Order Code IB92056
Issue Brief for Congress
Received through the CRS Web
China’s Proliferation of Weapons of Mass
Destruction and Missiles: Current Policy Issues
Updated May 21, 2002
Shirley A. Kan
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

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CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Recent PRC Proliferation Challenges
Nonproliferation Commitments but Continued Concerns
Nuclear Technology Sales to Pakistan
Ring Magnets
Furnace and Diagnostic Equipment
Missile Technology Sales to Pakistan
M-11s and Sanctions
Missile Plants, MRBMs, and Sanctions
Nuclear Technology Sales to Iran
Missile Technology Sales to Iran
Ballistic Missiles
C-802 Anti-Ship Cruise Missiles
Chemical Sales to Iran
Missile Technology Sales to North Korea
Missile Technology Sales to Libya
Missile Technology Sales to Syria
Policy Issues and Options
Foreign and Defense Policies
Summits
Fight against Terrorism
Missile Defense
Linkage to the Taiwan Issue
Trade Controls
Satellite Exports
Nonproliferation Sanctions
Nuclear Cooperation Agreement
U.S. Import Controls
U.S. Export Controls
Nonproliferation and Arms Control
Nonproliferation Regimes
CTBT and Fissile Materials Production
International Lending and Japan

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China’s Proliferation of Weapons of Mass Destruction and Missiles:
Current Policy Issues
SUMMARY
Congress has long been concerned about
the NPT and/or contradictions of the MTCR
challenges to U.S. security posed by the Peo-
or U.S. laws, which may require sanctions.
ple’s Republic of China (PRC) in the prolifer-
China is not in the MTCR, Nuclear Suppliers
ation of weapons of mass destruction (WMD)
Group, nor Australia Group.
and missiles that could deliver them. Recipi-
ents of China’s technology include Pakistan
Successive Administrations have pursued
and countries that the State Department says
a policy of “engagement” with Beijing, while
support terrorism, like Iran, North Korea, and
some have argued that the policy needs a
Libya. Policy issues have concerned summits,
tougher approach to advance non-proliferation
sanctions, and satellite exports.
interests. In 1998, President Clinton issued
certifications to implement the 1985 Nuclear
Since 1991, Beijing has taken steps to
Cooperation Agreement. The Clinton Admin-
mollify concerns about its role in proliferation.
istration encouraged the PRC to join the
Steps include the: 1991-1992 promise to abide
MTCR and proposed to allow more PRC
by the Missile Technology Control Regime
satellite launches. In November 2000, the
(MTCR); March 1992 accession to the Nu-
State Department agreed to waive sanctions
clear Nonproliferation Treaty (NPT); January
and consider new satellite exports in return for
1993 signing and subsequent ratification of
a missile non-proliferation pledge from China.
the Chemical Weapons Convention (CWC);
October 1994 statements on the MTCR and
Congress passed the Iran Non-prolifera-
fissile material production; November 1995
tion Act (P.L. 106-178). Under this law, on
white paper on arms control and disarmament;
June 14, 2001, January 16, and May 9, 2002,
May 1996 reiteration on making only safe-
the Bush Administration imposed sanctions
guarded nuclear transfers; July 1996
for PRC weapons proliferation in Iran. On
announcement of a moratorium on nuclear
September 1, 2001, the Administration im-
testing; signing of the Comprehensive Test
posed missile proliferation sanctions (denying
Ban Treaty in September 1996; October 1997
satellite exports), after China apparently
entry to the Zangger Committee; and Novem-
violated its November 2000 pledge and
ber 2000 missile nonproliferation pledge.
transfers continued to Pakistan. The 9/11
terrorist attacks added an urgent U.S. interest
Nonetheless, as the Director of Central
in weapons nonproliferation. The PRC Presi-
Intelligence reports, the PRC remains a “key
dent is expected to visit in October.
supplier” of technology inconsistent with
nonproliferation goals — particularly missile
See also CRS Report 96-767, Chinese
or chemical technology transfers. China has
Proliferation of Weapons of Mass Destruc-
aggravated trends that result in more ambigu-
tion: Background and Analysis; and CRS
ous technical assistance, more indigenous
Report 98-485, China: Possible Missile Tech-
capabilities, longer range missiles, and sec-
nology Transfers From U.S. Satellite Export
ondary (retransferred) proliferation. Some
Policy – Actions and Chronology.
transfers raise questions about violations of

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MOST RECENT DEVELOPMENTS
Although President Bush imposed sanctions in September 2001 for PRC missile
proliferation in Pakistan, sought anti-terrorism support, and raised proliferation issues in
Shanghai in October 2001 and in Beijing in February 2002, the PRC has failed to fulfill its
November 2000 missile nonproliferation pledge. National Security Advisor Condoleezza
Rice said that the PRC has not issued missile export controls and insisted on
“grandfathering” pre-agreement contracts. On May 9, 2002, the Administration again
imposed sanctions for PRC weapons proliferation in Iran.
BACKGROUND AND ANALYSIS
Congress has long been concerned about U.S. policy to address transfers by the People’s
Republic of China (PRC) adding to the proliferation of weapons of mass destruction (WMD)
and missiles. This problem refers to the threat of nuclear, chemical, or biological weapons
and missiles that could deliver them. Some have argued that certain PRC transfers violated
international commitments, including the NPT and MTCR, and/or have contravened U.S.
laws that require sanctions (including the Arms Export Control Act, Export Administration
Act, Iran-Iraq Arms Nonproliferation Act, and Iran Nonproliferation Act). Even if no laws
or treaties are violated, many view China’s transfers as undermining U.S. security interests.
This CRS Issue Brief discusses current policy issues concerning the PRC’s proliferation of
WMD and missiles. For background and analysis on the 1980s to 1996, see CRS Report
96-767, Chinese Proliferation of Weapons of Mass Destruction: Background and Analysis.
Recent PRC Proliferation Challenges
Nonproliferation Commitments but Continued Concerns
Since 1991, Beijing has taken steps to address U.S. and other concerns and increase its
partial participation in international nonproliferation regimes. China promised to abide by
the Missile Technology Control Regime (MTCR) in 1991-1992 and reaffirmed that
commitment in a October 4, 1994 statement. The MTCR is not an international agreement
and has no legal authority. It is a set of voluntary guidelines that seeks to control the transfer
of missiles that are inherently capable of delivering at least a 500 kg (1,100 lb) payload to
at least 300 km (186 mi). It is unclear whether China has adhered to the revised MTCR
guidelines of 1993 calling for the presumption to deny transfers of any missiles capable of
delivering any WMD. According to a Senate Foreign Relations Committee report of
September 11, 2000, the State Department has argued that China agreed to the MTCR
Guidelines, but not the Annex. However, State has also stated that China indicated it would
control exports “consistent with the MTCR Guidelines and Annex” and that the MTCR
consists of a common policy (Guidelines) applied to a common list (Annex). On November
21, 2000, Beijing said that it has no intention of assisting any other country in developing
ballistic missiles that can be used to deliver nuclear weapons (missiles with payloads of at
least 500 kg and ranges of at least 300 km). It did not issue missile-related export controls
but promised to do so “as soon as possible.”
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Also, China acceded to the Nuclear Nonproliferation Treaty (NPT) on March 9, 1992.
The NPT does not ban peaceful nuclear projects. China signed the Chemical Weapons
Convention (CWC) in January 1993. In November 1995, China issued its first public
defense white paper, which focused on arms control and disarmament. On May 11, 1996,
the PRC issued a statement promising to make only safeguarded nuclear transfers. China,
on July 30, 1996, began a moratorium on nuclear testing and signed the Comprehensive Test
Ban Treaty (CTBT) in September 1996, but (like the United States) has not ratified it. On
April 25, 1997, China deposited its instrument of ratification of the CWC, before it entered
into force on April 29, 1997. Premier Li Peng issued new nuclear export control regulations
on September 10, 1997. On October 16, 1997, China joined the Zangger Committee (on
nuclear trade). On June 6, 1998, the U.N. Security Council (including China) adopted
Resolution 1172, asking states to prevent exports to India or Pakistan’s nuclear weapon or
missile programs. The PRC issued regulations on dual-use nuclear exports on June 17, 1998.
Nevertheless, China is not a member of the MTCR, Nuclear Suppliers Group (NSG)
(requires full-scope safeguards), nor Australia Group (AG) (on chemical and biological
weapons). PRC weapons proliferation has persisted, aggravating trends that result in more
ambiguous technical assistance, longer range missiles, more indigenous capabilities, and
secondary (retransferred) proliferation. The Director of Central Intelligence (DCI) noted that,
for July-December 1996, “China was the most significant supplier of WMD-related goods
and technology to foreign countries.” The 1998 report of the Rumsfeld Commission
identified China’s weapons proliferation as a “threat.” The DCI’s semi-annual reports have
named the PRC (plus Russia and North Korea) as “key suppliers” of dangerous technology.
Nuclear Technology Sales to Pakistan
Ring Magnets. In early 1996, some in Congress called for sanctions after reports said
that China sold unsafeguarded ring magnets to Pakistan, apparently in violation of the NPT
and contradiction of U.S. laws, including the Arms Export Control Act and Export-Import
Bank Act (as amended by the Nuclear Proliferation Prevention Act of 1994). On February
5, 1996, the Washington Times first disclosed intelligence reports that the China National
Nuclear Corporation, a state-owned corporation, transferred to the A.Q. Khan Research
Laboratory in Kahuta, Pakistan, 5,000 ring magnets, which can be used in gas centrifuges to
enrich uranium. Reportedly, intelligence experts believed that the magnets provided to
Pakistan were to be used in special suspension bearings at the top of rotating cylinders in the
centrifuges. The New York Times (May 12, 1996) reported that the shipment was made after
June 1994 and was worth $70,000. The PRC company involved was China Nuclear Energy
Industry Corporation, a subsidiary of the China National Nuclear Corporation. The State
Department’s report on nonproliferation efforts in South Asia (January 21, 1997) confirmed
that “between late 1994 and mid-1995, a Chinese entity transferred a large number of ring
magnets to Pakistan for use in its uranium enrichment program.”
The Clinton Administration’s decision-making was complicated by considerations of
U.S. corporations with business in China. Officials reportedly considered imposing then
waiving sanctions or focusing sanctions only on the China National Nuclear Corporation,
rather than large-scale sanctions affecting the entire PRC government and U.S. companies,
such as Westinghouse Electric Corporation (which had deals pending with China National
Nuclear Corporation) and Boeing Aircraft Company. At the end of February 1996, Secretary
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of State Christopher instructed the Export-Import Bank to suspend financing for commercial
deals in China for one month. Christopher reportedly required time to try to obtain more
information to make a determination of whether sanctions would be required. Meanwhile,
DCI John Deutch reportedly said at a White House meeting that PRC officials at some level
likely approved the sale of magnets. Defense Secretary Perry supported this view, but
officials of the Commerce and Treasury Departments and the U.S. Trade Representative
argued there was lack of solid proof (Washington Post, April 1, 1996).
On May 10, 1996, the State Department announced that China and Pakistan would not
be sanctioned, citing a new agreement with China. Clinton Administration officials said
China promised to provide future assistance only to safeguarded nuclear facilities, reaffirmed
its commitment to nuclear nonproliferation, and agreed to consultations on export control
and proliferation issues. The Administration also said that PRC leaders insisted they were
not aware of the magnet transfer and that there was no evidence that the PRC government
had willfully aided or abetted Pakistan’s nuclear weapon program through the magnet
transfer. (Congress responded that year by adding language on “persons” in the Export-
Import Bank Act.) Thus, the State Department announced that sanctions were not warranted,
and Export-Import Bank considerations of loans for U.S. exporters to China were returned
to normal. On May 11, 1996, China’s foreign ministry issued a statement that “China will
not provide assistance to unsafeguarded nuclear facilities.” In any case, China since 1984
has declared a policy of nuclear nonproliferation and requirement for recipients of its
transfers to accept IAEA safeguards, and China acceded to the NPT in 1992.
Furnace and Diagnostic Equipment. The October 9, 1996, Washington Times
reported on a September 14, 1996, CIA report that China sold a “special industrial furnace”
and “high-tech diagnostic equipment” to unsafeguarded nuclear facilities in Pakistan. In
September 1996, PRC technicians in Pakistan reportedly prepared to install the dual-use
equipment. The deal was allegedly made by the China Nuclear Energy Industry Corporation,
the same firm which sold the ring magnets. Those who suspect that the transfer was intended
for Pakistan’s nuclear weapons program say that high temperature furnaces are used to mold
uranium or plutonium. The CIA report was said to state that “senior-level government
approval probably was needed” and that PRC officials planned to submit false
documentation on the final destination of the equipment. The report said that the equipment
was set to arrive in early September 1996. The Washington Post, on October 10, 1996,
reported that the equipment was intended for a nuclear reactor to be completed by 1998 at
Khushab in Pakistan. One U.S. aim was to prevent China from providing reprocessing
technology to this facility for separating plutonium from spent fuel (Nucleonics Week,
August 14, 1997). On October 9, 1996, the State Department responded that it did not
conclude that China violated its May 11, 1996 statement (see above). However, the State
Department did not publicly address whether the reported transfers occurred before May 11,
1996, violated the NPT, or contradicted U.S. laws (including the Arms Export Control Act,
Export-Import Bank Act, and the Nuclear Proliferation Prevention Act).
Concerns have persisted about PRC assistance to Pakistan’s nuclear weapon-related
facilities. Referring specifically to Pakistan’s efforts to acquire equipment, material, and
technology for its nuclear weapon program, the DCI’s June 1997 report for the last half of
1996 (after China’s May 1996 pledge) stated that China was the “principal supplier.” Then,
on May 11 and 13, 1998, India conducted nuclear tests, citing China’s nuclear ties to
Pakistan, and Pakistan followed with nuclear tests on May 28 and 30, 1998. China, as
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Pakistan’s military and nuclear supplier, failed to avert the tests and has not cut off nuclear
aid, but condemned the tests at the U.N. The Arms Control and Disarmament Agency’s
annual report on arms control for 1998 stated that “there continued to be some contacts
between Chinese entities and Pakistan’s unsafeguarded and nuclear weapons program.”
China built a nuclear power plant at Chashma and was previously identified as helping
Pakistan to build an unsafeguarded, plutonium-producing reactor at Khushab. The Chashma
reactor has safeguards but not full scope safeguards. China may have provided equipment
for Pakistan’s secret heavy water production plant at Khushab, which reportedly has
generated weapons-grade plutonium (Nucleonics Week, March 23, 2000; Nuclear Fuel, June
12, 2000). The DCI reported in January 2002 that the PRC in the past provided “extensive
support” to Pakistan’s nuclear weapons programs and that, in the 1st half of 2001, “continued
contacts” between PRC entities and Pakistani nuclear weapons entities cannot be ruled out,
despite the PRC’s 1996 promise to stop assistance to unsafeguarded nuclear facilities.
Missile Technology Sales to Pakistan
M-11s and Sanctions. Transfers of the PRC’s M-11 short range ballistic missiles
or related equipment exceed MTCR guidelines, because the M-11 has the inherent capability
to deliver a 500 kg (1,100 lb) warhead to 300 km (186 mi). U.S. sanctions were imposed on
transfers of PRC M-11 missile-related technology (Category II), not complete missiles
(Category I), to Pakistan. Sanctions were imposed under Section 73(a) of the Arms Export
Control Act and Section 11B(b)(1) of the Export Administration Act. In June 1991, the Bush
Administration first imposed sanctions on China for transferring M-11 technology to
Pakistan. Sanctions affected exports of supercomputers, satellites, and missile technology.
The Administration later waived the sanctions on March 23, 1992. On August 24, 1993, the
Clinton Administration determined that China had again transferred M-11 equipment (not
whole missiles) to Pakistan and imposed new sanctions (affecting exports of some satellites).
Later, Secretary of State Christopher and Foreign Minister Qian Qichen signed a joint
statement on October 4, 1994, that Washington would waive the August 1993 sanctions and
Beijing would not export “ground-to-ground missiles” “inherently capable” of delivering a
500 kg warhead 300 km. The sanctions were waived on November 1, 1994.
Questions about imposing new sanctions persisted for six years. The Washington Times
(March 14, 1997) said “numerous” intelligence reports indicated that M-11 missiles were
“operational” in Pakistan, but these findings were disputed by some policy-makers. In a
March 1998 report on Nuclear Nonproliferation in South Asia, the Secretary of State
acknowledged concerns about reports of M-11 missiles in Pakistan but added that there was
no determination that such transfers occurred. Gordon Oehler, former head of the CIA’s
Nonproliferation Center, testified on June 11, 1998, to the Senate Foreign Relations
Committee that in November 1992, “the Chinese delivered 34 M-11s to Pakistan.” In July
1998, the Rumsfeld Commission reported that China had transferred complete M-11s to
Pakistan. Some said that sanctions were not imposed for transfers of complete M-11s,
because the missiles remained inside crates at Sagodha Air Base (Wall Street Journal,
December 15, 1998). Others said the Administration avoided making any determinations.
On September 9, 1999, the CIA publicly confirmed for the first time that “Pakistan has M-11
SRBMs from China” and they may have a nuclear role. Nonetheless, the State Department
responded on September 14, 1999, that it required a “high standard of evidence” and had not
yet determined that Category I sanctions were warranted, despite the intelligence judgment.
(Category I sanctions would deny licenses for exports of Munitions List items, among other
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actions, and Congress in 1998 transferred satellites back to the Munitions List.) The Far
Eastern Economic Review reported on May 18, 2000, that the Clinton Administration and
Senator Helms of the Foreign Relations Committee had struck a deal in 1999 that required
a decision within six months on sanctions for the PRC’s M-11 transfer to Pakistan in
exchange for the confirmation of Robert Einhorn as Assistant Secretary of State for
Nonproliferation (approved on November 3, 1999). On November 21, 2000, the Clinton
Administration said it determined that PRC entities had transferred Category I and Category
II missile-related items to Pakistani entities, and sanctions would be waived on the PRC for
past transfers, given its new missile nonproliferation promise.
Missile Plants, MRBMs, and Sanctions. While China promised not to transfer
missiles, it has reportedly helped Pakistan to achieve an indigenous missile capability. U.S.
intelligence reportedly concluded in a National Intelligence Estimate that China provided
blueprints and equipment to Pakistan to build a plant for making missiles that would violate
the MTCR (Washington Post, August 25, 1996). Analysts disagreed, however, about
whether the plant will manufacture some major missile components or whole copies of the
M-11 missile. Construction of the plant allegedly began in 1995. On August 25, 1996, Vice
President Al Gore acknowledged concerns about the plant. Time alleged on June 30, 1997,
that the Clinton Administration would not discuss possible sanctions based on intelligence
on the missile plant. A November 1997 report by the Secretary of Defense also confirmed
the facility. By 1998, the missile plant in Fatehjung was reportedly almost finished, awaiting
delivery of crucial equipment from China (Wall Street Journal, December 15, 1998).
Pakistan first tested its nuclear-capable Ghauri medium-range ballistic missile (MRBM)
on April 6, 1998. The Administration, on April 17, 1998, imposed Category I sanctions on
North Korean entities, because the Ghauri was based on the North Korean No Dong missile.
Still, U.S. intelligence was said to suspect that China Poly Ventures Company delivered,
perhaps in 1999, U.S.-made specialized metal-working presses and a special furnace to
Pakistan’s National Development Center, a missile plant (Washington Times, April 15,
1999). China reportedly has been building a second missile plant and providing specialty
steel, guidance systems, and technical aid (Far Eastern Economic Review, June 22, 2000;
New York Times, July 2, 2000). Apparently confirming these stories, the DCI reported in
August 2000 that, besides North Korean help, PRC entities provided “increased assistance”
to Pakistan’s ballistic missile program in the 2nd half of 1999. Also, China reportedly has
assisted Pakistan with development of the Shaheen-2 two-stage, solid-fuel MRBM (Jane’s
Defense Weekly, Dec. 13, 2000), and DCI Tenet confirmed U.S. concerns about such
assistance in testimony on February 7, 2001 and in a February 2001 report on proliferation.
PRC entities transferred technology to Pakistan that were “inconsistent” with the
November 2000 missile nonproliferation agreement, stated Vann Van Diepen, Acting Deputy
Assistant Secretary of State for Nonproliferation, on January 17, 2002. In the first several
months of 2001, a PRC company reportedly had delivered 12 shipments of missile
components for Pakistan’s Shaheen-1 SRBM and Shaheen-2 MRBM programs (Washington
Times, August 6, 2001). On September 1, 2001, the State Department imposed sanctions on
China Metallurgical Equipment Corporation (CMEC) for proliferation of missile technology
(Category II items of the MTCR) to Pakistan. (Also see Nonproliferation Sanctions.) In
January 2002, the DCI reported that, in the 1st half of 2001, PRC entities provided
“significant assistance” to Pakistan’s ballistic missile programs, including serial production
of solid-fuel SRBMs (e.g., Shaheen-1 and Haider-1) and the Shaheen-2 MRBM.
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Nuclear Technology Sales to Iran
Suspecting that Iran uses nuclear technology to build a scientific and technical
infrastructure for its clandestine nuclear weapon program, Washington has urged China (and
Russia) not to sell any nuclear technology to Iran. In 1995, China suspended a sale of
nuclear reactors to Iran. Showing Israeli influence, Prime Minister Benjamin Netanyahu
publicly reported in August 1997 that PRC Vice Premier Li Lanqing said that China canceled
plans to build the reactors. However, there have been other controversial PRC nuclear deals
with Iran pointing to an Iranian nuclear weapon program. PRC technicians built a calutron,
or electromagnetic isotope separation system, for enriching uranium at the Karaj nuclear
research facility, according to “confidential reports” submitted to President Rafsanjani by his
senior aides. The PRC system was similar to the one used in Iraq’s secret uranium
enrichment program (Washington Times, September 25, 1995). The Secretary of Defense
confirmed in an April 1996 report that “the Iranians have purchased an electromagnetic
isotope separation unit from China.”
The China Nuclear Energy Industry Corporation reportedly had plans to sell Iran a
facility to convert uranium ore into uranium hexafluoride gas, which could be enriched to
weapons-grade material (Washington Post, April 17, 1995; June 20, 1996). According to
intelligence reports, the deal was proceeding with PRC nuclear experts going to Iran to build
the new uranium conversion plant near Esfahan (Washington Times, April 17, 1996).
However, some PRC civilian nuclear officials indicated to the IAEA and U.S. officials that
China would not transfer the uranium conversion facility, ostensibly because of Iran’s
inability to pay. Some analysts pointed to changes as stemming from Iran’s turn to Russian
reactors. Also, China may have responded to concerns of Israel (a key supplier to China’s
military). Robert Einhorn reportedly told Members of Congress that China canceled this deal
but had provided Iran with a blueprint to build the facility (Washington Post, September 18,
1997). On the eve of a U.S.-China summit in Washington in October 1997, PRC Foreign
Minister Qian Qichen provided a secret letter to Secretary of State Madeleine Albright,
promising not to begin new nuclear cooperation specifically with Iran, after building a small
nuclear research reactor and a factory to fabricate zirconium cladding to encase fuel rods in
nuclear reactors (Washington Post, October 30, 1997). U.S. officials said the projects would
not be significant for nuclear proliferation. In the February 2001 report (on the 1st half of
2000), the DCI dropped an earlier observation that this pledge appeared to be holding. The
DCI reported in January 2002 that “some interactions” between PRC and Iranian entities
raised questions about Beijing’s continued commitment to the pledge in the 1st half of 2001.
As uncovered during a closed hearing of the Senate Foreign Relations Committee on
March 12, 1998, the Washington Post reported that, in January 1998, the China Nuclear
Energy Industry Corporation negotiated with Iran’s Isfahan Nuclear Research Center to
provide “a lifelong supply” of hundreds of tons of anhydrous hydrogen fluoride (AHF), or
hydrofluoric acid, under falsified documents about end-users. (The AHF chemical could be
used to produce uranium hexafluoride used in uranium conversion facilities. AHF is also a
precursor for the chemical weapon agent Sarin.) After Washington protested, Beijing
reportedly stopped the sale. The Administration argued that Beijing responded positively and
the chemical is controlled by the Australia Group and not on a nuclear control list. An April
2, 1999 U.S. intelligence report was said to suggest that the China Non-metallic Minerals
Industrial Import/Export Corporation “revived” negotiations with the Iranian Atomic Energy
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Organization on the construction of a plant to produce graphite (used as a moderator in some
reactors), reported the Washington Times (April 15, 1999).
Missile Technology Sales to Iran
Ballistic Missiles. Depending on the specifications of the equipment and whether
the equipment have been delivered to Iran, China may have violated its commitment to
observe the MTCR and U.S. laws. The CIA reportedly found that China delivered dozens
or perhaps hundreds of missile guidance systems and computerized machine tools to Iran
sometime between mid-1994 and mid-1995 (International Herald Tribune, June 23, 1995).
The November 21, 1996 Washington Times cited a CIA report as saying that China agreed
in August 1996 to sell to Iran’s Defense Industries Organization gyroscopes, accelerometers,
and test equipment, which could be used to build and test components for missile guidance.
On the same day, the State Department would only say publicly that “we believe at this stage
that, in fact, the Chinese are operating within the assurances they have given us.”
The Washington Times, on September 10, 1997, cited Israeli and U.S. intelligence
sources as saying that China Great Wall Industry Corp. (which markets satellite launches)
was providing telemetry equipment used in flight-tests to Iran for its development of the
Shahab-3 and Shahab-4 MRBMs (with ranges, respectively, of about 800 mi. and 1,240 mi.).
Over 100 PRC and North Korean experts were reportedly working there (Washington Times,
November 23, 1997; Washington Post, December 31, 1997). Citing a May 27, 1998
intelligence report, the June 16, 1998 Washington Times reported that, in May 1998, China
discussed selling telemetry equipment (for testing missiles) to Iran. On July 22, 1998, Iran
first tested the mobile Shahab-3 missile, which the Pentagon confirmed to be based on a
North Korean Nodong missile. In Beijing in November 1998, Acting Undersecretary of State
John Holum protested continuing PRC missile technology aid to Iran, including a reported
shipment of telemetry equipment in November 1998 (Washington Post, November 13, 1998;
Washington Times, December 7, 1998). U.S. intelligence reportedly suspected continued
PRC sales of missile technology to Iran in 1999, including specialty steel, telemetry
equipment, and training on inertial guidance (Washington Times, April 15, 1999).
On November 21, 2000, the State Department announced that it determined that PRC
entities had transferred Category II items (missile components) to Iranian entities and U.S.
sanctions would be waived on the PRC given its new missile nonproliferation promise. Still,
the Washington Times (Jan. 26, 2001) said that NORINCO (a PRC defense industrial firm)
shipped materials (metals and chemicals) for missile production to Iran. President Bush
reported to Congress on December 4, 2001 (on the national emergency related to weapons
proliferation) that PRC entities “have continued to supply Iran with a wide variety of missile-
related goods, technology, and expertise.” The DCI reported in January 2002 that, in the 1st
half of 2001, PRC (and Russian and North Korean) entities continued to supply “crucial”
ballistic missile-related equipment, technology, and expertise to Iran. It is unclear whether
the May 9, 2002 sanctions under the Iran Nonproliferation Act covered such transfers.
C-802 Anti-Ship Cruise Missiles. China has sold land-, sea-, and air-launched anti-
ship missiles to Iran. In January 1996, Vice Admiral John Scott Redd, as Commander of the
U.S. Fifth Fleet, reported that China supplied to Iran C-802 anti-ship cruise missiles
(Washington Times, March 27, 1996). In 1997, General J.H. Binford Peay, Central
Command commander, said that China transferred 20 patrol boats with 15 equipped with
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C-802 missiles (Washington Times, January 29, 1997). The C-802 is a subsonic (0.9 Mach)
missile which has a range of 120 km. (75 mi.) and carries a 165 kg. (363 lb.) warhead. No
international agreement bans transfers of anti-ship missiles, and the C-802 is not covered by
the MTCR, which controls exports of ballistic and cruise missiles that can deliver 500 kg.
warheads to 300 km. Nevertheless, some argue that the transfer has violated the Iran-Iraq
Arms Nonproliferation Act (P.L. 102-484), which requires sanctions for transfers that
contribute to Iranian or Iraqi efforts to acquire “destabilizing numbers and types of advanced
conventional weapons” (including cruise missiles) or WMD. On April 10, 1997, Deputy
Assistant Secretary of State for Nonproliferation Robert Einhorn testified that “especially
troubling to us is that these cruise missiles pose new, direct threats to deployed U.S. forces.”
Still, Einhorn stated that “we have concluded that the C-802 transfers that have occurred so
far are not of a destabilizing number and type.” Arguments against sanctions were in part
based on the case that anti-ship cruise missiles were not a new type of weapon in Iran’s
arsenal; China previously transferred Silkworm anti-ship cruise missiles to Iran. Others in
Congress and the Pentagon argued that U.S. sanctions should be imposed on China for the
delivery of C-802 anti-ship cruise missiles to Iran which were “destabilizing” to the region.
According to Reuters, on June 17, 1997, Defense Secretary Cohen reported Iran had
test-fired PRC air-launched, anti-ship cruise missiles. They were C-801 missiles fired from
F-4 fighters. (China Precision Machinery Import-Export Corporation markets air-launched
anti-ship cruise missiles called C-801K and C-802K. The subsonic C-801K has a range of
50 km (31 mi).) Cohen added that the U.S. military is watching very closely and has “the
capability to defeat any weapon system that Iran might possess.” After seeking to clarify
apparently vague PRC assurances made at the U.S.-China summit in October 1997, Defense
Secretary Cohen said in Beijing on January 20, 1998, that the PRC President promised that
China does not plan to transfer to Iran additional anti-ship cruise missiles, including those
under contract, or technology to achieve over-the-horizon capability or indigenous
production (Reuters, January 20, 1998). During another visit to China, Secretary Cohen said
on July 10, 2000, that the PRC has “abided by that agreement” made in 1998 “as far as the
shipment of cruise missiles to the Iranians.” In his January 2001 report on proliferation,
Secretary Cohen did not mention China’s promises on Iranian cruise missiles.
U.S. intelligence reportedly believed that China already delivered perhaps 150 C-802
missiles to Iran, which has made additional C-802s, using suspected French TRI-60 engines
manufactured and sold by Microturbo SA to China beginning in 1987 and perhaps also to
Iran in 1998 (Washington Post, April 3, 1999). Responding to U.S. diplomatic protests, Paris
said that the French firm sold generators, not missile engines. The DCI reported in July 1999
that “China also was an important supplier of [advanced conventional munitions] to Iran
through the second half of 1998, but President Jiang Zemin pledged to cease supply of cruise
missiles” [in January 1998]. The report did not say whether that pledge was holding. The
Washington Times (August 19, 1999) cited intelligence reports as saying that China signed
an $11 million agreement to improve Iran’s FL-10 anti-ship cruise missiles. The DCI’s
August 2000 report, on the second half of 1999, said that China (and others) helped Iran to
develop its capability to produce conventional weapons, including PRC-designed anti-ship
cruise missiles. The Bush Administration did not publicly explain in detail the May 9, 2002
sanctions under the Iran Nonproliferation Act, but the Washington Times (May 20, 2002)
reported that three of the sanctioned PRC entities had transferred cruise missile components.
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Chemical Sales to Iran
Concerning sales for chemical weapons, the Washington Post of March 8, 1996,
reported that U.S. intelligence was monitoring transfers of precursor chemicals and
chemical-related equipment from China to Iranian organizations affiliated with the military
or the Revolutionary Guards. The equipment included glass-lined vessels for mixing the
caustic precursors and special air filtration equipment to prevent poison gas leaks. Iran was
also buying PRC technology for indigenous and independent production.
Confirming long-suspected PRC transfers, on May 21, 1997, the Clinton Administration
imposed sanctions on two PRC companies, five PRC citizens, and a Hong Kong company
for transfers to Iran contributing to chemical weapon proliferation. U.S. sanctions, banning
U.S. government procurement and imports, were imposed under the Arms Export Control
Act and Export Administration Act (as amended by the Chemical and Biological Weapons
Control and Warfare Elimination Act). Sanctions were not imposed under the Iran-Iraq
Arms Nonproliferation Act (affecting “persons” or “countries”), because the transfers
apparently occurred before February 10, 1996, the date when provisions on WMD
proliferation took effect; and because the State Department said that it had no evidence that
the PRC or Hong Kong governments were involved. The sanctions remain in effect.
An intelligence report was said to allege that China completed in June 1997 a plant in
Iran for making glass-lined equipment used in producing chemical weapons (Washington
Times, October 30, 1997). The Nanjing Chemical and Industrial Group built the factory, and
North Chemical Industries Corporation (NOCINCO) brokered the deal. (NOCINCO is
affiliated with NORINCO, a defense-industrial firm.) However, the PRC government
reportedly held up supplies of raw materials. The London Daily Telegraph (May 24, 1998)
reported that SinoChem Corp.’s branch in Tianjin, China, supplied to Iran 500 tons of
phosphorus pentasulphide (controlled by the Australia Group for making nerve agents).
On June 14, 2001, the George W. Bush Administration imposed sanctions under the
Iran Nonproliferation Act of 2000 (P.L. 106-178) on Jiangsu Yongli Chemicals and
Technology Import and Export Corporation (one of the two PRC companies sanctioned in
1997) for proliferation of chemical weapons-related materials or equipment to Iran.
According to the Washington Times (June 28, 2001), the PRC company helped Iran to build
a factory to manufacture dual-use equipment applicable to chemical weapons. Again, on
January 16, 2002, the Administration imposed similar sanctions (for transfers of chemical
and/or biological items controlled by the Australia Group) on Liyang Chemical Equipment
Company, China Machinery and Electric Equipment Import and Export Company, and a
PRC citizen (Chen Qingchang). Chen was also sanctioned in 1997. Sanctions remain for
two years, but there is no economic effect because of the absence of U.S. Government
contracts, assistance, arms sales, or dual-use exports with/to such “persons.”
The State Department did not impose sanctions under the Arms Export Control Act nor
the Iran-Iraq Arms Nonproliferation Act, apparently because unlike those laws, the Iran
Nonproliferation Act authorizes sanctions based on “credible information” that a person,
since 1999, transferred to Iran items controlled by multilateral export control lists (NSG,
MTCR, AG, CWC, or Wassenaar Arrangement). After those sanctions were imposed, the
DCI’s January 2002 public report said that, in the 1st half of 2001, Iran continued to seek
production technology, training, expertise, equipment, and chemicals from PRC (and
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Russian) entities to achieve its goal of having “an indigenous nerve agent production
capability.” The Administration again imposed sanctions on May 9, 2002, without details,
but the Washington Times (May 20, 2002) reported that transfers involved anti-corrosive
glass-lined equipment to make chemical weapons and that NORINCO was sanctioned but
not listed among the eight publicly named PRC entities.
Missile Technology Sales to North Korea
Since 1998, there have been public concerns about and U.S. government confirmation
of PRC assistance to North Korea’s missile program. The PRC may have interests in North
Korea’s missile advances. Indeed, the PRC’s Lieutenant General Xiong Guangkai, a Deputy
Chief of General Staff, visited North Korea in early August 1998, right before the surprising
test-firing of a three-stage, medium-range Taepo Dong 1 missile on August 31, 1998.
However, North Korea’s missile program has harmed PRC interests, since that threat has
spurred U.S. and Japanese support for missile defense opposed by China. Some say PRC
entities acted on their own. Such PRC aid has further implications, since North Korea also
supplies Iran, Syria, Pakistan, Egypt, and Libya.
The National Security Agency (NSA) reportedly suspected in late 1998 that the China
Academy of Launch Vehicle Technology (CALT) was working with North Korea on its
space program (closely related to missiles) to develop satellites, but that cooperation was not
confirmed to be linked to the Taepo Dong MRBM program (Washington Times, February
23, 1999). An NSA report dated March 8, 1999, reportedly suggested that China sold
specialty steel for use in North Korea’s missile program (Washington Times, April 15, 1999).
In June 1999, U.S. intelligence reportedly found that PRC entities transferred accelerometers,
gyroscopes, and precision grinding machinery to North Korea (Washington Times, July 20,
1999). An October 20, 1999 classified report is said to say that China’s Changda Corp.
sought to buy Russian gyroscopes that are more of the same that China supplied to the North
Korean missile program earlier that year (Washington Times, Nov. 19, 1999). In December
1999, the NSA reportedly discovered an alleged PRC deal to supply unspecified PRC-made
missile-related items to North Korea through a Hong Kong company (Washington Times,
January 1, 2000). The DCI first publicly confirmed PRC supplies in July 1999. The DCI’s
January 2002 report said North Korea acquired missile-related raw materials and
components, especially through North Korean firms in China, in the 1st half of 2001.
Missile Technology Sales to Libya
Beginning in 2000, public reports appeared on PRC assistance to Libya’s missile
program. The Defense Department reportedly discovered in December 1999 that the PRC
had plans to build a hypersonic wind tunnel in Libya for missile design (Washington Times,
January 21, 2000). A classified March 2, 2000 report by the NSA was said to describe the
PRC’s missile technology transfer to Libya that month, helping Libya to develop the Al
Fatah SRBM with a range of 600 miles. China Precision Machinery Import-Export Corp.
allegedly began cooperating with Libya in March 1999 (Washington Times, April 13, 2000).
The June 30, 2000 Washington Times, citing a classified NSA report, said that the PRC is
training Libyan missile experts at the Beijing University of Aeronautics and Astronautics.
Aside from wind tunnels, PRC assistance has also covered navigational and guidance
systems (Jane’s Defense Weekly, February 13, 2002). The DCI’s August 2000 report
publicly confirmed PRC missile assistance to Libya for the first time, and the January 2002
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report said PRC (and other foreign) assistance was “critical” to Libya’s ballistic missile
programs in the 1st half of 2001.
Missile Technology Sales to Syria
The DCI’s public reports have not specified PRC assistance for Syria’s missile program.
The Secretary of Defense’s January 2001 report (Proliferation: Threat and Response) said
that PRC firms, in addition to North Korean and Russian entities, contributed equipment and
technology to Syria’s liquid fuel missile program. However, while criticizing North Korean
and Russian assistance in Syria’s ballistic missile development, Under Secretary of State
John Bolton did not raise PRC help (Heritage Foundation speech, May 6, 2002).
Policy Issues and Options
Weapon proliferation by the PRC raises policy issues concerning: (1) assessments of
the nature and seriousness of the security threat; (2) the priority of this issue relative to other
U.S. interests (i.e., other security issues, Taiwan, trade, human rights); and (3) the
Administration’s response (including the use of sanctions) and possible new legislation.
Successive Administrations have pursued a policy of “engagement” with Beijing. Some
officials and experts tend to cite PRC nonproliferation statements as signs that the United
States has made progress in nonproliferation goals. Some also say that U.S. sanctions are
counterproductive and are too broad. Rather, China needs to recognize nonproliferation for
its own national interests and develop stronger export controls. Also, China would be more
cooperative if brought in to draw up “the rules.”
Others argue that PRC weapons proliferation activities have continued and PRC
assurances have proved to be unreliable. Also, they say that U.S. security interests are better
served with a tougher approach to deter China’s transfers, which may include appropriate
sanctions. Some argue that the United States should not be “subsidizing” China’s missile
and nuclear industries. These proponents tend to see the U.S. position as stronger than that
of China’s. They also point out that China’s suspension of its participation in the Middle
East Arms Control effort ended it. Some are skeptical that China views nonproliferation as
in its national interest, since Beijing may see its sales as a form of leverage against
Washington, especially on the issue of U.S. arms sales to Taiwan.
No matter what options are pursued, many argue that U.S. leadership and a
forward-looking and coherent strategy are needed for dealing with China’s rising influence
in world affairs. A strategic approach might underpin short-term responses to violations and
use both positive and negative sources of leverage. Policy issues have often centered on
summitry, sanctions, and satellite exports.
Foreign and Defense Policies
Summits. After the downturn in U.S.-PRC relations because of the 1989 Tiananmen
crackdown, the Clinton Administration resumed high-level exchanges and argued that
“comprehensive engagement” with China advances U.S. security goals, including
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nonproliferation. President Clinton granted Jiang Zemin summits in Washington, on October
29, 1997, and in Beijing, on June 29, 1998. Leading up to the 1997 summit, the
Administration urged China to adopt “comprehensive, nationwide regulations on nuclear
export control.” China responded by implementing a set of regulations (not a law) on nuclear
export controls signed by Premier Li Peng on September 10, 1997. The regulations permit
nuclear exports to only facilities under IAEA safeguards. China also joined the Zangger
Committee (on nuclear trade) on October 16, 1997. Then, China issued new export control
regulations on dual-use nuclear items on June 17, 1998. The 1998 summit in Beijing
produced an agreement on non-targeting nuclear weapons, and joint statements on South
Asia and on biological weapons. But China refused to join the MTCR, saying that it was
“actively studying” whether to join. President Bush raised the proliferation issue in
Shanghai in October 2001 and in Beijing in February 2002, but the PRC failed to fulfill its
November 2000 pledge and did not issue the promised missile export controls. PRC
President Jiang Zemin is scheduled to visit the United States in October.
Fight against Terrorism. The vicious terrorist attacks of September 11, 2001, added
a compelling U.S. interest in considering U.S. policy on PRC weapons proliferation. With
questions about the viability of Pakistan’s government after it gave strong support to the anti-
terrorism war, the United States could seek intelligence from the PRC about Pakistan’s
nuclear weapons and cooperation in not further adding to instability in South Asia. Also, the
Bush Administration could maintain or strengthen its response to the proliferation problem,
since PRC entities have reportedly transferred nuclear, missile, and/or chemical weapons
technology to sponsors of terrorism (listed by the State Department), like Iran, North Korea,
and Libya. If the Administration lifts sanctions for supportive countries, options also include
waiving proliferation-related sanctions. On October 25, 2001, Senator Kyl warned against
“rewarding” Beijing with any relaxation of U.S. restrictions as we seek China’s cooperation.
In his January 29, 2002 State of the Union speech, President Bush identified the two primary
threats as terrorism and weapons proliferation, and he targeted North Korea, Iran, and Iraq
as an “axis of evil.” However, despite U.S. sanctions, promised post-9/11 anti-terrorism
support, and Presidential visits, PRC transfers to Pakistan and Iran have reportedly continued
(New York Times, Feb. 21, 2002) and the November 2000 promise is unfulfilled.
Missile Defense. Some say that missile defense should play a critical role in the
strategy to counter the proliferation threat. Others say the September 11 attacks raised
questions about the likelihood of terrorists using missiles for weapons delivery. China has
opposed U.S. deployment of missile defense systems and related cooperation with Japan or
Taiwan and threatened to significantly increase its nuclear missile force. China is concerned
that missile defense would spur an arms race, negate its deterrence capabilities, forge closer
U.S.-Taiwan military cooperation, and violate the MTCR. During Defense Secretary
William Cohen’s visit to China in July 2000, the PRC reportedly warned that it would
continue missile proliferation activities if the United States provides missile defense to
Taiwan (Washington Post, July 12, 2000). Also, top PRC arms control official Sha Zukang
warned that the PRC would withhold cooperation on arms control and weapons
nonproliferation in response to U.S. deployment of NMD (Washington Post, July 14, 2000).
Others say that PRC proliferation activities and missile buildups would continue regardless.
Linkage to the Taiwan Issue. China has tried to link missile nonproliferation to
U.S. arms sales to Taiwan, and one policy issue concerns the U.S. response. During the 1998
summit in Beijing, the Clinton White House reportedly considered a PRC request for a U.S.
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pledge to deny missile defense sales to Taiwan, if China promised to stop missile sales to
Iran; but no agreement was reached (Far Eastern Economic Review, July 16, 1998). On
February 26, 2002, before the Director General in charge of arms control at the PRC Foreign
Ministry, Liu Jieyi, attended meetings in Washington on March 4-6, a PRC official said,
“you can’t just accuse us of violating our commitments and at the same time you are selling
large amounts of arms to Taiwan,” which are “also a kind of proliferation.”
Trade Controls
Satellite Exports. There are policy issues about using satellite exports to gain
China’s cooperation in missile nonproliferation. Since 1988, the policy of granting export
licenses and Presidential waivers of post-Tiananmen sanctions (Section 902 of P.L. 101-246)
have allowed satellites to be exported for launch by China Great Wall Industry Corp. (the
same company sanctioned for missile proliferation) and – increasingly – for China’s own use.
In the Clinton Administration, the National Security Council, in a Secret memo on bilateral
talks leading up to the 1998 summit (dated March 12, 1998, and printed in the Washington
Times), proposed to expand space cooperation, increase the number of satellite launches,
issue a blanket Presidential waiver of sanctions, and support China’s membership in the
MTCR — in return for PRC missile export controls. On November 21, 2000, the State
Department said it would waive sanctions as well as resume processing licenses (suspended
in February 2000) to export satellites to China and discuss an extension of the bilateral space
launch agreement (expired at the end of 2001), in return for another PRC promise on missile
nonproliferation. However, on September 1, 2001, the State Department imposed sanctions
on a PRC company, the China Metallurgical Equipment Corporation (CMEC), for
proliferation of missile technology to Pakistan, denying satellite exports to China. (Also see
Nonproliferation Sanctions.) (See CRS Report 98-485, China: Possible Missile
Technology Transfers From U.S. Satellite Export Policy – Actions and Chronology.)
Nonproliferation Sanctions. Policy debates concerning PRC technology transfers
have often centered on the question of whether to impose unilateral sanctions under various
U.S. laws or to enact new laws requiring sanctions. While certain PRC transfers may not
violate any international treaties, sanctions may be required under U.S. laws. Congress has
passed a number of laws to set U.S. nonproliferation policy and enforce nonproliferation
treaties and guidelines with unilateral sanctions in response to violations. Underlying the
question of whether sanctions should be used are disagreements about the most effective
approach for curbing dangerous PRC sales and promoting U.S. interests and leadership. The
elimination of the Soviet threat sharpened debate about the primacy of security interests over
economic interests. Some argue that sanctions are not effective in countering the PRC’s
proliferation practices. Others say they signal U.S. resolve on this important security issue.
In the 106th Congress, Members in 1999 passed the FY2000 National Defense
Authorization Act (P.L. 106-65), requiring a report on the PRC’s adherence to the MTCR
(the classified report was submitted on August 18, 2000). In 2000, Congress passed the Iran
Nonproliferation Act (P.L. 106-178). In May 2000, Senator Thompson, along with Senator
Torricelli, introduced S. 2645, the China Nonproliferation Act, to require annual reviews
(based on “credible information”), sanctions, and use of the U.S. securities market as a policy
tool. In September 2000, the Senate passed (65-32) a motion to table the legislation as an
amendment to the bill granting China permanent normal trade relations (PNTR) status.
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On November 21, 2000, the State Department said it would waive economic sanctions
as well as resume processing licenses to export satellites to China and discuss an extension
of the bilateral space launch agreement, in return for another PRC promise on missile
nonproliferation. However, continued PRC transfers soon raised the issue of imposing
sanctions, and Beijing has not yet issued missile export controls as promised. By July 2001,
the United States formally protested to China about its compliance with the agreement
(Washington Post, July 27, 2001). Visiting Beijing ahead of President Bush’s trip to
Shanghai in October 2001, Secretary of State Powell said on July 28, 2001, that expert talks
would be held on proliferation, noting “outstanding issues” about China’s implementation
of the November 2000 agreement. Unsatisfactory talks were held on August 23.
So, on September 1, 2001, the Bush Administration imposed sanctions on a PRC
company, the China Metallurgical Equipment Corporation (CMEC), for proliferation of
missile technology (Category II items) to Pakistan. (The sanctions also applied to Pakistan’s
National Development Complex.) The sanctions have the effect of denying licenses for two
years the export of satellites to China for its 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 (section 74(a)(8)(B) of the AECA) as any PRC government activity related to
missiles, electronics, space systems, or military aircraft, and the State Department considers
that satellites are covered by the MTCR Annex (since it includes satellite parts). The
President has the authority to waive the sanctions. Although Presidents Bush and Jiang met
in Shanghai and Beijing in October 2001 and February 2002, the PRC has failed to fulfill its
November 2000 pledge. Traveling with Bush, National Security Advisor Condoleezza Rice
said that the PRC should issue a missile export control law and stop “grandfathering” pre-
agreement contracts. John Wolf, Assistant Secretary of State for Nonproliferation, said on
April 16, 2002, that both sides have held talks at least five or six times since the summer of
2001, but “actions are what are necessary, not talk.”
Nuclear Cooperation Agreement. As agreed during the U.S.-China summit in
October 1997, President Clinton, on January 12, 1998, signed certifications (as required by
P.L. 99-183) about China’s nuclear nonproliferation policy and practices to implement the
1985 Nuclear Cooperation Agreement. According to President Clinton, the agreement serves
U.S. national security, environmental, and economic interests, and “the United States and
China share a strong interest in stopping the spread of weapons of mass destruction and other
sophisticated weaponry in unstable regions and rogue states — notably, Iran.” The President
also waived a sanction imposed after the Tiananmen crackdown (in P.L. 101-246). Later,
at the 1998 summit, the Department of Energy (DOE) and the PRC State Planning
Commission signed an agreement on peaceful nuclear cooperation, including bringing PRC
scientists to U.S. national laboratories, universities, and nuclear reactor facilities.
During debate on the agreement, some in Congress, the nonproliferation community,
and elsewhere were skeptical that PRC policies changed sufficiently to warrant the
certifications and that they are in U.S. interests. They also pointed out that China had not yet
joined the Nuclear Suppliers Group. (See Nonproliferation Regimes below.) Congressional
review ended on March 18, 1998, and the agreement has since been implemented. U.S. firms
may apply for Export-Import Bank financing and licenses from the Nuclear Regulatory
Commission (NRC) and DOE to export nuclear technology to China, and foreign firms may
apply to re-export U.S. technology. Members pursued several options to affect the
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agreement’s implementation. On November 5, 1997, the House passed a bill with an
amendment sponsored by Rep. Gilman, chairman of the Committee on International
Relations, to extend congressional review for implementation of the agreement from 30 to
120 days and provide for expedited review procedures. As amended by Rep. Gilman, the
National Defense Authorization Act for FY1999 (P.L. 105-261) requires the President to
notify Congress “upon” granting licenses for nuclear exports to a non-NATO country that
has detonated a nuclear explosive device (e.g., China). Nucleonics Week (March 23, 2000)
and the Washington Times (May 9, 2000) reported that the Administration had not obtained
from China an overall assurance that it will not re-export U.S. technology to another country,
such as Pakistan, thus affecting the issuance of export licenses. As required, the State
Department, on June 9, 2000, issued the first notification to Congress that NRC issued a
license on February 3 for the export of tantalite ore to China. The Administration issued this
and subsequent licenses based on case-by-case assurances from Beijing of no re-transfers.
U.S. Import Controls. While sanctions may affect U.S. exports, some policy steps
may affect imports of products produced by PRC military or defense-industrial companies
suspected of contributing to proliferation. Import controls have been included as possible
sanctions for missile proliferation under Section 73(a)(2)(C) of the Arms Export Control Act
and Section 11B(b)(1)(B)(iii) of the Export Administration Act, as well as affected by what
is popularly called the “Helms Amendment,” giving a broad definition of “person” as a target
of sanctions. Issues include whether to sanction imports and what the parameters should be.
U.S. Export Controls. Export controls can be an important policy tool, because U.S.
technology provides one source of leverage over Beijing. For example, the Reagan
Administration, in 1987, froze export control liberalization because China sold Silkworm
anti-ship missiles to Iran. After the Cold War, U.S. export restrictions have been reduced
to focus on items that contribute significantly to the development and production of WMD.
Some in Congress are concerned about U.S. technology reaching hostile states with WMD
programs through China. Congress may strengthen controls over missile-related technology.
U.S. military sales to China have not been allowed since sanctions were imposed after the
1989 Tiananmen Crackdown, but there is increasing demand to export dual-use technology.
Nonproliferation and Arms Control
Nonproliferation Regimes. Another policy approach is to strengthen the
international nonproliferation regimes. There are two prongs in such efforts: encourage PRC
support for strengthening the regimes to enforce compliance and filling gaps in China’s
participation. Some say that including China would capitalize on its desire to be treated as
a “great power” and to be perceived as a responsible world leader. In addition, China might
be more cooperative if it helped to draw up the “rules.” Others argue that China’s
participation would obstruct efforts for tighter export controls, derail arms control efforts,
link them to the Taiwan issue (e.g., the Mideast arms control talks), or weaken provisions
(e.g., the CTBT).
For nuclear nonproliferation, the U.N. Security Council has recognized the limits to the
effectiveness of the NPT/IAEA safeguards system (as shown by Iraq’s and North Korea’s
advanced, clandestine nuclear weapons programs) and has tried to strengthen the IAEA’s
verification authority. Some advocate strengthening the Biological Weapons Convention
(BWC) with a verification protocol for inspections to monitor compliance.
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The United States and others might encourage China to join the MTCR (as a member
after it establishes a record of compliance and effective export controls), Nuclear Suppliers
Group (NSG), Australia Group (on chemical and biological weapons), and Wassenaar
Arrangement (military and dual-use export controls). Indeed, Clinton’s National Security
Council in a secret memo, dated March 12, 1998 (printed in the March 23, 1998 Washington
Times), proposed in a “China missile deal” to expand space cooperation with Beijing,
increase the number of satellites that China can launch, issue a blanket Presidential waiver
of post-Tiananmen sanctions on satellite launches, and support China’s membership in the
MTCR — in return for effective PRC missile export controls.
Critics say that membership in the MTCR would exempt China from certain sanctions,
provide it with intelligence, give it a potentially obstructionist role in decision-making, and
relax missile-related export controls to China. In September 1999, Congress passed the
FY2000 National Defense Authorization Act (P.L. 106-65), stating its sense that the
President shall take steps to obtain an agreement with the PRC on adherence to the MTCR
and its annex and that the PRC should not be allowed to join the MTCR without meeting
certain conditions. It also required a report on the PRC’s adherence to the MTCR. The
classified report was submitted on August 18, 2000.
China joined the Zangger Committee (on nuclear trade) in October 1997, before a
summit in Washington. Also, China issued new export control regulations on dual-use
nuclear items on June 17, 1998, before another summit in Beijing. But China is the only
major nuclear supplier to shun the 39-nation NSG, which requires “full-scope safeguards”
(IAEA inspections of all other declared nuclear facilities in addition to the facility importing
supplies to prevent diversions to weapon programs).
CTBT and Fissile Materials Production. China, on July 30, 1996, began a
moratorium on nuclear testing and signed the CTBT on September 24, 1996. However, after
the U.S. Senate rejected (51-48) the treaty on October 13, 1999, it became doubtful that the
PRC would ratify the CTBT. Also, the United States has sought PRC cooperation on
negotiating a global ban on the production of fissile materials for nuclear weapons and other
nuclear explosive devices. On October 4, 1994, the United States and China agreed to “work
together to promote the earliest possible achievement of a multilateral, non-discriminatory,
and effective verifiable convention” banning fissile materials production.
International Lending and Japan
Congress may seek to link U.S. support for loans made by international financial
institutions to China’s nonproliferation record. The Iran-Iraq Arms Nonproliferation Act
requires U.S. opposition to multilateral loans for sanctioned countries (Section 1605(b)(2)).
The World Bank and the Asian Development Bank have resumed substantial lending to
China since the Tiananmen crackdown of 1989. Coordination with Japan is important, since
it provides the most significant bilateral aid to China and, in 1995, was the only country to
cut aid to pressure China to stop nuclear testing. The U.S.-Japan Joint Declaration on
Security Alliance for the 21st Century (of April 17, 1996) provides a basis for bilateral
coordination on weapon nonproliferation issues.
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