Select Committee on China for a month, until April 30, 1999. Meanwhile,
Representatives Cox and Dicks briefed President Clinton on April 22, 1999, about the
findings of the committee’s report.54 The House agreed to H.Res. 153, on April 29,
1999, to further extend the committee until May 14, 1999, and approved H.Res. 170,
on May 13, 1999, to extend the date to May 31, 1999. On May 25, 1999, the Cox
Committee released the declassified version of its January 3, 1999 classified report on
its investigation of U.S. technology transfers to China.55
The committee concluded that, over at least the last 20 years, China has pursued
a “serious, sustained” effort to acquire advanced American technology — covering
“more serious national security problems than the Loral-Hughes cases,” and that
technology acquisition has harmed U.S. national security. The Committee’s report
agreed with intelligence assessments that Loral and Hughes helped to improve China’s
missile capabilities. The committee made 38 recommendations for remedies, including
possible legislation, mostly to tighten export controls (e.g., giving the Departments
51 Greenberger, Robert S., “House Panel Expands Its China Satellite Probe,” Wall Street
Journal
, October 7, 1998.
52 Congressional Record, January 6, 1999.
53 Pomper, Miles A. and Chuck McCutcheon, “State Department Talks Tough to Beijing As
GOP Assails ‘Failed’ Policy,” CQ Weekly, March 6, 1999; Jeff Gerth and Eric Schmitt,
“Political Battle: What to Reveal On China Arms,” New York Times, March 10, 1999;
Vernon Loeb, “CIA Probe Gets Outside Review,” Washington Post, March 16, 1999.
54 Risen, James, “U.S. Inquires Why Suspect At Atom Lab Kept Access,” New York Times,
April 23, 1999.
55 U.S. House of Representatives, Select Committee, H.Rept. 105-851, U.S. National Security
and Military/Commercial Concerns with the People’s Republic of China
, classified report
issued on January 3, 1999; declassified version issued on May 25, 1999. See CRS Report
RL30220, China’s Technology Acquisitions: Cox Committee’s Report — Findings, Issues,
and Recommendations
, by Shirley A. Kan.

CRS-22
of Defense and State more say) and security at the national labs. The committee
apparently did not focus on the question of PRC political donations nor requested the
Justice Department to begin new investigations. Loral and Hughes deny having
violated the law.56
Shifting attention from missile technology to nuclear weapons, the Cox
Committee reviewed the most serious concerns that the PRC had stolen information
on nuclear weapons allegedly from U.S. national laboratories of the Department of
Energy. A third incident has been made public involving the W-88 nuclear warhead
(deployed on the Trident II submarine-launched ballistic missile).57 The Federal
Bureau of Investigation (FBI) has investigated that incident in which China reportedly
received data from Los Alamos National Lab in the mid-1980s, but the case was
uncovered in 1995. Two other cases involving China and U.S. labs were previously
reported.58 Representative Dicks said that the most important matter to be learned
from the committee’s report will be “that for 20 years, starting in the 1980s, we had
a major counterintelligence failure at Los Alamos and at other national labs that is
now being corrected.”59 Allegations of the PRC’s acquisition of nuclear weapon
secrets were publicly confirmed by U.S. intelligence on April 21, 1999.60 In 2000,
U.S. intelligence reportedly concluded from additional translations of PRC documents
obtained in 1995 that PRC espionage has gathered classified information on U.S.
ballistic missiles and reentry vehicles, in addition to that on nuclear weapons.61
According to the Cox Committee, “the PRC has stolen or otherwise illegally
obtained U.S. missile and space technology that improves the PRC’s military and
intelligence capabilities.” After three failed satellite launches in 1992, 1995, and 1996,
U.S. satellite makers (Hughes and Loral) transferred missile design information and
know-how to China without required export licenses from the Department of State
56 Press conference of Representatives Cox and Dicks, December 30, 1998; Gerth, Jeff and
Eric Schmitt, “House Panel Says Chinese Obtained U.S. Arms Secrets,” New York Times,
December 31, 1998; John Mintz, “China Aid Hurt U.S. Security, Panel Says,” Washington
Post
, December 31, 1998; Robert S. Greenberger, “Hughes, Loral Sales Hurt U.S., Panel
Says,” Wall Street Journal, December 31, 1998.
57 See CRS Report RL30143, China: Suspected Acquisition of U.S. Nuclear Weapon Data,
by Shirley A. Kan.
58 Mintz, John, “Atomic Labs Criticized For Security Conditions,” Washington Post, January
1, 1999; Carla Anne Robbins, “China Received Secret Data On Advanced U.S. Warhead,”
Wall Street Journal, January 7, 1999; James Risen and Jeff Gerth, “China Stole Nuclear
Secrets From Los Alamos, U.S. Officials Say,” New York Times, March 6, 1999. On whether
China may have passed nuclear weapon design information to Pakistan, see CRS Report 96-
767, Chinese Proliferation of Weapons of Mass Destruction: Background and Analysis, by
Shirley A. Kan.
59 Interview on NBC’s “Meet the Press,” March 14, 1999.
60 CIA, “The Intelligence Community Damage Assessment On The Implications Of China’s
Acquisition of U.S. Nuclear Weapons Information On the Development of Future Chinese
Weapons,” unclassified release, April 21, 1999.
61 Pincus, Walter and Vernon Loeb, “China Spy Probe Shifts to Missiles,” Washington Post,
October 19, 2000.

CRS-23
“in violation of the International Traffic in Arms Regulations.” The U.S. firms gave
technical information that has improved the “reliability” of PRC rockets used to
launch satellites with civilian and military purposes. The information is also useful for
the design and improved reliability of “future PRC ballistic missiles.” Specifically, the
committee found that in 1993 and 1995, Hughes “illegally” recommended to the PRC
improvements to the fairing (nose cone that protects the payload), and in 1996, Loral
and Hughes helped the PRC improve the guidance of a failed rocket, and in so doing,
“deliberately acted without the legally required license and violated U.S. export
control laws.”
Regarding Hughes, the committee’s report printed an unclassified assessment
completed on December 18, 1998, by the State Department’s Office of Defense Trade
Controls. That office concluded that, in reviewing the PRC launch failure of January
1995 that involved a LM-2E space launch vehicle (SLV) and the Apstar II satellite,
Hughes engaged in technical discussions with the PRC, without U.S. government
monitors, that resulted in “significant improvement to the PRC spacelift program and
contributed to China’s goal of assured access to space.” Moreover, “the lessons
learned by the Chinese are inherently applicable to their missile programs as well,
since SLVs and ICBMs share many common technologies.”
As for Loral and Hughes’ activities in 1996, the committee reported that a 1998
interagency review determined that the “technical issue of greatest concern was the
exposure of the PRC to Western diagnostic processes, which could lead to
improvements in reliability for all PRC missile and rocket programs.” The
improvements to China’s missile program could come from “increased production
efficiency, and improved reliability through adoption of improved quality control and
reliability-enhancing measures in design and manufacturing that were introduced after
the accident investigation, including some that the [Loral-led] Independent Review
Committee advocated.” The committee judged that the guidance system of the Long
March 3B rocket, reviewed by Loral and Hughes in 1996, is “among the systems
capable of being adapted for use in the PRC’s planned road-mobile intercontinental
ballistic missiles” (i.e., the DF-31).
There were previous concerns that after the explosion that destroyed the Loral-
built Intelsat 708 satellite in 1996, classified U.S. encryption boards were lost to
China. The committee reported that while the two FAC-3R encryption boards were
not recovered from the crash site by Loral, they “most likely were destroyed in the
explosion.” While it is not known whether the PRC recovered the boards, even if
they did, “it would be difficult for the PRC to determine the cryptographic algorithm
that was imprinted on them,” and “reverse-engineering of a damaged board would be
even more difficult.” Thus, “the National Security Agency remains convinced that
there is no risk to other satellite systems, now or in the future, resulting from having
not recovering the FAC-3R boards from the PRC.”
Contrary to earlier allegations of U.S. assistance for China’s development of
multiple satellite dispensers and MIRVs, the committee determined that “Motorola
did not provide the PRC with information on how to design the Smart Dispenser;
rather, the PRC built the Smart Dispenser indigenously to Motorola’s specifications.”

CRS-24
The Cox report agreed with earlier public assessments of the Administration
that, in the 1990s, the PRC has deployed a total of approximately 20 CSS-4 ICBMs
in silos, but contrary to the White House’s June 1998 announcement of a detargeting
agreement with China, “most” of those ICBMs remain targeted on the United States.
Nonetheless, the report noted previous statements by U.S. intelligence that the “CSS-
4s are deployed in their silos without warheads and without propellants during day-to-
day operations.” The committee judged that “within 15 years,” China’s missile
modernization program could result in the deployment of up to 100 ICBMs.
Moreover, if China aggressively developed MIRVs, it could deploy “upwards of
1,000 thermonuclear warheads on ICBMs by 2015.” Confirming suspicions of
problems in China’s SLBM force, the committee reported that while China developed
a JL-1 SLBM to be launched from the PLA’s Xia-class nuclear-powered submarine,
the PRC has not yet deployed the JL-1 SLBM.
In June 1999, Loral Space and Communications published a full-page response
to the Cox report. Loral said that its employees “acted in good faith and did nothing
to violate export control regulations or the law or to harm national security.”
Nonetheless, Loral’s statement acknowledged that “mistakes were made.” Loral also
referred to sensitive information that could have been conveyed at the meetings,
saying that “unfortunately, the [Review] Committee secretary, a Loral engineer, had
already faxed a copy of the report [reviewing the launch failure] to the Chinese in the
process of sending it to the Committee members. However, prior to doing so, the
secretary took measures to delete all sensitive material from the report.”62
In its recommendations related to satellite exports, the Cox Committee:
! Expected that the executive branch will aggressively implement the
Satellite Export Control provisions of the Strom Thurmond National
Defense Authorization Act for FY1999.
! Stated that the congressional judgment that the Department of State
is the appropriate agency for licensing both exports of satellites and
any satellite launch failure investigations must be faithfully and fully
implemented.
! Stated that the Department of State must ensure, consistent with
national security, that satellite export licenses and notices to
Congress are acted on in a timely fashion and that exporters are
informed about the progress of their applications and have access to
appropriate dispute resolution procedures. The executive branch and
Congress should ensure that the Department of State has adequate
personnel and resources devoted to processing export license
applications.
! Recommended that congressional committees report legislation to
ensure that satellite manufacturers are not disadvantaged in collateral
areas such as tax credits by the transfer of licensing responsibility to
the Department of State.
62 Washington Post, June 15, 1999, p. A27; Space News, June 28, 1999.

CRS-25
! Stated that DOD must give high priority to obligations under the
Strom Thurmond National Defense Authorization Act, including
requirements for monitoring launches and technology control plans.
! Recommended that congressional committees report legislation
providing that, in connection with foreign launches of U.S. satellites,
DOD shall contract for security personnel who have undergone
background checks to verify their loyalty and reliability. The number
of guards shall be sufficient to maintain 24-hour security of the
satellites and all related missile and other sensitive technology. The
satellite export licensee shall be required to reimburse DOD for all
associated costs of such security.
! Recommended that DOD shall ensure sufficient training for space
launch campaign monitors and the assignment of adequate numbers
of monitors to space launch campaigns.
! Recommended that DOD monitors shall maintain logs of all
information authorized for transmission to the PRC, and such
information shall be transmitted to DOD, State, Commerce, and the
CIA.
! Recommended that relevant departments and agencies ensure that
the laws and regulations on export controls are applied in full to
communications among satellite manufacturers, purchasers, and the
insurance industry, including communications after launch failures.
! Recommended that, in light of the impact on U.S. national security
of insufficient domestic, commercial space launch capacity and
competition, congressional committees report legislation to
encourage and stimulate further the expansion of such capacity and
competition.
Clinton Administration’s Response. The Clinton Administration
expressed concerns about implications of the Cox Committee’s recommendations for
U.S. exports. Under Secretary of Commerce William Reinsch said in a speech on
export controls to high-tech companies that there are those in Congress who “do not
understand” the “political and economic transformations” in recent years and
“respond to them by trying to return to the simpler era of the Cold War and a single
bipolar adversary. Only this time, it is China. A good example of this is the Cox
Committee. . .”63
On February 1, 1999, the National Security Council (NSC) of the White House
issued a 32-page unclassified version of its response to the House Select Committee’s
38 recommendations,64 even before the committee’s report is declassified. Those
issues pertain to several broad areas:
! security on nuclear weapons at national labs;
! multilateral export control and weapon nonproliferation efforts;
! satellite launches;
63 Speech to the Silicon Valley Forum, Commonwealth Club, California, January 14, 1999.
64 NSC, response to recommendations, (unclassified), February 1, 1999; John Mintz,
“Clinton: Panel’s Export Rules May Delay Deals,” Washington Post, February 2, 1999.

CRS-26
! high-performance computers;
! export controls; and
! counter-intelligence.
The White House said it agreed with some of the recommendations or has
already addressed those concerns. The NSC, however, opposed other
recommendations, including the following objections:
! assessments at the Departments of State, Defense, Energy, and
Justice, and the CIA on security risks in U.S.-PRC lab-to-lab
exchanges should be conducted by intelligence experts, not inspector
generals;
! the United States should not deny exports of high-performance
computers if China does not permit effective end-use verification,
including surprise on-site inspections, by an “arbitrary deadline” of
September 30, 1999;
! export control procedures do not need longer review periods where
an agency’s mid-level officials may “stop the clock” on national
security grounds with “indefinite” and “unjustified” delays;
! export control procedures requiring consensus of reviewing agencies
would “hinder the deliberative process;”
! new legislation, beyond the Hong Kong Policy Act of 1992, is not
needed to require examination of trade flows to China through Hong
Kong, U.S. export control policy of treating Hong Kong differently
from China, and unmonitored border crossings by PRC military
vehicles;
! legislation that would amend the Defense Production Act of 1950 to
require mandatory notifications to the Committee on Foreign
Investment in the United States (CFIUS) by any U.S. national
security-related business of any planned mergers, acquisition, or
takeovers by a foreign or foreign-controlled entity could “chill
legitimate foreign investment” that is strongly in U.S. interests;
! the Department of Justice deems it “unnecessary” to have legislation
directing it to promptly share national security information with other
agencies through the establishment of an interagency mechanism.
Senate Task Force. In the Senate, Majority Leader Lott announced, on May
20, 1998, the creation of a Task Force, with Senators Shelby, Helms, Thurmond,
Thompson, Cochran, Kyl, and Hutchinson. The task force, which first met on June
2, 1998, oversaw the four investigations of the Committees on Intelligence, Foreign
Relations, Armed Services, and Governmental Affairs.65 On May 29, 1998, 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
65 Gugliotta, Guy and Juliet Eilperin, “Lott Says China Probes Won’t Be Political Tool,”
Washington Post, June 3, 1998.

CRS-27
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
PRC 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.
The Senate Intelligence Committee’s investigations covered two categories:
! U.S. export control policies, since 1988, on PRC launches of U.S.-
built satellites and implications for U.S. national security;
! any secret PRC program to contribute political donations and
influence the U.S. political process in 1996.66
On May 7, 1999, the Senate Committee on Intelligence released its 45-page,
unclassified report that it had approved two days before in a bipartisan 16-1 vote.67
The office of Senator Graham, who dissented, explained he was concerned that the
process did not allow sufficient time for the members to review the report before the
vote. As urged by Senator Levin, the sections on possible missile technology transfers
and PRC efforts to influence U.S. policies were kept separate, because no evidence
of a link between the two issues was found.68 The report included a number of
findings and recommendations.
On security implications of any U.S. technology transfers for China’s military
and missile programs, the committee found no evidence that U.S. technology has been
incorporated into the currently deployed PRC ICBM force, while noting that such
66 Senate Select Committee on Intelligence, “Investigation of Impacts to U.S. National
Security From Advanced Satellite Technology Exports to China and Chinese Efforts to
Influence U.S. Policy: Terms of Reference,” June 2, 1998.
67 Senate Select Committee on Intelligence, “Report On Impacts To U.S. National Security
Of Advanced Satellite Technology Exports to the People’s Republic of China (PRC), and
Report on the PRC’s Efforts to Influence U.S. Policy,” May 1999.
68 Schmitt, Eric, “Panel Finds Harm in China Launchings,” New York Times, May 7, 1999.

CRS-28
integration may not be apparent for several years if at all. The report also stated that
“extensive assistance from non-U.S. foreign sources probably is more important” than
technology transfers associated with satellite launches. Nonetheless, the committee
concluded that “the technical information transferred during certain satellite launch
campaigns enables the PRC to improve its present and future ICBM force that
threatens the United States,” as well as short-range and intermediate-range ballistic
missiles that threaten U.S. military forces and allies in Asia. Further, U.S. national
security may be harmed, according to the report, if China proliferated missile systems
improved by U.S. technology. The committee also found that improvements to
China’s space launch capability also enhanced its use of space for military
reconnaissance, communications, and meteorology, posing challenges to U.S. national
security. The committee found, that despite assurances of government monitoring
and security safeguards, there were security violations and “significant weaknesses”
in the implementation of the satellite export policy since the Reagan Administration.
U.S. satellite exports to China, the committee concluded, have “created a tension
between U.S. national security interests and U.S. commercial interests,” and “this
tension and conflict of interests have been problematic throughout the U.S.-PRC
satellite launch relationship.”
The Committee made 10 recommendations related to strengthening controls
over satellite exports. These include:
! authority for monitors from the Defense Threat Reduction Agency
(DTRA) to suspend launch-related activities;
! strengthening DTRA to monitor satellite launches overseas;
! annual reports from DTRA to Congress on implementation of
technology safeguards;
! adherence by the Department of State to strict timetables in
reviewing license applications;
! intelligence review in the licensing process;
! intelligence assessments of foreign efforts to acquire U.S.
technology;
! consideration of investigations for export control violations
associated with satellite exports;
! call for the Administration to use all available means to obtain PRC
compliance with the MTCR;
! efforts by the Administration and Congress to encourage expansion
of the U.S. commercial launch industry; and
! reappraisal of the policy to export satellites to China, including
whether it should be phased out.
Clinton Administration’s Response. The White House issued a response
to the Senate Intelligence Committee’s report on May 7, 1999.69 The Administration
acknowledged that it shared the Committee’s concern that “unauthorized assistance
and transfers of technology relevant to space launch vehicles and ballistic missiles may
have occurred during certain space launch failure analyses.” The statement also noted
69 White House, “Statement by the Press Secretary: Administration Response to Report on
China Satellite Launch,” May 7, 1999.

CRS-29
the Department of Justice’s investigations into those allegations. The White House
agreed and confirmed that U.S. concerns do not center on China’s “currently
deployed ICBM force,” but that “unauthorized assistance and transfers of space
launch vehicle and satellite technology could assist China in the development of future
ballistic missiles.” While concurring with most of the committee’s recommendations,
the Administration disagreed with the last one, saying that “the longstanding policy
of permitting the launch of U.S. commercial satellites by China, with strong
technology controls, serves our overall national interest.” However, this statement
did not cover China’s increasing use (not just launch) of such satellites.
Export Controls and Intelligence. In addition, congressional
investigations expanded to include concerns about alleged politicization of export
control and intelligence in the Clinton Administration. Export control specialists
skeptical of liberalizing controls on dual-use technology transfers to China complained
that decision-makers, in approving exports, have ignored evidence of U.S. firms
helping China’s military. One manager in DTSA, Michael Maloof, reportedly kept a
diary of export control cases critical of the Commerce Department and his superiors
at DTSA, including David Tarbell. Maloof’s information was shared with the House
Select Committee in August 1998 and also with the Department of Justice and
Customs Service. His criticisms reportedly covered alleged close ties between Tarbell
and Hughes. Tarbell denied showing favoritism to Hughes. The Pentagon’s
spokesman dismissed Maloof’s charges as “ideological differences” about U.S. policy
toward China, while Peter Leitner, another DTSA employee who briefed Congress,
criticized “long-time ideological opponents” of export controls.70
Meanwhile, at the request of the Senate Intelligence Committee, the Justice
Department began an unusual criminal investigation in 1998 into whether the CIA
obstructed justice when it allegedly warned Hughes about the committee’s interest in
some of its employees. CIA officials agreed to testify before a federal grand jury in
Washington in December 1998. In April 1996, a CIA analyst, Ronald Pandolfi, had
reportedly prepared a National Intelligence Estimate (NIE) on how Hughes may have
helped to improve China’s missile capabilities, but the CIA reportedly did not approve
the NIE. In September 1998, Pandolfi briefed the committee on what he found in
1995 (after Hughes reviewed the explosion of a Long March rocket in January 1995).
The CIA then told Hughes about Pandolfi’s briefing for the committee.
Administration officials have said that the CIA advised Hughes about providing names
of its executives to the committee in order to urge Hughes to cooperate and have
denied that the CIA tried to hinder the committee’s investigation. Nonetheless, the
committee has questioned whether the Clinton Administration’s policy of engagement
with China influenced intelligence assessments about China.71 Confirming that he and
Senator Bob Kerrey, the vice chairman, had found out about the CIA’s contact with
70 Cloud, David S., “Beijing Export Battle: Case Study of One Hard-Liner,” Wall Street
Journal
, November 27, 1998.
71 Loeb, Vernon and John Mintz, “CIA Faces Criminal Probe in China Case,” Washington
Post
, December 5, 1998; Jeff Gerth, “Old Concerns Over Data Transfer to China Get New
Attention,” New York Times, December 7, 1998; Robert S. Greenberger and David S. Cloud,
“Justice Department Examines CIA Role in Probe Into Hughes’ China Dealings,” Wall Street
Journal
, December 7, 1998.

CRS-30
Hughes in an internal CIA cable dated September 23, 1998, and then asked Attorney
General Janet Reno for the criminal investigation, Senator Shelby said in September
2000 that the Justice Department decided not to charge an unnamed CIA official with
obstructing a Senate investigation.72
In another case, the Cox Committee asked the CIA to provide a classified cable
written in March 1996 on Hughes and Loral that had not been provided to the Justice
Department until these congressional investigations began. The CIA’s inspector
general began investigating the alleged failure to pass the cable to Justice, which the
CIA characterized as an oversight. The message was said to have reported on an
American consultant, Bansang Lee, who worked for Hughes from 1989 to 1995,
when Loral hired him to work on sales of satellites, including Chinasat-8. In helping
to sell satellites to China and to export them for launch from there, Lee allegedly
made illegal payments to and received payments from PRC aerospace executives.
Lee’s lawyer stated that Lee “has never made any unlawful or improper payments of
any kind to any Chinese official,” and spokesmen for Hughes and Loral also denied
any wrongdoing.73
Senator Specter’s Investigation. In October 1999, Senator Specter, under
the jurisdiction of the Senate Judiciary Subcommittee on Administrative Oversight
and the Courts, began holding hearings in his investigation into the Justice
Department’s handling of the PRC’s suspected acquisition of missile technology and
nuclear weapon secrets, campaign finance, Waco, and other issues.
Legislation to Revise Export Controls
105th Congress. In the 105th Congress, the House-passed National Defense
Authorization Act for FY1999 (H.R. 3616) included amendments (sections 1206-
1209) passed on May 20, 1998, that sought to express 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); prohibit U.S. participation in
investigations of PRC launch failures (Bereuter, agreed 414-7); prohibit transfers of
missile equipment or technology to China (Hefley, agreed 412-6); and prohibit the
export or re-export of U.S. satellites to China (Hunter, agreed 364-54). Also, section
1212 sought to 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 FY1999 (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.
72 Gertz, Bill, “CIA Official Spared Justice Prosecution,” Washington Times, September 22,
2000.
73 Gerth, Jeff, “C.I.A. Ignored Report of Payments to Chinese For Satellite Contracts,” New
York Times
, December 24, 1998.

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On July 22, 1998, Senator Hutchinson filed but did not offer Amendment 3250
to the Senate-passed Defense Appropriations Act for FY1999 (S. 2132/H.R. 4103)
to transfer the export control of satellites back to the State Department and require
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.
Although the Senate’s version of the Defense Authorization Act for FY1999 (S.
2057) did not include the restrictions on satellite exports, the Senate Task Force led
by Majority Leader Lott, as proposed by Senator Helms of the Foreign Relations
Committee, was in favor of transferring the licensing authority over satellites back to
the State Department.74 At a conference committee meeting on September 17, 1998,
House and Senate conferees agreed to transfer the licensing authority over
commercial satellites back to the State Department in an effort to strengthen export
controls.75 They did not agree to ban further satellite exports to China, as some
advocated in calling for a reassessment of the policy of allowing China to launch U.S.-
origin satellites.76 U.S. policy might have also distinguished between exports of
satellites for PRC launch only and satellites for PRC use. Some said it is difficult to
prevent the PLA from using commercial satellites owned by China. Others said that
it is up to Congress to assess the state of U.S. dual-use export controls by passing a
law to replace the Export Administration Act that expired in 1994.77
Section 1511 of the Act (P.L. 105-261) expresses the sense of Congress, among
other views, that the President should not issue any blanket waiver of post-Tiananmen
sanctions (in P.L. 101-246) for satellite exports to China. Section 1512 requires the
President to certify to Congress before exporting missile technology to China that
such export will not be detrimental to the U.S. space launch industry and will not
measurably improve PRC missile or space launch capabilities. Section 1513 transfers
satellites controlled under the Commerce Department’s Commerce Control List back
to the State Department’s Munitions List, effective March 15, 1999. That section
also requires a report from the Secretary of State on implementation, improvement
to the timeliness and transparency of the license review process, adequacy of
resources, and recommendations for amending the Arms Export Control Act. Section
1514 mandates additional requirements to strengthen national security controls over
satellite exports, including mandatory licenses for launch failure investigations,
mandatory intelligence review of license applications and TAAs considered by the
74 Pomper, Miles A., “Hill’s Probes of Dealings with China Unlikely to Alter Basic
Relationship,” CQ Weekly, June 20, 1998; and interview with Senate Foreign Relations
Committee staffer.
75 Schmitt, Eric, “Congress Moves to Reverse Clinton’s Satellite-Export Procedure,” New
York Times
, September 18, 1998.
76 Sokolski, Henry, “Protecting High Tech,” Washington Times, September 30, 1998.
77 “Export Act Inertia” (Commentary), Defense News, November 2-8, 1998; “Reinsch Says
Congress Needs to Revise EAA,” Export Practitioner, November 1998; and Henry Sokolski,
“What Now For China Policy?” Wall Street Journal, March 15, 1999.

CRS-32
Departments of Commerce and State for foreign launches of satellites, and
notification to Congress of export licenses that are issued for satellite launches; with
the exception of satellites exported for launch by members of the North Atlantic
Treaty Organization (NATO) or a major non-NATO ally. Section 1515 requires a
detailed justification to accompany the President’s waiver of post-Tiananmen
sanctions for satellite exports to China. Section 1521 requires the establishment of
a Deputy Under Secretary of Defense for Technology Security Policy who serves as
the director of DTSA.
There had been concerns in Congress about how the Administration would
implement the requirement to shift licensing authority back to State. Despite signing
the act on October 17, 1998, President Clinton said he “strongly opposed” the
transfer of authority. He also warned that he would “take action to minimize the
potential damage to U.S. interests” and order appropriate agencies to implement the
change “in a manner consistent with current dual-use export license processing.”78
National Security Adviser Samuel Berger reportedly urged a veto and included the
strong language.79 In coordination with the U.S. satellite industry which prefers
speedier and more predictable licensing procedures,80 the White House’s National
Security Council reportedly drafted an executive order for the President to issue to
accord the Commerce Department a continuing role in licensing satellite exports,
perhaps the authority to appeal the decisions of the State Department on Munitions
List items, including satellites.81 In response, the chairmen of six House and Senate
committees (National Security, Armed Services, International Relations, Foreign
Relations, Intelligence) wrote a letter on December 9, 1998, warning the President
against “direct contravention” of the legislation.
As required by section 1513, the Secretary of State submitted to Congress on
January 21, 1999, the plan on regaining licensing authority over commercial satellites
as Munitions List items on March 15, 1999. It includes a goal (but not a limit) of
timely review of licenses within 90 working days; procedures for Commerce to
comment, but not veto, licensing reviews; and veto authority for the Defense
Department (that is not subject to appeal by the Commerce Department). It stated
that “no new Executive Order is needed,” and decisions on defense exports are made
exclusively by the Departments of State and Defense and “solely on the basis of
national security and foreign policy.”82 The Defense Department’s new Space Launch
78 President William J. Clinton’s statement on the FY1999 Defense Authorization Act.
79 Lelyveld, Michael S., “Clinton Ripped On Satellites To China,” Journal of Commerce,
December 14, 1998.
80 “Conferees’ Decision Draws Ire of Satellite Industry,” Aerospace Daily, September 21,
1998; Interview with John Douglass, President/General Manager, Aerospace Industries
Association, Defense News, November 2-8, 1998; Interview with Clayton Mowry, Director,
U.S. Satellite Industry Association, Space News, November 9-15, 1998; “A License to Do
Mischief (commentary),” Space News, February 1, 1999.
81 Opall-Rome, Barbara, “White House Plots To Skirt Congress On Exports,” Defense News,
December 7-13, 1998.
82 “Report by The Secretary of State Pursuant to Section 1513(d) of the NDAA for FY1999,”
(continued...)

CRS-33
Monitoring Division of the Defense Threat Reduction Agency is reportedly hiring 39
engineers and other staff to review licenses for satellite exports and monitor foreign
launches. U.S. firms are to reimburse the costs of monitoring.83
106th Congress. In the 106th Congress, Rep. Sweeney introduced H.R. 281
on January 6, 1999, to prohibit the export to China of satellites and related equipment.
On May 19, 1999, he sponsored an amendment to the NASA authorization bill (H.R.
1654
) to require NASA to certify, before any cooperative agreement with the PRC,
that the technology transfer will not improve PRC ballistic missile or space launch
capabilities. The House agreed to the amendment. The NASA Authorization Act for
FYs 2000, 2001, and 2002 (P.L. 106-391, signed into law on October 30, 2000)
includes the requirement for certification to Congress, at least 15 days before such an
agreement, that it is not detrimental to the U.S. space launch industry and will not
improve the PRC’s ballistic missile or space launch capabilities (Section 126(a)(2)).
During the mark-up of the Foreign Relations Authorization Act for FY2000,
H.R. 1211, by the Committee on International Relations on April 14, 1999,
Representative Rohrabacher introduced an amendment to give preferential treatment
in licensing for export of satellites and related items to NATO allies, major non-
NATO allies, and other friendly countries; but not for China, countries that potentially
pose a security threat to the United States, or countries likely to proliferate satellite
technology to countries of security concern. (The FY1999 National Defense
Authorization Act already exempts NATO and non-NATO allies from the more
stringent export controls.) As amended by Representative Gejdenson, however, the
approved section 210 of H.R. 1211 (H.Rept. 106-122) does not have references to
China and other countries not subject to preferential treatment. Rohrabacher’s
amendment also directs the Secretary of State to obligate $2 million to the Office of
Defense Trade Controls to expedite the review of satellite export licenses.84
On May 27, 1999, the Senate agreed by voice vote to Senator Lott’s
amendment to the National Defense Authorization Act for FY2000 (S. 1059). The
amendment sought to improve the monitoring of satellite exports and strengthen
safeguards, security, and counterintelligence at DOE facilities.85 On June 9, 1999,
Representative Cox introduced an amendment86 to the House’s version (H.R. 1401).
The amendment consisted of 27 sections, with 25 sections requiring reports or other
actions, or amending the law; a section simply providing a short title; and a section
82 (...continued)
January 21, 1999; Robert S. Greenberger and David S. Cloud, “State Department Seeks to
Allay Fears With 90-Day Satellite-License Reviews,” Wall Street Journal, January 29, 1999;
NSC unclassified response to the Cox Committee’s recommendations, February 1, 1999.
83 Ferster, Warren, “Pentagon Hires Staff For Review Office,” Space News, April 26, 1999.
84 H.Rept. 106-122; “$2 Million Pushed For State Tech Transfer Office; Attempt to Add
Controls on China is Stymied,” Spacebusiness Today, April 20, 1999; Warren Ferster,
“Pentagon Establishes Office To Review Satellite Export Requests,” Defense News, May 3,
1999.
85 For language of amendment, see Congressional Record, May 26, 1999, p. S6073-6074.
86 Congressional Record, June 8, 1999, p. H3862-3866.

CRS-34
providing a definition of “national laboratory.” The sections or subsections of the
Cox amendment addressed fully or partially 21 of the 38 recommendations of the Cox
Committee. The House agreed to the Cox amendment by 428-0 on that day and
passed H.R. 1401 on June 10, 1999. In September 1999, Congress approved the
conference report (H.Rept. 106-301) on S. 1059. The act, signed into law (P.L. 106-
65
) on October 5, 1999, includes sections 1401-1412 that addresses export controls
as they relate to missile technology, satellites, high-performance computers,
multilateral export controls, monitoring of foreign satellite launches, State Department
licensing, improved intelligence consultation, and notification to Congress of
investigations into possible export control violations by satellite makers. In addition,
section 1612(b) expressed the sense of Congress that the policy of exporting satellites
to the PRC for launch should be reexamined, with a review of whether to phase out
that policy. Congress did not require a report on this review.
On May 10, 2000, Rep. Gejdenson introduced H.R. 4417 to transfer export
controls over satellites back to the Secretary of Commerce. It would also provide for
certain procedures for satellite exports to the PRC.
107th Congress. On May 3, 2001, Representative Howard Berman
introduced H.R. 1707 (the Satellite Trade and Security Act of 2001), with
Representative Dana Rohrabacher as the co-sponsor. The bill seeks to shift the
jurisdiction over satellite exports back to the Department of Commerce. On August
1, 2001, Representative Berman added the legislation as an amendment to the House
version of a new Export Administration Act (EAA)87, H.R. 2581, passed by the
House International Relations Committee. The language does not cover satellites
going to China, which would remain under the oversight of the State Department.88
In February 2001 briefings for Representatives Cox and Rohrabacher, the
Satellite Industry Association (SIA) argued that California’s satellite industry lost $1.2
billion in potential revenues and over 1,000 new jobs in the face of greater European
competition, because the State Department’s export controls over satellites negatively
affected U.S. firms after March 1999. SIA also contended that the U.S. share (vs.
European share) of orders of Geostationary Earth Orbit (GEO) commercial satellites
dropped from a high of 76 percent (19 orders) in 1997 to 45 percent (13 orders) in
2000.89 Still, others have reported difficulties for U.S. satellite makers due to limited
demand in the worldwide market for satellites, projected to average less than 25-30
87 See CRS Report RL30169, Export Administration Act of 1979 Reauthorization,
coordinated by Ian Fergusson.
88 According to HIRC staff and Svitak, Amy, “Bill Would Shift Oversight of U.S. Satellite
Exports,” Space News, August 13, 2001, and “House, Senate Bills Differ on Dual-Use
Exports,” Defense News, August 6-12, 2001.
89 Satellite Industry Association, “Satellite Export Licensing: the Impact of Federal Export
Control Laws on the California Space Industry,” study for the California Trade and
Commerce Agency, released February 6, 2001; Evelyn Iritani and Peter Pae, “U.S. Satellite
Industry Reeling Under New Export Controls,” Los Angeles Times, December 11, 2000.

CRS-35
satellites annually in the next several years.90 Others, however, argued for keeping
satellite export controls under the State Department but with expeditious and fair
processing of license applications. In March 2001, the Heritage Foundation said that
“though the satellite industry lobbied to get license authority transferred back to the
Commerce Department, given the sensitive nature of the technology involved in the
engineering and launch of satellites, the State Department’s licensing authority
combined with the Defense Department’s approval of a technology transfer control
plan and close monitoring of all launches is prudent to made sure that commercial
interests have been weighed against security risks posed by each transaction.”91
Supporters of keeping satellites as Munitions List items have cited a June 2001 report
by GAO that found similar export licensing times at the Departments of State and
Commerce.92 Some in Congress have been also mindful that satellites licensed by the
State Department are subject to congressional review, particularly, at the Senate
Foreign Relations Committee.
Denied and Pending Satellite Exports
Role of Congress. In addition to the FY1999 Defense Authorization Act,
Congress also passed omnibus legislation (P.L. 105-277, Sec. 101(b)) appropriating
funds for the Department of Commerce in FY1999 that required notification to
Congress before expending funds to process licenses for satellite exports to China.
On November 20, 1998, the Commerce Department reported processing of two
export license applications. Commerce again notified Congress on February 1, 1999,
that it was processing three additional applications to export satellites to China.
Those five satellite projects considered by Commerce were: Chinasat-8R, Asia Pacific
Mobile Telecommunications (APMT), Asiasat-3sb/4, Command and Control
Software for Satellites, and Iridium.
As exports of Munitions List items licensed by the State Department, satellite
exports are subject to congressional review, particularly at the Senate Foreign
Relations Committee. Under Section 36(c) of the Arms Export Control Act (AECA),
P.L. 90-629, the Department of State is required to notify Congress of any proposed
licenses for the export of any major defense equipment sold commercially under a
contract worth $14 million or more or for the export of defense articles or services
sold commercially under a contract worth $50 million or more. Such a license may
not be issued for an export to China until at least 30 calendar days after Congress
receives the certification and shall not be issued if Congress, during the review period,
enacts a joint resolution to prohibit the proposed export. In the case of exports to the
PRC, approvals for export licenses are also contingent upon a presidential waiver of
post-Tiananmen sanctions.
90 de Selding, Peter B., “Satellite Builders Faced with Crowded Market,” Space News, June
25, 2001.
91 Wortzel, Larry M., “Proceed with Caution in Approving Satellite Exports to China,”
Heritage Foundation Executive Memorandum, March 2, 2001.
92 General Accounting Office, “Export Controls: State and Commerce Department License
Review Times are Similar,” GAO-01-528, June 2001.

CRS-36
On July 2, 2001, Senators Helms, Shelby, Thompson, and Kyl signed a letter to
President George W. Bush, urging him to deny waivers for proposed satellite exports
to China based on weapons nonproliferation and human rights reasons.93 They
expressed their concern that “China has continued to transfer missile equipment and
technology” in contravention of both the Missile Technology Control Regime and its
November 2000 pledge on missile nonproliferation. They urged the President not to
present the Congress (particularly, the Senate Foreign Relations Committee) with
proposed licenses for satellite exports to China, under review at the State Department.
On July 20, 2001, Senator Helms, ranking member of the Senate Foreign
Relations Committee, issued a letter to other Senators urging them to call for a re-
evaluation of policy toward the PRC and to support President Bush should he decide
to deny China the opportunity to “launch United States satellites for profit,” focusing
on those satellites that might be exported to be launched from China. Senator Helms
also issued a chart describing China’s nonproliferation pledges and violations of them,
including the assurance of November 2000. He wrote that “none of these pledges has
been honored.”94
APMT. At least one pending export to China, the APMT satellite project,
encountered controversy. On July 2, 1998, the State Department suspended a license
issued in 1996 to Hughes that permitted Shen Jun, son of a PLA lieutenant general,
to work on the $450 million deal for the APMT consortium. Shen Jun’s father, Lt.
Gen. Shen Rongjun, was a Deputy Director of the Commission on Science,
Technology, and Industry for National Defense (COSTIND) from 1985 to 1998, with
special responsibility for aerospace. Also, the Administration re-examined the APMT
project, in part because the PRC governmental investors include those with ties to the
military: COSTIND, China Launch and Tracking Control, CASC, Ministry of
Information Industry, and China Telecommunications Broadcasting Satellite Corp.
(Chinasat). (In April 1998, COSTIND was reorganized as a civilian organization
under the State Council, while the PLA retained control over satellite launches under
the new General Equipment Department.) Some were concerned that the APMT
satellite (with powerful spot beams) could be used by the PLA 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. There were also concerns about
Hughes’ past record of interaction with PRC aerospace engineers, including the
review of the January 1995 launch failure.95
93 Senators Helms, Shelby, Thompson, and Kyl, letter to the President, July 2, 2001.
94 Senator Jesse Helms, “Dear Colleague” letter and chart, “Two Decades of Broken
Promises: Chinese Proliferation Words and Deeds,” July 20, 2001.
95 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.

CRS-37
As for the PLA’s possible use of ostensibly civilian communication satellites, a
DTSA official, Michael Maloof, wrote a July 1998 memo about his concerns that the
PRC military has used U.S.-made satellites to improve its encrypted command,
control, communications, and intelligence (C4I), using the Asiasat and Apstar satellites
built by Hughes.96 In an unclassified report submitted as required by FY1999
appropriations legislation, the Secretary of Defense reported on February 1, 1999,
that China’s military and civilian leaders are paying “specific attention” to the C4I
infrastructure. The report further said that “the military’s lack of communications
satellites could force the PLA to rely on foreign satellite services to meet military
needs in wartime or a crisis” and that, in a crisis, “the military would preempt the
domestic satellite systems for combat operations.”97
On February 23, 1999, the Clinton Administration announced that it decided to
deny approval to Hughes for the export of the APMT satellite, after the Departments
of Defense and State objected to the export, while the Commerce Department favored
it.98 The Administration cited concerns that the end-user would be the PLA. Hughes
responded on March 15, 1999, asking the Administration for a detailed justification
for the denial. But on April 14, 1999, Hughes said that the APMT consortium
dropped Hughes as the satellite supplier.99
Concerning the PLA’s use of satellites, a report said that the indigenous satellite
(Chinasat-22) launched by China on January 26, 2000, is also called the Feng Huo-1,
representing the first of China’s military communications satellites for a new battle
management system, called the Qu Dian C4I system. The news story cited a classified
report by the Defense Intelligence Agency, reportedly describing the Qu Dian system,
when fully deployed in several years, as intended to be similar to the U.S. Joint
Tactical Information Distribution System (JTIDS), a secure data link network used
by U.S. and allied forces.100 China has said that it plans to deploy three major satellite
systems for remote-sensing, navigation and positioning, and communications.101
China’s Ziyuan-2 satellite, launched on September 1, 2000, is reportedly also used by
the military as a reconnaissance satellite and designated as Jianbing-3.102
96 Capaccio, Tony, “China Military Benefitted from U.S. Technology, U.S. Aide Says,”
Bloomberg News, February 16, 1999.
97 Secretary of Defense, “Report to Congress Pursuant to the FY99 Appropriations Bill,”
February 1, 1999.
98 Cloud, David S., “Hughes’ Sale of a Satellite to China is Imperiled by Concerns at
Pentagon,” Wall Street Journal, February 22, 1999; Jeff Gerth and David E. Sanger, “Citing
Security, U.S. Spurns China On Satellite Deal,” New York Times, February 23, 1999.
99 “Singapore Customer Drops Hughes After Export License Delay,” Aerospace Daily, April
15, 1999.
100 Gertz, Bill, “China’s Military Links Forces to Boost Power,” Washington Times, March
16, 2000.
101 Wen Wei Po [PRC-owned newspaper in Hong Kong], October 31, 2000, translated by
FBIS (“China Raises Satellite Positioning, Tracking Capability with Latest Launch”).
102 Gertz, Bill, “Chinese ‘Civilian’ Satellite a Spy Tool,” Washington Times, August 1, 2001.

CRS-38
Chinasat-8. Meanwhile, Loral has encountered a delay in obtaining approval
from the Department of State for the export to China of the Chinasat-8 satellite, the
subject of the latest Presidential waiver in February 1998, which raised this
controversy.103 In a full-page ad in the May 6, 1998 Washington Post, Loral had
boasted that Chinasat-8 is the “most powerful satellite China has ever purchased.”
Chinasat-8 had been scheduled for launch in May 1999. The PRC government entity
buying the satellite is the China Telecommunications Broadcast Satellite Corporation,
subordinate to the Ministry of Information Industry (MII).104 The MII represents a
PRC defense industrial sector that was formed in March 1998 in a reorganization that
merged the Ministry of Electronics Industry and the Ministry of Posts and
Telecommunications.105 Loral’s chairman, Bernard Schwartz, argued that the
government’s delay in granting a technical assistance agreement (TAA) for Chinasat-8
risks the “commercial viability” of the whole U.S. satellite manufacturing industry in
Asia.106 The trade publication, Space News, alleged in September 1999 that “the State
Department is delaying approval of the Chinasat 8 TAA to punish Loral for the still
unproven allegation that the company broke the law while participating with Hughes
in an independent review of a Chinese launch accident investigation.” It also
protested that “the export licensing process should not be used as a substitute for the
judicial system.”107 The Department of State reportedly returned the license without
action in January 2001.108
Others. Other satellite projects possibly subject to U.S. export controls,
Presidential waivers, and congressional review include the following. On May 10,
1999, as required by section 1512 of the FY1999 National Defense Authorization Act
(P.L. 105-261), President Clinton issued a certification for the export of satellite fuels
and separation systems for the Iridium satellite project (owned by Motorola). He
certified that the export is not detrimental to the U.S. space launch industry and that
the material and equipment, including any indirect technical benefit that could be
derived from such export, will not measurably improve PRC missile or space launch
capabilities.109
In September 2000, AsiaSat, the Hong Kong-based company partly owned by
the PRC’s China International Trust and Investment Corporation (CITIC) and Societe
Europeenne des Satellites (SES), announced that it ordered AsiaSat 4 from Hughes
Space and Communications (later acquired by Boeing). AsiaSat 4 is scheduled for
103 Space News, April 12 and 26, 1999.
104 Lawrence, Susan V., “Clipping Their Wings,” Far Eastern Economic Review, April 8,
1999.
105 Defense Intelligence Agency, “China’s International Defense-Industrial Organizations,”
Defense Intelligence Reference Document DI-1921-60A-98, June 1998.
106 Silverstein, Sam, “Loral: Chinasat Delay Threatens U.S. Suppliers’ Credibility in Asia,”
Space News, August 23, 1999.
107 “Free Chinasat 8,” (commentary), Space News, September 6, 1999.
108 Space News, January 22, 2001.
109 Jefferson, William J., “Certification Regarding Export of Satellite Fuels to China,”
Congressional Record, May 11, 1999, p. H2955; S5029.

CRS-39
launch in the first half of 2002 from Cape Canaveral on an Atlas III rocket owned by
U.S.-based International Launch Services – not on a PRC rocket.110 Under section
36(c) of the AECA, the State Department, on October 11, 2000, notified Congress
of a proposed export license for AsiaSat 4, and on May 25, 2001, notified Congress
of a proposed export license for technical data and assistance to support the launch
of the satellite.111
In early 2001, Hong Kong-based APT Satellite Co. (partly owned by China
Aerospace Corporation) ordered Apstar 5 from Space Systems/Loral. APT plans to
launch the satellite from China on a Long March 3B rocket in early 2003.112
In February 2001, Intelsat concluded an agreement to order the APR-3 satellite
from Astrium SAS of France, which will be used by the PRC’s Sinosat company after
launch by China Great Wall Industry Corporation in the spring of 2002. The satellite
reportedly will include U.S. components.113 It has reportedly received State
Department approvals. Also waiting for U.S. authorization in early 2001 is Italy’s
Alenia Spazio whose Atlantic Bird-1 satellite has U.S. components.114
110 AsiaSat press releases, September 7 and 19, 2000, through BBC Monitoring Media.
111 Public announcements are published in the Federal Register, January 4 and June 11, 2001.
112 Silverstein, Sam, “Space Systems/Loral’s China Deal to Test Export Controls,” Space
News
, January 15, 2001.
113 Intelsat, press release, February 8, 2001; Sam Silverstein and Peter de Selding, “Intelsat
Deal Gives China Great Wall 2nd Win in Month,” Space News, February 12, 2001.
114 De Selding, Peter, “Export Worries Prompt Satellite Operators to Rethink Launch Plans,”
Space News, April 30, 2001.

CRS-40
Chronology of Major Events
Date
Event
1988
9/9/88
The Reagan Administration notified Congress that it will approve the
first export licenses for the use of PRC space launch services (for one
Asiasat and two Aussat satellites), subject to conditions.
12/17/88
The United States and China signed agreements to establish technology
safeguards on launching satellites from China and on insurance liability;
and initialed an agreement on international commercial launch services.
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
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 PRC 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).

CRS-41
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 PRC state-owned companies for missile
proliferation in Pakistan took effect.
11/21/91
After Secretary of State James Baker visited Beijing, the PRC foreign
ministry issued a vague statement that China “intends to abide” by the
MTCR.
1992
2/1/92
According to the Bush Administration, the PRC foreign minister sent a
secret letter to the U.S. Secretary of State promising to abide by the
MTCR.
2/22/92
The PRC 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).
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.

CRS-42
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 PRC LM-2E launch vehicle exploded and destroyed the Australian
Optus-B2 satellite (built by Hughes) it was carrying. After the
explosion, PRC officials denied that PRC 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.
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 PRC defense industrial aerospace entities, including China Great
Wall Industry Corp. The Category II sanction denied U.S. government
contracts and export licenses for missile equipment or technology (items
in the MTCR annex) for two years. The Department of State argued
that the sanction banned all licenses for satellite exports, but the
Department of Commerce argued that the sanction did not cover
satellites.

CRS-43
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.115
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 PRC ambassador that
the Clinton Administration was willing to negotiate a waiver of the
sanctions, but a more formal and binding PRC 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 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 PRC 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 PRC promise, in
more detail and with more authority, not to export MTCR-class
missiles.
115 “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.

CRS-44
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 PRC 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 PRC LM-3 rocket launched the Apstar-1 satellite (built by Hughes).
8/28/94
A PRC 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.
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 PRC 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 PRC aerospace industry officials
contradicted an official PRC 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.

CRS-45
3/13/95
The United States and China signed a new bilateral space launch
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. (The agreement will expire on
December 31, 2001.)
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 PRC 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).
11/28/95
A PRC 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 PRC 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.

CRS-46
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 PRC 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 jurisdiction was
moved from the Department of State to the Department of Commerce
(implemented in November 1996).
March 1996 The CIA had a classified cable on an American consultant, Bansang Lee,
who worked for Hughes and later Loral, and possible payments
exchanged between him and PRC aerospace executives, but the CIA did
not pass the cable to the Justice Department until 1998 (New York
Times
, December 24, 1998).
April 1996
A CIA analyst, Ronald Pandolfi, had reportedly prepared a National
Intelligence Estimate (NIE) on how Hughes may have helped improve
China’s missile capabilities in reviewing the explosion of a Long March
rocket in January 1995, but the CIA did not approve the NIE (New York
Times
, December 7, 1998).
April 1996
At China’s request, Dr. Wah L. Lim, then 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. PRC
engineers participated in the two meetings.
5/7/96
A draft preliminary report of Loral’s 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 PRC rocket’s guidance
and control systems (New York Times, April 13, 1998).

CRS-47
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 and use by 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.116
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).
10/20/96
China successfully launched a satellite for “scientific exploration and
technological experiment” on a Long March 2D rocket.
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.117
11/19/96
President Clinton waived sanctions under P.L. 101-246 for U.S. parts
for the PRC 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.
116 China Telecom will invest $37.5 million to become a full partner in Globalstar, according
to Aviation Week & Space Technology, October 5, 1998.
117 Also see GAO report GAO/NSIAD-97-24, Export Controls: Change in Export Licensing
Jurisdiction for Two Sensitive Dual-Use Items
, January 1997.

CRS-48
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.
6/10/97
China successfully launched its Fengyun-2, a second-generation PRC
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/SD.
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.
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 PRC pricing
of launch services to low earth orbit.

CRS-49
11/2/97
After a summit in Washington, PRC President Jiang Zemin toured a
Hughes satellite plant in Los Angeles, 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 the Loral-built Chinasat-8 satellite. Berger said 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 memo noted that “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)
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 PRC 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 PRC 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.

CRS-50
3/29/98
A Hong Kong newspaper owned by the PRC 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 PRC 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 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 PRC Foreign Ministry spokesman stated that “the exchange of
technical information about satellite launchings between U.S. companies
and the PRC 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.”

CRS-51
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.”
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 PRC 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 PRC 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 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-PRC confirmation of
resolutions of problems with Long March rockets, that Loral formed a
committee of several satellite companies, including Hughes, to review
the PRC investigation. However, Loral admitted that, contrary to its

CRS-52
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 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 failure on January 26, 1995 that destroyed the Apstar-2 satellite.
The Commerce Department had approved Hughes’ report.
6/18/98
The House voted on H.Res. 463 to create the Select Committee on U.S.
National Security and Military/Commercial Concerns with the People’s
Republic of China (chaired by Rep. Cox). Popularly known as the “Cox
Committee,” it was comprised of five Republicans and four Democrats.
6/29/98
President Clinton held a summit in Beijing with President Jiang Zemin,
at which the PRC refused to join the MTCR but said it was “actively
studying” whether to join.
7/2/98
The State Department suspended the license issued in 1996 to Hughes
that permitted Shen Jun, son of a PLA lieutenant general, to work on a
$450 million satellite deal for the APMT consortium.
7/7/98
A DTSA official, Michael Maloof, wrote a memo about his concerns
that the PRC military has used U.S.-made satellites to improve its
encrypted command, control, communications, and intelligence (C4I),
using the Asiasat and Apstar satellites built by Hughes.
7/18/98
China launched its Sinosat-1 (built by French companies, Alcatel and
Aerospatiale) on a LM-3B rocket.
8/19/98
A PRC Long March 2C/SD rocket launched two replenishment satellites
for Iridium (owned by Motorola).

CRS-53
Summer
An internal memo of the Justice Department’s campaign finance task
force reportedly found no evidence that Loral’s chairman Bernard
Schwartz corruptly influenced President Clinton in his decision to
approve Loral’s export of a satellite to China in 1998, but the memo
recommended to Attorney General Janet Reno that she appoint an
independent prosecutor. Reno denied the recommendation.
9/17/98
Conferees on the National Defense Authorization Act for FY1999 (H.R.
3616) agreed to transfer the export licensing authority over commercial
satellites back to the State Department, among other provisions, but did
not ban further satellite exports to China.
Sept. 1998
A CIA analyst, Ronald Pandolfi, briefed the Senate Intelligence
Committee on what he had found in 1995 about Hughes’ review of the
explosion of a Long March rocket in January 1995. The CIA then
allegedly alerted Hughes about Pandolfi’s briefing, reportedly according
to an internal CIA cable dated September 23, 1998. The committee
then asked Attorney General Janet Reno for a criminal investigation into
whether the CIA improperly obstructed a Senate investigation.
10/17/98
President Clinton signed the National Defense Authorization Act for
FY1999 (P.L. 105-261), but said he “strongly opposed” the provisions
on shifting controls over satellite exports back to the Department of
State.
11/16/98
China Great Wall Industry Corp. failed to receive bids and information
from any U.S. satellite manufacturers for a PRC proposal to set up a
joint satellite production facility, in part because of Congressional
concerns over sensitive technology transfers (Space News, November
23-29, 1998).
11/20/98
The Department of Commerce notified Congress, as required in FY1999
appropriations legislation (P.L. 105-277), that it is processing two
applications for licenses to export satellites to China.
Dec. 1998
CIA officials agreed to testify before a federal grand jury in Washington
in the Justice Department’s unusual criminal investigation into whether
the CIA obstructed justice when it allegedly warned Hughes about the
Senate Intelligence Committee’s interest in some of its employees. The
investigation began at the request of that committee (Washington Post,
December 5, 1998).
12/7/98
Aviation Week & Space Technology reports that the Department of
Commerce granted permission for the launch of the APMT satellite to
proceed.
12/7/98
DOD issued an initial assessment of documents provided by the
Department of Commerce in July 1998 on Hughes’ review the January
1995 launch failure (for Apstar-2). The report prepared by DTSA and
NAIC concluded that Hughes provided information to China that
potentially helped its missile program and violated standards of not
improving PRC satellite and missile capabilities.

CRS-54
Dec. 1998
The Departments of Defense and State began a study after the
December 7, 1998 Pentagon report on Hughes’ technical exchanges
with China in 1995. The follow-up study will assess any military benefit
to China of the technical exchanges.
12/9/98
The chairmen of six House and Senate Committees (National Security,
Armed Services, International Relations, Foreign Relations, and
Intelligence) wrote a letter to President Clinton, warning against “direct
contravention” of legislation passed by Congress to have the State
Department regain control over the export of satellites.
12/15/98
The New York Times reports that the Department of Justice’s
investigation of China’s role in the political campaigns of 1996 has
found new evidence that the PRC goal was acquisition of U.S. high
technology, especially that with military uses.
12/18/98
The State Department’s Office of Defense Trade Controls (DTC)
completed a sensitive but unclassified report, concluding that Hughes,
in reviewing the January 1995 launch failure of Apstar-2, provided
technical lessons that are “inherently applicable” to PRC missile as well
as satellite launch programs. (Printed in the Cox Committee’s report,
volume II, p. 76-84)
12/19/98
A PRC Long March 2C/SD rocket launched two replenishment satellites
for Iridium (owned by Motorola).
12/30/98
The “Cox Committee” unanimously approved a classified report on its
six-month investigation. According to Rep. Cox and Dicks, the chair
and ranking Democrat, PRC technology acquisitions, not only those
associated with satellite launches, harmed U.S. national security.
1999
1/6/99
The House extended the “Cox Committee” for three months in the 106th
Congress to work on the declassification of its report.
1/14/99
Under Secretary of Commerce William Reinsch said in a speech that the
Cox Committee is a good example of those in Congress who “do not
understand” the “political and economic transformations” in recent years
and “respond to them by trying to return to the simpler era of the Cold
War and a single bipolar adversary. Only this time, it is China.”
1/21/99
The Secretary of State submitted her plan to Congress on regaining
licensing authority over satellites on March 15, 1999, as required in
section 1513(d) of the National Defense Authorization Act for FY1999.
2/1/99
The NSC issued a 32-page, unclassified response to the “Cox
Committee’s” recommendations, before release of its declassified report.

CRS-55
2/1/99
As required in FY1999 appropriations legislation (P.L. 105-277),
Commerce again notified Congress (after the Nov. 20, 1998 notice) that
it is processing three additional applications to export satellites to China.
The total of five satellite projects under consideration were: Chinasat-
8R, APMT, Asiasat-3sb/4, Command and Control Software for
Satellites, and Iridium.
2/1/99
The Defense Secretary reported that China’s military and civilian leaders
are paying “specific attention” to the C4I infrastructure and that “the
military’s lack of communications satellites could force the PLA to rely
on foreign satellite services to meet military needs in wartime or a
crisis.”
2/23/99
The Clinton Administration announced that it decided to deny approval
to Hughes for the export of the APMT satellite, after the Departments
of Defense and State voted against the Commerce Department’s support
for the export. The administration cited concerns that the end-user of
the satellite would be the PLA.
3/15/99
The Department of State regained authority over the licensing of
satellite exports, pursuant to the National Defense Authorization Act for
FY1999 (P.L. 105-261).
3/15/99
Hughes responded to the Administration’s decision to deny an export
license for the APMT satellite by asking for a detailed justification.
3/18/99
The Department of Commerce published a rule in the Federal Register
on removing commercial communication satellites and related items
from the Commerce Control List.
3/22/99
The Department of State published a rule in the Federal Register on
reinstating commercial communication satellites on the Munitions List
on March 15, 1999.
3/24/99
The House passed H.Res. 129 (Cox) to extend the “Cox Committee”
until April 30, 1999.
4/4/99
The Los Angeles Times reports that Democratic fund-raiser Johnny
Chung told federal investigators that Liu Chaoying, executive of China
Aerospace International Holdings, Ltd., helped to funnel $300,000 from
General Ji Shengde, head of the PLA’s intelligence department, to
Chung for President Clinton’s re-election campaign in 1996, but most
of that money did not go to the Democratic Party.
4/14/99
Hughes reported that the APMT consortium dropped Hughes as the
satellite supplier, after it failed to obtain the export licenses.
4/21/99
The Director of Central Intelligence publicly reported on the Intelligence
Community’s damage assessment on PRC acquisitions of information
on U.S. nuclear weapons and ballistic missiles.
4/22/99
Representatives Cox and Dicks briefed President Clinton on the findings
of the “Cox Committee’s” report.

CRS-56
4/29/99
The House agreed to H.Res. 153 (Cox) to extend the “Cox Committee”
until May 14, 1999.
5/7/99
The Senate Select Committee on Intelligence released its report on
security implications of U.S. satellite exports to China and on PRC
political donations to U.S. political campaigns. The committee had
approved the report on May 5, 1999, in a 16-1 vote, with Senate
Graham dissenting. There are 10 recommendations related to the policy
of satellite exports to China.
5/10/99
As required by section 1512 of the FY1999 National Defense
Authorization Act (P.L. 105-261), President Clinton issued
certifications (for the Iridium satellite project) that the export of satellite
fuels and separation systems is not detrimental to the U.S. space launch
industry and that the material and equipment, including any indirect
technical benefit that could be derived from such export, will not
measurably improve PRC missile or space launch capabilities.
5/10/99
China launched two PRC satellites (Fengyun-1 weather satellite and
Shijian-5 unspecified scientific satellite) using a LM-4B rocket for the
first time.
5/13/99
The House approved H.Res. 170, on May 13, 1999, to extend the “Cox
Committee” until May 31, 1999.
5/25/99
The “Cox Committee” released the declassified version of its January 3,
1999 report on its investigation of PRC technology acquisitions.
6/11/99
A LM-2C rocket launched two Iridium satellites (owned by Motorola).
10/5/99
The President signed into law (P.L. 106-65) the FY2000 National
Defense Authorization Act in which Congress addressed export controls
relating to missile technology, satellites, and other issues.
10/14/99
A LM-4B rocket launched the China-Brazil Earth Resources Satellite
(CBERS-1), or Zi Yuan-1.
11/20/99
A Long March 2F rocket launched the Shenzhou spacecraft in the
PRC’s first successful unmanned flight test of a manned spacecraft.
12/15/99
Four experts at Stanford University’s Center for International Security
and Cooperation issued a critique of the “Cox Committee’s” report.
Alastair Iain Johnston, W. K. H. Panofsky, Marco Di Capua, and Lewis
R. Franklin, edited by M. M. May, “The Cox Committee Report: An
Assessment,” December 1999.
2000
1/25/00
A Long March 3A rocket launched a PRC Zhongxing-22 (Chinasat-22)
communications satellite. (The Washington Times reported that it is
also called Feng Huo-1, the first of China’s military communications
satellites for a new battle management system.)

CRS-57
3/16/00
U.S. Ambassador to the PRC Joseph Prueher hosted a dinner in Beijing
for representatives of Loral, Lockheed Martin, Hughes, CASC, and
ChinaSat.
4/4/00
The Department of State charged Lockheed Martin Corporation with
violating the Arms Export and Control Act by assessing a PRC kick
motor for the Asiasat-2 satellite.
6/14/00
The Department of State announced a settlement with Lockheed Martin,
involving $13 million in total penalties.
6/25/00
A Long March 3 rocket launched the PRC’s Fengyun 2 weather
satellite.
7/17/00
The Defense Security Service issued an award for security performance
to Loral but then rescinded it.
9/1/00
A Long March 4B rocket launched the PRC’s China Resources-2
(Zhongguo Ziyuan-2) remote sensing satellite to collect imagery.
Sept. 2000
According to Senator Shelby, the Justice Department decided not to
charge an unnamed CIA official with obstructing a Senate investigation.
(The Senate Intelligence Committee had found out about the CIA’s
contact with Hughes in September 1998 and then asked Attorney
General Janet Reno for a criminal investigation.)
10/30/00
President Clinton signed the NASA Authorization Act for FYs 2000,
2001, and 2002 (P.L. 106-391) that includes a requirement for
certification to Congress, at least 15 days before a U.S.-PRC
cooperative agreement, that it is not detrimental to the U.S. space
launch industry and will not improve the PRC’s ballistic missile or space
launch capabilities (Section 126(a)(2)).
10/31/00
A Long March 3A rocket launched the PRC’s Beidou navigational
satellite, the first for a planned system to provide all-weather, round-the-
clock navigational information for use on land and at sea.
11/21/00
The State Department announced a new U.S.-PRC agreement on missile
nonproliferation, in which the United States decided to waive sanctions
on PRC entities for past missile proliferation transfers to Pakistan and
Iran, resume processing of satellite export licences, and hold discussions
on extending the 1995 bilateral agreement on commercial launch
services, in return for a PRC pledge on missile nonproliferation that
includes setting up comprehensive export controls.
11/22/00
The PRC issued a White Paper on Space Activities, saying that it
attaches great importance to the significant role of space activities for
national interests in economic development, national security, scientific
and technological advancement, and social progress. It also plans to
develop satellites for observation from space, telecommunications,
navigation and positioning, remote-sensing, etc.
12/21/00
A Long March 3A rocket launched the second Beidou navigational
satellite from the Xichang Satellite Launch Center.

CRS-58
2001
01/10/01
A Long March 2F rocket launched the Shenzhou II unmanned vehicle
into space from Jiuquan Launch Center, in the PRC’s second test of an
unmanned spacecraft.
Aug. 2001
Loral and Hughes reportedly have negotiated possible civil settlements
with the State Department, rather than face criminal charges from the
Justice Department, in resolving government investigations since 1997.
09/01/01
The State Department imposed sanctions on a PRC company, the China
Metallurgical Equipment Corporation, for proliferation of missile
technology to Pakistan, which denied licenses for the export of satellites
to China.