China and Proliferation of Weapons of Mass
Destruction and Missiles: Policy Issues

Shirley A. Kan
Specialist in Asian Security Affairs
January 3, 2014
Congressional Research Service
7-5700
www.crs.gov
RL31555


China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues

Summary
Congress has long been concerned about whether U.S. policy advances the national interest in
reducing the role of the People’s Republic of China (PRC) in the proliferation of weapons of mass
destruction (WMD) and missiles that could deliver them. Recipients of China’s technology
reportedly included Pakistan, North Korea, and Iran. This CRS Report, updated as warranted,
discusses the security problem of China’s role in weapons proliferation and issues related to the
U.S. policy response since the mid-1990s. China has taken some steps to mollify U.S. and other
foreign concerns about its role in weapons proliferation. Nonetheless, supplies from China have
aggravated trends that result in ambiguous technical aid, more indigenous capabilities, longer-
range missiles, and secondary (retransferred) proliferation. Unclassified intelligence reports told
Congress that China was a “key supplier” of technology, particularly with PRC entities providing
nuclear and missile-related technology to Pakistan and missile-related technology to Iran.
Policy approaches in seeking PRC cooperation have concerned summits, sanctions, and satellite
exports. PRC proliferation activities have continued to raise questions about China’s commitment
to nonproliferation and the need for U.S. sanctions. The United States has imposed sanctions on
various PRC “entities” (including state-owned entities) for troublesome transfers related to
missiles and chemical weapons to Pakistan, Iran, or perhaps another country, including repeated
sanctions on some “serial proliferators.” Since 2009, the Obama Administration has imposed
sanctions on 16 occasions on multiple entities in China for weapons proliferation.
Skeptics question whether China’s roles in weapons nonproliferation warrant a closer relationship
with China, even as sanctions were required on some PRC technology transfers. Some criticize
the imposition of U.S. sanctions targeting PRC “entities” but not the government. Others doubt
the effectiveness of any stress on sanctions over diplomacy or a comprehensive strategy.
Concerns grew that China expanded nuclear cooperation with Pakistan, supported North Korea,
and could undermine sanctions against Iran (including in the oil/gas energy sector). In 2002-2008,
the U.S. approach relied on China’s influence on North Korea to dismantle its nuclear weapons.
Beijing hosted the Six-Party Talks (last held in December 2008) with limited results. Since 2006,
China’s balanced approach has evolved to vote for some U.N. Security Council (UNSC)
sanctions against missile or nuclear proliferation in North Korea and Iran. Some called for
engaging more with Beijing to use its leverage against Pyongyang and Tehran. However, North
Korea’s nuclear tests in 2006, 2009, and 2013 prompted greater debate about how to change
China’s calculus and the value of its cooperation. After negotiations, the PRC voted in June 2009
for UNSC Resolution 1874 to expand sanctions imposed under Resolution 1718 in 2006 against
North Korea. The PRC voted in June 2010 for UNSC Resolution 1929 for the fourth set of
sanctions against Iran. In 2013, the PRC voted for UNSC Resolutions 2087 and 2094 on North
Korea for missile and nuclear tests. Still, China has continued its balanced approach that includes
incremental implementation of UNSC sanctions. China’s approach has not shown fundamental
changes toward Pakistan, Iran, and North Korea. China again is calling for resuming the Six-
Party Talks, but the Administration says the goal is North Korea’s credible denuclearization. On
November 29, 2013, the Secretary of State again announced that China (and other countries)
“significantly” reduced crude oil imports from Iran and that sanctions under the FY2012 National
Defense Authorization Act (NDAA) (P.L. 112-81) would not apply. Legislation includes H.Res.
65 (Royce), H.R. 673 (Ros-Lehtinen), and S. 298 (Menendez). In December, Congress passed the
NDAA for FY2014, H.R. 3304, with Section 1248 to require a report on a plan to reduce missile
proliferation in Iran, North Korea, and Syria, including with the PRC’s cooperation.
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China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues

Contents
Purpose and Scope ........................................................................................................................... 1
PRC Proliferation Challenges .......................................................................................................... 1
Partial Nonproliferation Commitments ..................................................................................... 1
Continuing Concerns and Intelligence Report ........................................................................... 2
Nuclear Technology Sales to Pakistan ....................................................................................... 3
Overview ............................................................................................................................. 3
Nuclear Cooperation ........................................................................................................... 3
A. Q. Khan’s Nuclear Network ........................................................................................... 5
Missile Technology Sales to Pakistan ........................................................................................ 6
Overview ............................................................................................................................. 6
Nuclear Technology Sales to Iran .............................................................................................. 7
Overview and Policy Approaches ....................................................................................... 7
Uranium Enrichment ........................................................................................................... 8
Dual Approach and Energy-related Oil and Gas Deals ....................................................... 9
UNSC Resolutions and Sanctions ..................................................................................... 14
Missile Technology Sales to Iran ............................................................................................. 18
Overview ........................................................................................................................... 18
Obama Administration ...................................................................................................... 19
North Korea’s Missile and Nuclear Weapons Programs.......................................................... 19
Suspected Missile Supplies ............................................................................................... 19
Secret Nuclear Programs ................................................................................................... 21
PRC Border, Ports, and Airspace ...................................................................................... 22
PRC-DPRK Military Relationship .................................................................................... 24
Trilateral and Six-Party Talks in Beijing ........................................................................... 26
Missile Technology Sales to Syria ........................................................................................... 50
Policy Issues and Options .............................................................................................................. 50
Issues for Policy ...................................................................................................................... 50
Debate ............................................................................................................................... 51
The PRC Government’s Role ............................................................................................ 51
Foreign and Defense Policies .................................................................................................. 52
Summits ............................................................................................................................. 52
Counter-Terrorism Campaign ............................................................................................ 53
Missile Defense ................................................................................................................. 53
Proliferation Security Initiative (PSI) and 9/11 Commission ............................................ 53
Export Control Assistance ................................................................................................. 54
Linkage to the Taiwan Question ........................................................................................ 54
Economic Controls .................................................................................................................. 55
Satellite Exports ................................................................................................................ 55
Sanctions and the “Helms Amendment” ........................................................................... 56
Capital Markets ................................................................................................................. 58
Nuclear Cooperation and U.S. Export of Reactors ........................................................... 59
U.S. Import Controls ......................................................................................................... 60
U.S. Export Controls ......................................................................................................... 60
Nonproliferation and Arms Control ......................................................................................... 60
Nonproliferation Regimes (MTCR, NSG, etc.) ................................................................. 60
CTBT, Fissile Materials, and Nuclear Security ................................................................. 62
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China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues

Intermediate-range Nuclear Forces (INF) Treaty .............................................................. 62

Tables
Table 1. PRC Entities Sanctioned for Weapons Proliferation ........................................................ 63

Contacts
Author Contact Information........................................................................................................... 72

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China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues

Purpose and Scope
Congress has long been concerned about whether U.S. policy advances U.S. security interests in
reducing the role of the People’s Republic of China (PRC) in the proliferation of weapons of mass
destruction (WMD) and missiles as well as obtaining China’s cooperation in weapons
nonproliferation. 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 treaties or guidelines, and/or have contravened various U.S. laws requiring sanctions
to shore up those international standards. Even if no laws or treaties are violated, many view
China’s transfers as threatening U.S. security interests. Using unclassified consultations and
citations, this CRS Report discusses the national security problem of the PRC’s role in weapons
proliferation and issues related to the U.S. policy response, including legislation. Table 1, at the
end of this report, summarizes the U.S. sanctions imposed or waived on PRC entities or the PRC
government for weapons proliferation. For a discussion of the policy problem in the 1980s to
1996, see CRS Report 96-767, Chinese Proliferation of Weapons of Mass Destruction:
Background and Analysis
, and CRS Report 98-485, China: Possible Missile Technology Transfers
Under U.S. Satellite Export Policy—Actions and Chronology
, by Shirley A. Kan.
PRC Proliferation Challenges
Partial Nonproliferation Commitments
Since 1991, Beijing has taken steps to address U.S. and other countries’ concerns by increasing its
partial participation in international nonproliferation regimes and issuing export control
regulations. However, questions have remained. China first promised tentatively to abide by the
Missile Technology Control Regime (MTCR) in November 1991 and February 1992 and later
reaffirmed that commitment in an October 4, 1994, joint statement with the United States. The
MTCR, set up in 1987, is not an international agreement and has no legal authority, leaving issues
about U.S. sanctions to shore up the standards unresolved. It is a set of voluntary guidelines that
seeks to control the transfer of ballistic and cruise missiles that are inherently capable of
delivering at least a 500 kg (1,100 lb) payload to at least 300 km (186 mi), called Category I or
MTCR-class missiles. It was unclear whether China adhered to the revised MTCR guidelines of
1993 calling for the presumption to deny transfers of any missiles capable of delivering any
WMD (not just nuclear weapons). A 1996 State Department fact sheet said that China unilaterally
committed to controlling exports “consistent with the MTCR Guidelines and Annex,” with the
MTCR consisting of a common export control policy (Guidelines) applied to a common list of
controlled items (Annex). However, a Senate Foreign Relations Committee report of September
11, 2000, said the State Department had argued to Congress that China agreed to the MTCR
Guidelines, but not the 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) and promised to issue missile-related export
controls “as soon as possible.” After a contentious period that saw new U.S. sanctions, the PRC
finally published those regulations and the control list (modeled on the MTCR) on August 25,
2002, as Washington and Beijing prepared for a Bush-Jiang summit on October 25, 2002. In
2004, China applied to join the MTCR but has not been accepted as a member.
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China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues

China acceded to the Nuclear Nonproliferation Treaty (NPT) on March 9, 1992. The NPT does
not ban peaceful nuclear projects. 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. Premier Li Peng issued nuclear export control regulations on
September 10, 1997. On October 16, 1997, China joined the Zangger Committee (on nuclear
trade). Also in October 1997, China promised not to start new nuclear cooperation with Iran. 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. In May 2004, China applied to join the
Nuclear Suppliers Group (NSG), which accepted China as a member after the Bush
Administration decided to support China, despite congressional concerns.
In 1995, China issued its first public defense white paper, which focused on arms control and
disarmament. Also, China signed the Chemical Weapons Convention (CWC) in January 1993. On
April 25, 1997, China deposited its instrument of ratification of the CWC, before it entered into
force on April 29, 1997. From 1993 to 1998, the PRC issued export control regulations on
chemicals. On October 14, 2002, on the eve of a Bush-Jiang summit, the PRC issued regulations
for export controls over dual-use biological agents and related technology. On December 3, 2003,
China issued a white paper on nonproliferation, which stated that its control lists are almost the
same as those of the Zangger Committee, NSG, CWC, Australia Group, and MTCR.
Continuing Concerns and Intelligence Report
Nevertheless, China is not a member of the MTCR or the Australia Group (AG) (on chemical and
biological weapons). (In June 2004, China expressed willingness to join the MTCR.) China did
not join the 93 countries in signing the International Code of Conduct Against Ballistic Missile
Proliferation in The Hague on November 25, 2002. China has not joined the Proliferation
Security Initiative (PSI) announced by President Bush on May 31, 2003. PRC weapons
proliferation has persisted, aggravating trends that result in more ambiguous technical assistance
(vs. transfers of hardware), longer range missiles, more indigenous capabilities, and secondary
(i.e., 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.” As
required by Section 721 of the FY1997 Intelligence Authorization Act (P.L. 104-293), the
intelligence community’s report to Congress, “Unclassified Report to Congress on the Acquisition
of Technology Relating to Weapons of Mass Destruction and Advanced Conventional
Munitions,” named “entities” in China (plus North Korea and Russia) as key suppliers of
dangerous technology that could contribute to WMD and missile programs. China’s “entities,”
including state-owned defense industrial corporations, were reported to be “associated” with
Pakistan’s nuclear and missile programs and Iran’s missile programs. Subsequent discussions of
this required report refer to this Section 721 Report. Original legislation required a semi-annual
report. The FY2004 Intelligence Authorization Act (P.L. 108-177) changed the requirement for an
annual report. The Director of National Intelligence (DNI) submitted to Congress the latest
unclassified Section 721 Report to cover the year of 2011. The Intelligence Authorization Act for
FY2013 (P.L. 112-277) repealed this reporting requirement (Sec. 310).
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China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues

Nuclear Technology Sales to Pakistan
Overview
In 1996, U.S. policymakers faced the issue of whether to impose sanctions on the PRC for
technology transfers to Pakistan’s nuclear program, and Beijing issued another nuclear
nonproliferation pledge. Since then, the United States has maintained concerns—but at a lower
level—about continued PRC nuclear cooperation with Pakistan, particularly involving the
construction of nuclear power plants. The PRC government likely has known about the nuclear
cooperation with Pakistan. Nonetheless, in 2004, the Bush Administration supported China’s
application to join the Nuclear Suppliers Group (NSG), despite congressional concerns about
China’s failure to apply the NSG’s “full-scope safeguards” to its nuclear projects in Pakistan.
(Full-scope safeguards apply IAEA inspections to all other declared nuclear facilities in addition
to the facility importing supplies in order to prevent diversions to weapon programs.) The Obama
Administration has not raised strong concerns about the PRC’s expansion of nuclear projects.
Nuclear Cooperation
Concerns have persisted about PRC assistance to Pakistan’s nuclear facilities. As reported by
Pakistani and PRC news sources in 1992, China began to build a nuclear power plant at Chashma
and was suspected in 1994 of helping Pakistan to build an unsafeguarded, plutonium-producing
reactor at Khushab, according to Nucleonics Week (June 19, 1997, and February 26, 1998).
Operational since 2001, the Chashma reactor has IAEA safeguards but not full scope safeguards
(Nucleonics Week, April 26, 2001; and IAEA, Annual Report 2001).
Referring specifically to Pakistan’s efforts to acquire equipment, materials, and technology for its
nuclear weapons program, the DCI’s June 1997 Section 721 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 Pakistan’s principal military and
nuclear supplier, failed to avert the tests and did not cut off nuclear aid, but condemned the tests
at the U.N. The U.S. 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.”
In 2000, news reports said that some former U.S. nonproliferation and intelligence officials
suspected that China provided equipment for Pakistan’s secret heavy water production plant at
Khushab, where an unsafeguarded reactor reportedly started up in April 1998 and generated
weapons-grade plutonium. Clinton Administration officials at the White House and State
Department reportedly denied China’s involvement but said that they did not know the origins of
the plant.1 The DCI reported in November 2003 that, in the first half of 2003, continued contacts
between PRC entities and “entities associated with Pakistan’s nuclear weapons program” cannot
be ruled out, despite the PRC’s 1996 promise not to assist unsafeguarded nuclear facilities. The
Director of the Defense Intelligence Agency (DIA), Vice Admiral Lowell Jacoby, testified to the
Senate Intelligence Committee on February 24, 2004, that PRC entities “remain involved with

1 Mark Hibbs, “CIA Knew About Khushab D2O Plant but Not Source, Officials Claim,” Nucleonics Week, March 23,
2000; “Pakistani Separation Plant Now Producing 8-10 Kg Plutonium/Yr,” Nuclear Fuel, June 12, 2000.
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China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues

nuclear and missile programs in Pakistan and Iran,” while “in some cases,” the entities were
involved without the government’s knowledge, thus implying that there were cases in which the
PRC government had knowledge of the relationships.
On May 5, 2004, China signed a contract to build a second nuclear power reactor (Chashma-2) in
Pakistan. This contract raised questions because of continuing PRC nuclear cooperation with
Pakistan and its signing right before a decision by the Nuclear Suppliers Group (NSG) on China’s
membership, applied with U.S. support. With a pre-existing contract, Chashma-2 was exempted
from the NSG’s requirement for full-scope safeguards (not just IAEA safeguards on the reactor).2
(See “Nonproliferation Regimes (MTCR, NSG, etc.)” below for policy discussion.)
After China’s grandfathering of the Chashma-2 reactor under a pre-existing contract, the United
States and other countries monitored China’s subsequent agreement in October 2008 to build two
more nuclear reactors in Pakistan for compliance with the NSG’s rules, unless there would be an
exemption (like that for India in 2008). In February 2010, China tentatively agreed to finance
construction of two more reactors (Chashma-3 and Chashma-4), and the next month, Pakistan’s
government approved the deal in which the PRC promised a loan for the projects. In June, PRC
companies reportedly promised to build the reactors.3 The PRC acknowledged the deal and
contended that the reactors would be subject to IAEA safeguards. However, when President
Obama met with PRC leader Hu Jintao and hosted the Nuclear Security Summit in Washington
on April 12 and 13, 2010, briefings did not mention discussion of this dispute involving China
and Pakistan. Later, Assistant Secretary of State for South and Central Asian Affairs Robert Blake
said in Beijing on May 4 that China’s deal would require it to seek an exception to the NSG’s
guidelines. Acting Assistant Secretary of State for International Security and Nonproliferation
Vann Van Diepen testified that the Administration decided to vote against an exemption for
China, at a hearing on July 22 of the House Foreign Affairs Subcommittee on Terrorism,
Nonproliferation, and Trade. On September 21, the PRC Foreign Ministry claimed that the 3rd and
4th reactors were “based on” the PRC-Pakistan agreement signed in 2003 and that China
requested IAEA safeguards.
Relatedly, on December 21, 2010, PPG Paints Trading Company in Shanghai pled guilty in a U.S.
court to illegally exporting high-performance coatings from the United States through the PRC to
the Chashma-2 reactor in Pakistan from June 2006 to March 2007. Later, on June 16, 2011,
authorities in Atlanta arrested Wang Xun, a PRC national and U.S. resident. On November 16, the
Commerce Department ordered sanctions against Wang. On December 3, 2012, the China
Nuclear Industry Huaxing Construction Company of Nanjing pled guilty in a U.S. criminal case
for illegal exports of high-performance epoxy coatings from the United States to the Chashma-2
reactor. The Section 721 Report for 2011 continued to report that PRC entities as associated with
Pakistan’s nuclear programs.
In another visit to Beijing on March 17-18, 2011, Assistant Secretary of State Blake reiterated the
U.S. expectation for China to abide by the NSG’s guidelines as committed by China when it
became a member in 2004. He stated that construction of new nuclear reactors (e.g., Chashma-3
and Chashma-4) would be “inconsistent” with China’s obligations to the NSG. Nonetheless, he
balanced that criticism by also expressing support for Pakistan in meeting its energy needs.

2 “Pakistan, China Agree on Second Chashma Unit,” Nucleonics Week, May 6, 2004.
3 Daily Times, Lahore, October 19; Nucleonics Week, October 23; Jane’s Defense Weekly, October 29, 2008; Daily
Times
, Lahore, March 30, 2010; Financial Times, April 29, 2010; Reuters, June 24, 2010.
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However, the Carnegie Endowment argued in 2011 that two more reactors from China in six or
more years would cover only 20% of Pakistan’s electricity shortfall and that the design lacked
modern safety standards.4 When the Obama Administration held another Strategic and Economic
Dialogue (S&ED) with the PRC on May 9-10, U.S. officials did not raise publicly this dispute.
Pakistan inaugurated Chashma-2’s operations on May 12, 2011. In 2013, China reportedly signed
the formal agreement in February to build Chashma-3. China also expanded nuclear cooperation,
reportedly promising to build two nuclear power reactors in Karachi with a loan for $6.5 billion.
However, Prime Minister Nawaz Sharif still stressed Pakistan’s energy shortages, in a visit to
Shanghai in July, while Pakistan’s nuclear power generated only 6% of electricity (in 2011).5
A. Q. Khan’s Nuclear Network
China’s past and persisting connections to Pakistan’s nuclear program raised questions about
whether China was involved in or had knowledge about the long-time efforts, publicly confirmed
in early 2004, of Abdul Qadeer Khan, the former head of Pakistan’s nuclear weapon program, in
selling uranium enrichment technology to Iran, North Korea, and Libya. DCI George Tenet
confirmed A.Q. Khan’s network of nuclear trade in open testimony to the Senate Intelligence
Committee on February 24, 2004.
China’s ties to the network was a concern, particularly because China was an early recipient of
the uranium enrichment technology using centrifuges that Khan had acquired in Europe. In
return, in 1982, China gave Pakistan 15 tons of uranium hexafluoride gas for production of bomb-
grade uranium, 50 kilograms of weapons-grade enriched uranium enough for two bombs, and a
blue-print for a nuclear weapon that China already tested, according to Khan.6
Also, there were questions about whether China shared intelligence with the United States about
Khan’s nuclear technology transfers. With the troubling disclosures, China could have been more
willing to cooperate on nonproliferation or could have been reluctant to confirm its involvement.
A senior Pakistani diplomat was quoted as saying that, while in Beijing in 2002, PRC officials
said they knew “A.Q. Khan was in China and bribing people, and they wanted him out.”7
Particularly troubling was the reported intelligence finding in early 2004 that Khan sold Libya a
nuclear bomb design that he received from China in the early 1980s (in return for giving China
his centrifuge technology), a design that China had already tested in 1966 and had developed as a
compact nuclear bomb for delivery on a missile.8 That finding raised the additional question of
whether Khan also sold that bomb design to others, including Iran and North Korea. According to
two former U.S. nuclear bomb designers, the PRC proliferated nuclear bomb technology to

4 Toby Dalton, Mark Hibbs, and George Perkovich, “A Criteria-Based Approach to Nuclear Cooperation with
Pakistan,” Carnegie Endowment for International Peace, June 22, 2011.
5 Free Beacon, March 22; Kyodo, June 13; South China Morning Post, June 25; Nation, July 7; Wall Street Journal,
October 15; Xinhua, November 26; PRC Foreign Ministry, December 23; Reuters, December 24, 2013.
6 David Sanger and William Broad, “From Rogue Nuclear Programs, Web of Trails Leads to Pakistan,” New York
Times
, January 4, 2004; Simon Henderson, “Investigation: Nuclear Scandal, Dr Abdul Qadeer Khan,” Sunday Times,
London, September 20, 2009; R. Jeffrey Smith and Joby Warrick, “A Nuclear Power’s Act of Proliferation,”
Washington Post, November 13, 2009.
7 Barton Gellman and Dafna Linzer, “Unprecedented Peril Forces Tough Calls,” Washington Post, October 26, 2004.
8 Joby Warrick and Peter Slevin, “Libyan Arms Designs Traced Back to China,” Washington Post, February 15, 2004;
William Broad and David Sanger, “As Nuclear Secrets Emerge in Khan Inquiry, More Are Suspected,” New York
Times
, December 26, 2004.
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Pakistan, including a test conducted in 1990 for Pakistan of its first nuclear bomb.9 DCI Porter
Goss testified in February 2005 that the Bush Administration continued to explore opportunities
to learn about Khan’s nuclear trade, adding that “getting to the end of that trail is extremely
important for us. It is a serious proliferation question.”10 In his memoir of 2007, George Tenet
wrote that Khan’s broad international network included China, North Korea, and—vaguely—“the
Muslim world.”11 Finally, on January 12, 2009, the State Department imposed sanctions on 13
people and three companies for involvement in A.Q. Khan’s network that proliferated nuclear
technology to Iran, Libya, and North Korea. But the State Department did not name China among
a number of countries that cooperated to investigate and shut down that proliferation network.
Missile Technology Sales to Pakistan
Overview
From the early 1990s to 2000, the George H. W. Bush and Clinton Administrations faced the
issue of whether to impose sanctions on PRC “entities” Moreover, China's own for transferring
M-11 short-range ballistic missiles or related technology to Pakistan. The Clinton Administration
took eight years to determine in 2000 that PRC entities had transferred complete M-11 missiles as
well as technology to Pakistan, but waived sanctions in return for another missile nonproliferation
pledge from Beijing. However, despite that promise of November 2000, the United States has
continued concerns about PRC technology transfers that have helped Pakistan to build domestic
missile programs, including development of medium-range ballistic missiles. In September 2001,
the George W. Bush Administration imposed sanctions for PRC proliferation of missile
technology to Pakistan, denying satellite exports to China. While China promised not to transfer
missiles, it has reportedly helped Pakistan to achieve an indigenous missile capability.
Despite the PRC’s November 2000 missile nonproliferation pledge, in the first several months of
2001, a PRC company reportedly delivered 12 shipments of missile components to Pakistan’s
Shaheen-1 SRBM and Shaheen-2 MRBM programs, according to the 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. In November 2004, the DCI told Congress in a Section 721 report that, in the
second half of 2003, PRC entities helped Pakistan to advance toward serial production of solid-
fuel SRBMs (previously identified as the Shaheen-1, Abdali, and Ghaznavi) and supported
Pakistan’s development of solid-fuel MRBMs (previously noted as the Shaheen-2 MRBM). The
DNI’s Section 721 Report for 2011 reported that PRC entities continued to supply missile-related
items to Pakistan. Though that report stressed that they were “primarily” private entities, entities
could include state-owned organizations. The report also stressed entities, not the regime.

9 Thomas Reed, “The Chinese Nuclear Tests, 1964-1996,” Physics Today, September 2008; Alex Kingsbury, “Why
China Helped Countries Like Pakistan, North Korea Build Bombs,” U.S. News & World Report, January 5, 2009. Also
see R. Jeffrey Smith, “Pakistani Says N. Korea Paid Bribes for Nuclear Expertise,” Washington Post, July 7, 2011.
10 Senate Select Committee on Intelligence, hearing on “Global Intelligence Challenges 2005: Meeting Long-term
Challenges with a Long-term Strategy,” February 16, 2005.
11 George Tenet, At the Center of the Storm: My Years at the CIA (Harper Collins Publishers, 2007).
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Nuclear Technology Sales to Iran
Overview and Policy Approaches
In the mid-1990s, the Clinton Administration urged China to cancel ostensibly civilian nuclear
projects in Iran. In negotiations leading up to the 1997 U.S.-PRC summit, China pledged to end
nuclear cooperation with Iran. At the summit, President Clinton promised to implement the 1985
U.S.-PRC nuclear cooperation agreement (to sell nuclear power reactors to China). However, the
United States was concerned about whether China abided by its October 1997 promise. With
revelations in 2002 about Iran’s uranium enrichment program, the Bush Administration in 2004
sought PRC support for sanctions imposed by the U.N. Security Council (UNSC), where the
PRC has power to vote in favor, abstain, or veto. The PRC’s position has evolved to support some
sanctions but not use of force. The PRC voted for UNSC Resolutions 1737 (2006), 1747 (2007),
1803 (2008), and 1929 (2010)
to impose sanctions on Iran. However, the PRC also has invested
in and traded with Iran’s oil and gas energy sector.
As complementary or alternative approaches, some have viewed China’s cooperation in
pressuring Iran as necessarily for a working U.S.-PRC relationship, especially through the use of
summits. Others have focused attention on sanctions to target Iran’s energy-related investments,
industries, and imports. An alternative would be to prevent transfers of Western technology to
Iran for developing its oil and gas industries. Diplomatic impasses have raised the burden on
China’s preferred dialogue to produce results in support of nonproliferation and stability in the
Middle East. China likely fears greater instability or conflict in the Mideast, the source of about
50% of China’s oil imports. China has tried to maintain a balanced position in support of Iran and
U.S./European Union concerns, but also has evolved to support negotiations, the IAEA’s authority
in Iran, as well as some UNSC sanctions on Iran. Meanwhile, China pressed the United States to
talk directly with Iran. After the United States shifted to hold direct dialogue with Iran without
resulting in resolution of the dispute, the burden became greater on China to place a higher
priority on nonproliferation than business as usual (including energy deals), by pressuring Iran or
showing results of dialogue. Another approach has looked at options to alleviate China’s
dependence on Iranian oil through imports from other countries. Reportedly, in 2009, the Obama
Administration discussed with Saudi Arabia and United Arab Emirates (UAE) about raising their
supplies of oil to meet China’s need, but China refused an explicit deal. Yet another option would
increase China’s access to investments in U.S. or other Western energy projects.12 Still, others
have viewed multilateral approaches as more critical in dealing with Beijing. More significant
Russian nuclear cooperation with Iran has offered China maneuvering room in diplomacy.
However, any closer Russian alignment with the United States and European countries would
increase China’s isolation at the UNSC. In addition to the three tracks supported by China
(involving dialogue with Iran, the IAEA, and some UNSC sanctions), the United States,
European and Asian allies, and Israel have options of sanctions separate from those imposed by
the UNSC and the use of force (that would not require China’s vote). Also, Congress and the
Administration could urge allies and partners to suspend trade in Iran’s oil and gasoline.
In the February 2001 Section 721 Report (on the first half of 2000), the DCI dropped an earlier
observation that the 1997 pledge appeared to be holding. In testimony before the Senate
Governmental Affairs Subcommittee on International Security, Proliferation, and Federal Services

12 Guardian, August 25; Wall Street Journal, October 20; Haaretz, December 17, 2009; Reuters, October 28, 2010.
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China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues

on June 6, 2002, Assistant Secretary of State John Wolf stated concerns about possible PRC-
Iranian interactions “despite China’s 1997 pledge to end its nuclear cooperation with Iran.”
Uranium Enrichment
In 2002, an Iranian opposition group revealed that Iranian front companies procured materials
from China (and other countries) for secret nuclear weapons facilities, while experts from China
worked at a uranium mine at Saghand and a centrifuge facility (for uranium enrichment) near
Isfahan, reported the Washington Post (December 19, 2002, and February 20, 2003). Moreover,
Nucleonics Week (February 27 and March 6, 2003) reported that Iran, since 2000, was building a
secret uranium enrichment plant at Natanz with technology for gas centrifuge enrichment from
Pakistan (Khan Research Laboratories), a country that has received nuclear cooperation from
China. Also, the IAEA found out in 2003 that, in 1991, China supplied Iran with 1.8 metric tons
of natural uranium, reported Nucleonics Week (June 12, 2003). The head of the Iranian Atomic
Organization reported an Iranian-PRC contract to extract uranium ore in Yazd.13 The DCI’s
Section 721 Report (issued in November 2004) confirmed that the Iranian opposition group,
“beginning in August of 2002, revealed several previously undisclosed Iranian nuclear facilities.”
Testifying to Congress on February 11, 2003, DCI George Tenet pointed to China’s “firms”
(rather than the government) and warned that they “may be backing away from Beijing’s 1997
bilateral commitment to forego any new nuclear cooperation with Iran.” The DCI’s Section 721
Report of November 2003 reported that “some interactions of concern” between PRC and Iranian
entities continued in the first half of 2003. The Director of the Defense Intelligence Agency, Vice
Admiral Lowell Jacoby, testified to the Senate Intelligence Committee on February 24, 2004, that
PRC entities “remain involved with nuclear and missile programs in Pakistan and Iran, while, “in
some cases,” the entities are involved without the PRC government’s knowledge. Then, in April
2004, the Administration imposed sanctions under the Iran Nonproliferation Act. Assistant
Secretary of State John Wolf testified to the House International Relations Committee on May 18,
2004, that “most” of the sanctions related to non-nuclear transfers, but there were concerns in the
nuclear area as well.
In May 2006, diplomatic sources revealed that Iran had used uranium hexafluoride gas (UF6)
from China to accelerate Iran’s uranium enrichment program. An Iranian news agency
acknowledged that hexafluoride from China was used in initial uranium enrichment, after which
domestic supplies were applied.14
China’s companies reportedly have helped Iran to procure nuclear-related hardware. In 2007, a
PRC company in Dalian supplied Iran with sensitive materials for its nuclear program, including
graphite, tungsten copper, tungsten powder, and high-strength aluminum alloys and maraging
steel. In March 2009, the Shanghai-based Roc-Master Manufacture and Supply Company ordered
108 pressure gauges that could be used in centrifuges to enrich uranium for transfer to Iran from
an agent in Taiwan (Heli-Ocean Technology Company) for Inficon Holding, the manufacturer in
Switzerland. In 2010, under an IAEA investigation, China’s Zhejiang Ouhai Trade Corporation, a
subsidiary of Jinzhou Group, supplied to Iran sensitive valves and vacuum gauges useful for
uranium enrichment and made by KD Valves-Descote in France. The reported recipient in Iran

13 Mehr News Agency, Tehran, December 10, 2004.
14 “Iran Using Chinese-made Feedstock for Enriched Uranium: Diplomats,” AFP, May 18, 2006; Iranian Students
News Agency
, May 19, 2006.
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was Javedan Mehr Toos, a firm procuring nuclear-related items for Kalaye Electric Company that
is part of the Atomic Energy Organization of Iran. The French firm denied selling its sensitive
products to China, and the PRC company denied the story.15 On June 16, 2010, the Department of
the Treasury imposed sanctions on Javedan Mehr Toos among Iran’s entities, individuals, and
ships subject to U.S. sanctions under Executive Order 13382 for WMD proliferation.
Dual Approach and Energy-related Oil and Gas Deals
Since 2004, the United States has sought China’s cooperation (with its veto power) at the IAEA
and U.N. to achieve the U.S. and European objective of containing Iran’s suspected nuclear
weapon program by having the IAEA refer Iran’s case to the UNSC for sanctions in response to
Iran’s suspected violation of the NPT. The talks are called P5+1 referring to the five permanent
members of the UNSC plus Germany, or E3+3, referring to the three European Union countries
of Britain, France, and Germany plus the United States, Russia, and China. While it might share
U.S. concerns about nuclear nonproliferation, China has expressed reservations about sanctions
and the credibility of some U.S. intelligence. Moreover, China’s own “entities” have supplied
sensitive technology to Iran. Beijing has interests in raising its leverage vis-à-vis Washington,
including to check U.S. dominance and support for Taiwan.
Meanwhile, China has a competing priority of economic ties with Iran to fuel economic growth
partly with global investments, and China generally opposes sanctions that target energy deals.
There are concerns that China’s economic interests and influence in Iran, including multi-billion-
dollar oil and gas deals, could undermine U.S., European, and Asian pressure on and isolation of
Iran, and that China could capitalize on other countries’ sanctions by filling in situations where
U.S., European, and Asian companies pull back from investments in or supplies to Iran. The PRC
has not announced formal unilateral sanctions on Iran’s energy sector or support for those of other
countries. Any PRC exploitation of sanctions for gains could unravel international solidarity.
Oil. PRC companies, such as Sinopec and Zhuhai Zhenrong Corporation, reportedly have
imported crude oil from Iran. In early 2012, as other countries reduced trade with Iran, China’s
companies like SINOPEC reportedly used their increased leverage and cut oil imports from Iran.
However, the cut was due to commercial negotiations over prices and payment terms. China also
increased oil imports from other countries, showing it could diversify away from Iranian oil if
willing to do so. When PRC Premier Wen Jiabao visited Saudi Arabia in January 2012, its
officials reportedly raised concerns about Iran and offered to expand oil supplies to China. By the
end of 2011, China imported about 555,000 barrels per day (bpd) of Iranian crude oil. The PRC’s
import of crude oil from Iran dropped by 21% from 2011 to 2012, back to a level slightly above
that in 2010. Iran was the fourth-largest foreign supplier of crude oil to China (after Saudi Arabia,
Angola, and Russia). Iranian oil accounted for 8% of China’s oil imports. In January-October
2013, China’s import of Iranian crude oil dropped 3% from last year’s same period. However,
while China has cut its import of crude oil from Iran, China has increased significantly its import
of fuel oil from Iran, using a loophole in sanctions and giving Iran some important revenue.16

15 Peter Enav and Debby Wu, “How Nuclear Equipment Reached Iran,” AP, February 28, 2010; Verna Yu, “Mainland
Firm Denies Breaking Sanctions on Iran,” South China Morning Post, March 2, 2010; Peter Fritsch and David
Crawford, “Western Authorities Investigate China Connection in Export of French Valves,” Wall Street Journal, April
3, 2010; James Areddy, “China Firm Denies Iran Nuclear Role,” WSJ, April 15, 2010; John Pomfret, “U.S. Says
Chinese Businesses and Banks Are Bypassing U.N. Sanctions Against Iran,” Washington Post, October 18, 2010.
16 Wall Street Journal, August 21 and October 24, 2013.
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China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues

Investments. PRC state-owned companies like Sinopec and China National Petroleum
Corporation (CNPC) have invested significantly in Iran’s oil and gas sector. China’s companies
reportedly promised investments totaling about $55 billion in Iran’s energy industries by the end
of 2009. However, committed funds would be difficult to confirm. Moreover, progress has
depended on acquiring gas liquefaction technology that China has lacked. CNPC’s Huanqiu
Contracting and Engineering Corporation planned to build a natural gas liquefaction plant by
2016. In November 2010, China’s ENN Energy Trading Company signed a deal with a U.S.
company, Cheniere Energy Partners, to export U.S. liquefied natural gas (LNG) to China. Starting
in 2007 or 2009, hackers based in China reportedly conducted a cyberespionage campaign, that
McAfee called Night Dragon, to target major Western energy companies.17
The PRC’s investments include the following significant projects. In October 2004, China and
Iran signed a memorandum of understanding to develop Iran’s Yadavaran oil field in a project
initially worth $70 billion. Amid ongoing negotiations between China’s Sinopec and Iran, this
potential venture was valued at up to $100 billion in early 2006. In December 2007, Sinopec
signed the contract to invest about $2 billion to develop the Yadavaran oil field, and the State
Department responded that it was deeply disappointed and disturbed at this deal. In addition to
Sinopec, the China National Offshore Oil Corporation (CNOOC) and an Iranian company signed
a memorandum of understanding in December 2006 involving an investment from China worth
$16 billion to produce LNG at the North Pars gas field. With a delay in further commitment,
CNOOC reportedly signed the contract in May 2009. In January 2007, CNPC announced an
investment of $3.6 billion to develop Phase 14 at Iran’s South Pars gas field. (In 2007, Royal
Dutch Shell (headquartered in the Netherlands) and Repsol (based in Spain) considered a deal to
develop Phases 13 and 14 at South Pars. In June 2010, the two European companies withdrew
from the project and committed to the United States not to hold further talks with Iran. At that
time, the Iranian Revolutionary Guard Corps reportedly got involved in those two phases among
others at South Pars.) In the presence of the PRC ambassador, CNPC also signed a contract worth
$1.8 billion in January 2009 to develop Iran’s North Azadegan oil field, and the PRC Foreign
Ministry called the deal “normal energy cooperation.” In March 2009, China’s HuaFu
Engineering Company signed a contract apparently to invest $3.2 billion to produce LNG at
Phase 12 of the South Pars gas field. Then in June, CNPC signed a contract worth $4.7 billion to
develop Phase 11 of South Pars, reportedly replacing Total of France. In August 2009, a state-
owned insurance company, likely Sinosure, reportedly indicated an investment of $11.3 billion in
Iran’s oil refineries. China’s Sinopec reportedly agreed in a memorandum of understanding in
November 2009 to invest $6.5 billion in Iran’s refineries to reduce its dependence on imported
gasoline. Japan had concerns about China taking over an investment in the South Azadegan
oilfield, with reports that China National Petroleum Corporation International (CNPCI) gained
70% share in September 2009 after Japan’s Inpex company reduced its stake from 75% in 2004 to
10% in 2006. Since 2009, CNPC reportedly has considered an investment of most or all of $2.5
billion. Inpex decided in September 2010 to withdraw from South Azadegan.18

17 Reuters, August 18, 2010, January 14, 2011; Wall Street Journal, February 10 and February 14, 2011.
18 Numerous sources include Wall Street Journal and Washington Post, February 17, 2006; China Daily, January 6,
2007; AFP, January 11 and 15, 2007; Fars News Agency, January 16, 2007; Reuters, January 29, 2007; Vision of the
Islamic Republic of Iran Network
, December 9, 2007; Reuters, December 10, 2007; Dongfang Zaobao, December 11,
2007; Xinhua, January 14, 2009; AP, March 14, 2009; Upstream, March 20, 2009; Global Insight, May 29, 2009;
Reuters, June 3 and 4, 2009; Tehran Times, August 30, 2009; Iran Daily, August 31, 2009; Al-Manar TV Online, June
15, 2010; Taiwan News, June 15, 2010; Jiji Press, September 30, 2010.
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China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues

Gasoline. Regarding China’s gasoline supplies, Zhuhai Zhenrong (and possibly others) reportedly
started in 2008 to sell gasoline through intermediaries to Iran, supplying one-third of its imports
by September 2009. Further, in early 2010, a PRC state-owned company, Chinaoil, sent two
shipments of gasoline in the company’s first direct exports to Iran since January 2009, and
Sinopec also planned to sell gasoline to Iran. In August 2010, China’s Zhuhai Zhenrong in
partnership with Russia’s LUKOIL exported gasoline to Iran. (Lukoil re-committed the next
month to cease gasoline exports to Iran.) By then, PRC supplies of gasoline to Iran reached about
one-half of its imports. Zhuhai Zhenrong is a state-owned trading enterprise, set up in 1994 not
only by the PRC’s State Council (like a Cabinet) but also the Central Military Commission (high
command of the People’s Liberation Army). The firm has worked with Iran’s Ministries of
Defense and Oil. Another PRC state-owned enterprise, ZhenHua Oil, reportedly started to supply
gasoline to Iran in 2009, providing up to one-third of Iran’s imports by early 2010. ZhenHua Oil
was set up in 2003 as a subsidiary of China North Industries Corporation (NORINCO), a defense
industrial conglomerate which has faced U.S. sanctions (see Table 1 at the end of this report). In
early 2012, China’s state-owned companies reportedly continued to ship gasoline to Iran.19
Since 2010, concerns increased about enforcement of U.S. sanctions against PRC companies,
after enactment of the Comprehensive Iran Sanctions, Accountability, and Divestment Act
(CISADA) of 2010 as P.L. 111-195 on July 1, 2010, following UNSC Resolution 1929 of June.
China did not replace India in the original proposal for an Iran-Pakistan-India gas pipeline, when
the agreement was reached in June 2010 for the Iran-Pakistan pipeline. By March 2012, the
Industrial and Commercial Bank of China (ICBC) reportedly backed out of arranging finances.20
Still, China’s companies could become contractors in the project, which started in March 2013.
However, in addition to the United States, Canada, Australia, the European Union, Japan, and
South Korea imposed sanctions on Iran, and they have concerns about China’s exploitation of
their sanctions that restrain investments in Iran. At a press conference on August 4, 2010, the
State Department’s Special Advisor for Nonproliferation and Arms Control Robert Einhorn
acknowledged U.S. concerns that China’s companies would benefit from sanctions by taking over
deals abandoned by other foreign companies in support of U.S. and other sanctions against Iran’s
energy sector, unilateral sanctions opposed by China for “expanding” UNSC sanctions. Einhorn
said that the Obama Administration urged China to act as a “responsible stakeholder.” Two days
later in Beijing, PRC Vice Premier Li Keqiang met with Iran’s Oil Minister, but Li discussed
“existing” projects, with no reported PRC commitment to new deals. In September 2010, Einhorn
then went to Beijing with a “significant list” of PRC companies and banks that were suspected of
violating U.N. sanctions, with or without the PRC government’s approval of deals that occurred
before and after June 2010. Einhorn also urged the PRC’s oil companies, such as CNPC, to stop
or limit investments in Iran, at least temporarily. At the end of September, the State Department
issued a “fact sheet” to commend a number of foreign energy firms for stopping activities in Iran
but was not able to name any PRC energy companies. (A shipping company in Hong Kong, NYK
Line, stopped trading with Iran.) Also, the State Department confirmed on October 18 that it
provided information to China about “specific concerns” about some PRC “companies,” and that
the PRC promised to investigate the cases. However, the PRC Foreign Ministry said the next day

19 Financial Times, September 22, 2009; Reuters, September 23, 2009; Mehr News, September 29, 2009; Reuters,
November 25, 2009; Financial Times, March 7, 2010; Reuters, April 14, 2010; Reuters, August 11, 2010; Reuters,
February 27, 2012.
20 Express Tribune, March 14, 2012. The next day, the PRC Foreign Ministry did not confirm or deny this news.
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China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues

that it was following “the letter” of UNSC resolutions, with no mention of sanctions on Iran’s
energy sector or of any PRC investigations into PRC entities.
Still, by that month, the PRC government reportedly issued informal orders to its companies to
slow down their work in Iran’s energy projects. Apparently, CNPC suspended work at the South
Azadegan oil field, the project that raised Japan’s concern (as discussed above). Iran seemed to
have concerns about the pace of implementation of PRC investments, when Iran’s Minister of
Economic Affairs and Finance announced in Beijing in April 2011 an Iran-China “oil and gas
committee.” The PRC government, in late 2010, reportedly told CNOOC to suspend the project at
North Pars, and CNOOC withdrew its team. Sinopec delayed the start of the project at Yadavaran.
On June 17, the National Iranian Oil Company threatened CNPC with domestic replacements if it
continued to delay the development of Phase 11 of South Pars (after CNPC replaced Total), and
CNPC reportedly spent just $18 million in the project by August 2011. Repeatedly in 2012, Iran’s
oil minister warned CNPC that it risked the contract’s cancellation if it did not start work.21
As for the PRC’s direct actions on U.S. information about PRC companies, Under Secretary of
State William Burns testified to House Foreign Affairs Committee on December 1, 2010, that the
Obama Administration took seriously all information about PRC companies and provided that
information to the PRC. He acknowledged that “in some cases,” the PRC acted on the
information, but “the record is a mixed one,” and the Administration continued to raise concerns.
On the eve of top PRC ruler Hu Jintao’s state visit in Washington, Secretary of State Hillary
Clinton told ABC on January 18, 2011, that some PRC entities were still not “as in compliance”
with sanctions on Iran as the United States expected, with the PRC responding that it enforced
only sanctions under UNSC resolutions. She said that the United States conveyed its expectation
that Beijing implement all other sanctions on Iran. Moreover, Secretary Clinton testified to the
House Foreign Affairs Committee on March 1 that China did not perceive a threat from Iran. She
described the U.S. challenge in a “constant, committed, and determined” daily effort to keep
China’s adherence even to sanctions to which it already agreed. She named five foreign firms that
withdrew from energy investments in Iran (Shell, Statoil, ENI, Total, and Inpex), but she could
not name any that belonged to the PRC.
Some Members in Congress raised the issue of whether the Administration would apply CISADA
sanctions to PRC firms. On the eve of a PRC leader Hu Jintao’s state visit, Senators Joseph
Lieberman and Mark Kirk wrote a letter to President Obama on January 14, 2011, urging him to
warn Hu that the United States will be forced to sanction PRC companies if they do not suspend
business ties with Iran. On March 10, 10 Senators led by Senators Jon Kyl and Robert Menendez
wrote to Secretary of State Clinton, stating that it appeared that PRC firms conducted significant
activity in violation of U.S. law. They added that, “we cannot afford to create the impression that
China will be given a free rein to conduct economic activity in Iran when more responsible
nations have chosen to follow the course that we have asked of them.”22
Among companies in the PRC, a Hong Kong shipping company, NYK Line, first announced a
stop to trade with Iran, according to the State Department’s statement of May 24, 2011.

21 News sources included Shana News Agency, June 13, 2010; Xinhua, August 6, 2010; Caixin Wang, August 19, 2010;
Washington Post, October 18, 2010; Reuters, October 28, 2010; Tehran Times, April 23, 2011; Reuters, June 17, 2011;
Platts Commodity News, August 14, 2011; Reuters, September 2, 2011; Mehr News Agency, April 19, 2012; Tehran
Times
, June 25, 2012; Press TV, February 5, 2013.
22 Senators Jon Kyl, Robert Menendez, Kirsten Gillibrand, Jerry Moran, Robert Casey, Jr., Roy Blunt, Lindsey
Graham, Bill Nelson, Benjamin Cardin, and Marco Rubio, letter to Secretary Hillary Clinton, March 10, 2011.
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Concerning sanctions under the UNSC and CISADA, Under Secretary of the Treasury for
Terrorism and Financial Intelligence David Cohen traveled to Hong Kong and Beijing on
September 26-28, to seek cooperation to prevent Iran from using the global financial system for
its nuclear and missile programs and to stress the risk of doing business with the Islamic Republic
of Iran Shipping Lines (IRISL). Cohen warned four PRC banks (Bank of China, China
Construction Bank, Industrial and Commercial Bank of China, and the Agricultural Bank of
China) that accepting payments from an Iranian insurer (Moallem) would cut them off from the
U.S. banking system, according to AFP. However, the PRC Foreign Ministry’s spokesman
asserted that the PRC implements UNSC resolutions and has “normal business” with Iran,
without referring to CISADA, banking, energy, or shipping. Waigaoqiao Shipbuilding reportedly
has built oil tankers for the National Iranian Tanker Company. In July 2013, China Shipping
Container Lines (CSCL) and COSCO Container Lines reportedly stopped business with Iran.
President Obama issued Executive Order 13590 on November 21, 2011, that, inter alia, imposed
sanctions on Iran’s petrochemical industry and expanded sanctions against the provision of goods,
services, and technology to Iran’s oil and gas business. Enacted on December 31, 2011, the
National Defense Authorization Act (NDAA) for FY2012, P.L. 112-81, contained Section 1245 to
impose sanctions on Iran’s financial sector. Secretary of the Treasury Timothy Geithner then
visited Beijing on January 10-11, 2012, but apparently did not reach agreement.
Sanctions. The next day, the State Department imposed the first sanctions under CISADA against
China (on Zhuhai Zhenrong for supplying gasoline), though likely with limited effects. The PRC
has maintained its opposition to “unilateral” sanctions against Iran and that it has “normal”
economic ties with Iran separate from the nuclear program that do not violate UNSC resolutions.
However, other countries have joined the United States in cutting business with Iran’s energy
sector, and in June 2010, China voted for UNSC Resolution 1929 (see below) which noted the
link between Iran’s revenues derived from its energy sector and funding of nuclear activities. On
June 28, 2012, the Secretary of State stated that China “significantly reduced” oil imports from
Iran and that the sanctions under P.L. 112-81 would not apply to PRC financial institutions for a
potentially renewable period of 180 days. As discussed above, China cut such oil imports for its
commercial interests and energy security. At the end of July, the Treasury Department imposed
sanctions under CISADA (cutting off from the U.S. financial system) on CNPC’s Bank of Kunlun
in the PRC for continuing to handle significant international transactions for Iran’s banks. The
State Department denied the action was taken against China and insisted that Washington and
Beijing were “on the same page,” but the PRC Foreign Ministry strongly called for revocation of
what it called erroneous, unwarranted sanctions that harmed the PRC’s interests. (The Bank of
Kunlun reportedly held $22 billion in payments for Iran’s oil by November 2013, when Iran
agreed on a deal with the E3+3 on its nuclear program.23) On December 7, 2012, June 5, 2013,
and November 29, 2013, the Secretary of State again asserted that China (and other countries)
reduced crude oil imports from Iran and that sanctions under P.L. 112-81 would not apply.
Congress passed the Iran Threat Reduction and Syria Human Rights Act of 2012 (P.L. 112-158).
The law authorized further sanctions against additional forms of foreign energy dealings with
Iran, including shipments of crude oil. Congress passed more sanctions in Section 1241 of the
NDAA for FY2013 (P.L. 112-239), covering precious metals, currencies, ports, energy, shipping,
and shipbuilding. (See also CRS Report RS20871, Iran Sanctions, by Kenneth Katzman.)

23 Tasnim, November 2; Reuters, November 25, 2013.
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UNSC Resolutions and Sanctions
Under U.S. and other foreign pressure, China has evolved to vote for some sanctions at the
UNSC. On November 5, 2004, China’s Foreign Minister Li Zhaoxing talked with Secretary of
State Colin Powell, arguing that the dispute over Iran’s nuclear program should remain under the
IAEA’s handling. On the next day, Li arrived in Tehran and opposed referral of Iran’s case to the
UNSC.24 Then, at a meeting on the sideline of a U.N. summit in New York on September 13,
2005, President Bush tried to persuade PRC ruler Hu Jintao not to block the IAEA from referring
Iran’s case to the UNSC. Before the meeting, the Administration briefed China on U.S. classified
intelligence about Iran’s development of the Shahab-3 missile that could deliver a nuclear
warhead. China (and others) abstained when the IAEA passed a resolution on September 24,
2005, declaring that Iran was not complying with the NPT, and the PRC envoy in Vienna
continued to call for dealing with Iran at the IAEA.25 In Beijing in November 2005, President
Bush said that he had to repeat to Hu the need to stop Iran from developing nuclear weapons.26
The situation escalated on January 10, 2006, when Iran resumed work on uranium enrichment,
after allowing IAEA inspectors to place seals on equipment at an enrichment plant at Natanz and
starting negotiations with Britain, France, and Germany two years before. Deputy Secretary of
State Robert Zoellick visited Beijing January 24-25, 2006, to stress the importance of the Iran
problem, continue the “Senior Dialogue” over the PRC’s role as a “responsible stakeholder,” and
discuss a summit on April 20 between PRC leader Hu Jintao and President Bush in Washington.
At a news conference in Beijing on January 24, Zoellick acknowledged differences with China
over “diplomatic tactics.” At a special meeting in London on January 30, China, France,
Germany, Russia, United Kingdom, and United States announced their agreement to “report”
(rather than “refer”) Iran’s case to the UNSC at the special IAEA meeting in early February but to
wait until March to decide at the Security Council on any actions to support the IAEA (without
mentioning sanctions).27 Still, on February 4, China was one of 27 countries that voted at the
IAEA to support a resolution to report Iran to the UNSC, showing some progress in China’s
cooperation since it abstained on a resolution on Iran in September 2005.
When the IAEA sent a report on Iran to the UNSC on March 8, 2006, saying that it could not
conclude that there were no undeclared nuclear materials or activities in Iran, China continued to
be less critical of Iran and to favor the handling of this issue at the IAEA rather than the UNSC.
On March 29, 2006, after weeks of negotiations, the Security Council issued a statement through
its president, calling on Iran to suspend all nuclear enrichment and reprocessing activities to be
verified by the IAEA and requesting an IAEA report in 30 days to the IAEA Board of Governors
“and in parallel” to the Security Council, with no mention of sanctions. The Administration called
for a UNSC resolution that invoked Chapter VII of the U.N. Charter (for sanctions or force), but
the PRC argued against such action despite the IAEA’s April 28 report on Iran’s non-compliance.
On May 31, 2006, Secretary of State Rice announced U.S. support for a new approach to offer a
package of incentives and costs for Iran’s compliance, agreed by China and others on June 1.
However, to U.S. displeasure, on June 16, the PRC hosted a summit of the Shanghai Cooperation

24 Zhongguo Wang, October 31; Xinhua, November 5; IRNA, November 6; Xinhua, November 8, 2004.
25 New York Times, September 14, 2005; Wall Street Journal, September 14, 2005; AFP, September 24, 2005; and
Xinhua [New China News Agency], September 24, 2005.
26 George Bush, interview with Phoenix TV, based in Hong Kong, November 9, 2005.
27 “Permanent Five Say IAEA Must Report Iran to U.N.,” Reuters, January 31, 2006.
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Organization (SCO), at which Iran attended as an observer. PRC President Hu Jintao balanced his
remarks to Iranian President Ahmadinejad by saying that Iran had a right to nuclear energy and
calling for its response to the offer. But with no Iranian response, on July 12, China and the other
five countries issued a statement agreeing to a two-stage approach: to seek a UNSC resolution to
make it mandatory for Iran to suspend nuclear enrichment as required by the IAEA; and if Iran
refused, to adopt measures under Article 41 (for sanctions, not use of force) of Chapter VII.
After Iran announced that it would respond on August 22, 2006, China voted on July 31 with
other members of the UNSC (except Qatar) for Resolution 1696, demanding that Iran suspend
nuclear enrichment; calling upon countries to prevent technology transfers to Iran’s nuclear
enrichment and missile programs; requesting an IAEA report on Iran’s compliance by August 31;
and warning of sanctions if Iran does not comply. After negotiations over Russian and PRC
objections to the first U.S. and European draft resolution on sanctions, China voted with all other
Security Council members for Resolution 1737 on December 23, 2006, which invoked Article 41
of Chapter VII to require Iran to suspend nuclear enrichment and reprocessing activities, and
heavy water-related projects. On January 5, 2007, in Beijing, PRC President Hu Jintao stressed
the “unanimous” adoption of Resolution 1737 to visiting Iranian nuclear official Ali Larijani.
After negotiations on additional sanctions on Iran (during which China and Russia objected to a
ban on Iran’s arms imports and export credit guarantees for doing business in Iran),28 China voted
with all other members of the UNSC for Resolution 1747, adopted unanimously on March 24,
2007. Citing Article 41 of Chapter VII, the resolution banned Iran’s arms exports.
However, the United States raised the problem with China of its violation of UNSC Resolutions
1737 and 1747. In particular, U.S. officials reportedly said in July 2007 that earlier in the year, a
PRC “entity” (probably one under U.S. sanctions) tried to ship a large amount of chemicals used
to make solid fuel for ballistic missiles. Cooperating with U.S. intelligence, Singapore intercepted
the container from China on its way to the Shahid Bagheri Industrial Group in Iran.29 This Iranian
organization was listed in the Annex of UNSC Resolution 1737, but sanctions for entities or
people in the Annex involved restricting travel and freezing financial assets. Still, Resolution
1737 decided that all States take the necessary measures to prevent transfers directly or indirectly
from their territories that could contribute to Iran’s development of nuclear weapon delivery
systems. Resolution 1747 called for restraint in transfers related to arms and missiles to Iran.
After the IAEA reported on May 23, 2007, that Iran continued nuclear enrichment activities, the
Bush Administration called for a third UNSC resolution with tougher sanctions on Iran.30 On
September 28, China joined with the United States, France, Germany, Russia, and United
Kingdom in issuing a foreign ministers’ statement in support of negotiations, the IAEA, as well as
a third UNSC resolution with sanctions. However, on October 17, China refused to attend a
meeting in Berlin on Iran’s nuclear program, citing “technical” difficulties. China apparently tried
to make a linkage to an unrelated matter. U.S. officials said China showed displeasure over that
day’s award in the U.S. Capitol of the Congressional Gold Medal to Tibet’s Dalai Lama.

28 “Nations Closer to Deal on Iran Sanctions,” AP, March 13, 2007; and Colum Lynch, “6 Powers Agree on Sanctions
for Iran,” Washington Post, March 16, 2007.
29 Jim Wolf, “U.S. Faults China on Shipments to Iran,” Reuters, July 12, 2007; Neil King Jr., “China-Iran Trade Surge
Vexes U.S.,” Wall Street Journal, July 27, 2007.
30 Karen DeYoung, “Iranian Defiance of U.N. Detailed,” Washington Post, May 24, 2007; State Department, Daily
Press Briefing, July 26, 2007.
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Even as the UNSC expected the IAEA’s report and PRC Foreign Minister Yang Jiechi visited
Tehran on November 13, China’s Foreign Ministry spokesman criticized sanctions as being of
“no help.” Two days later, Under Secretary of State Nicholas Burns expressed concerns about
China’s increasing civilian and military trade with Iran and called on China to agree to have the
next meeting on sanctions and “take a much more resolute role.”31 China again did not attend a
meeting scheduled for Brussels on November 19, citing “scheduling reasons.”
On December 3, 2007, the United States issued a new National Intelligence Estimate (NIE) on
Iran’s nuclear capabilities, finding that, in the fall of 2003, Iran had halted its nuclear weapons
program but in January 2006, resumed its declared uranium enrichment activities. In response, the
PRC’s ambassador at the U.N. claimed that the situation for imposing more sanctions changed.
(Later, in the Section 721 Report to Congress for 2009, U.S. intelligence reported an assessment
that Iran kept open the option to develop nuclear weapons without knowing whether Iran
eventually will decide to produce nuclear weapons. Also, Iran continued uranium enrichment.)
Nonetheless, in January 2008, China’s shifted to support a third sanctions resolution at the UNSC,
upon talks with Deputy Secretary of State John Negroponte who visited China for the bilateral
Senior Dialogue and argued for another UNSC resolution because of Iran’s violation of the
previously passed resolutions. Foreign Minister Yang Jiechi attended a six-nation meeting on
sanctions at Berlin on January 22, 2008. However, Yang reportedly agreed to a draft UNSC
resolution only with compromise language that excluded new sanctions on freezing the assets of
Iranian banks and military units, and on Iran’s arms imports.
Based on the compromise in January, the U.N. Security Council passed (with Indonesia
abstaining) Resolution 1803 on March 3, 2008. This third UNSC sanctions resolution called for
travel restrictions and bans; bans on dual-use nuclear trade; “vigilance” in export credits and
financial transactions with Iranian banks; and cargo inspections. At the same time, China stressed
that the sanctions would not affect its “normal” business with Iran and called for negotiations.
While the United States and other countries sought a fourth set of UNSC sanctions on Iran, top
PRC leader Hu Jintao met with Iranian President Mahmoud Ahmadinejad in Beijing on
September 6, 2008, and expressed respect for Iran’s right to peaceful use of nuclear energy as
well as support for the nuclear non-proliferation regime. China raised another concern when it
tried to link the six-nation diplomacy on Iran’s nuclear program to U.S. arms sales to Taiwan.
After the Bush Administration notified Congress on October 3 of proposed arms sales to Taiwan,
the PRC blocked U.S. efforts to set up a conference call among the six countries to discuss Iran.32
But later, on February 4, 2009, PRC Assistant Foreign Minister Liu Jieyi showed up at a six-
nation (E3+3) meeting in Wiesbaden, Germany, to discuss Iran’s nuclear program.
In April 2009, the Obama Administration shifted policy to participate regularly in E3+3 talks
with Iran. At the same time, some observers in the EU reported that “because of a lack of any real
leverage over China on the issue [of Iran’s nuclear program], other than pointing to the threat of
U.S. or Israeli attack on Iranian nuclear sites, the EU has been unable to persuade China to back
tougher sanctions.” They also pointed out that China actually shielded Iran from tougher
sanctions and reinforced its economic influence in Iran.33

31 Quoted by Robin Wright, “U.S. to Seek New Sanctions Against Iran,” Washington Post, November 16, 2007.
32 Matthew Lee, “China Blocks New Iran Sanctions Talks,” Associated Press, October 16, 2008; Author’s consultation.
33 John Fox and Francois Godement, “A Power Audit of EU-China Relations,” European Council on Foreign Relations,
(continued...)
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The Obama Administration also sought to “reset” the relationship with Russia for closer
cooperation, which seemed to increase the isolation of China on the issue of whether to apply
greater multilateral pressure on Iran. After Iran disclosed to the IAEA in September 2009 what
was a second, secret uranium enrichment plant at Qom, Russia proposed that Iran send enriched
uranium to Russia for processing for use in a research reactor. Russian President Dmitry
Medvedev also discussed possible sanctions. (In 1995, Russia and Iran signed a contract for a
Russian-built nuclear reactor at Bushehr in Iran. In 2005, Russia proposed that Iran transfer
nuclear material from the Russian-built nuclear plant to Russia and to conduct nuclear enrichment
at a facility in Russia. On November 16, 2009, Russia’s Energy Minister indicated that the reactor
would not start operations in 2009 due to “technical” reasons, but the announcement came one
day after Presidents Barack Obama and Medvedev expressed concerns in a meeting in Singapore
about Iran’s uranium enrichment program.)34 In February 2010, Russia joined France and the
United States in criticizing Iran when it announced a plan to enrich uranium to 20% U-235,
developments that further increased pressure on the PRC to sanction Iran.
A week after President Obama’s summit in Beijing on November 17, 2009, at which he pressed
China to cooperate in dealing with Iran, PRC Foreign Minister Yang Jiechi called Secretary of
State Hillary Clinton. Prior to the summit, Administration officials had traveled to Beijing to warn
that Israel regarded Iran’s nuclear program an “existential” threat and could bomb Iran. The PRC
told Clinton of its support for an IAEA resolution critical of Iran. The IAEA passed a resolution
on November 27, censuring Iran’s nuclear enrichment facility at Qom. Further, in February, April,
and October 2010, Israel sent officials to China to urge its cooperation to sanction Iran. As
discussed above, the Administration urged Saudi Arabia and the UAE to increase oil supplies to
China to reduce its dependence on Iran’s oil. Moreover, visiting the two countries in March 2010
for talks that included sanctions against Iran, Defense Secretary Robert Gates confirmed that all
the Persian Gulf states were worried about Iran’s nuclear program and missile proliferation, and
he asked the Saudi king to urge China to support UNSC sanctions against Iran.35
Thus, China faced increased international pressures to act on additional sanctions against Iran.
Still, in diplomatic negotiations on another UNSC Resolution for a fourth set of sanctions, China
reportedly opposed sanctions to target Iran’s oil and gas industry. President Obama made some
progress with PRC leader Hu Jintao when he attended the Nuclear Security Summit in
Washington on April 12, 2010, and Hu used the word “sanctions” for work at the UNSC.36
On June 9, 2010, China voted for UNSC Resolution 1929 to impose sanctions against Iran. The
resolution simply noted the potential connection between Iran’s revenues derived from its energy
sector and funding of Iran’s nuclear activities. Among the sanctions, the resolution called on all
countries to prevent the direct or indirect supply to Iran of certain major weapons. Later, in
testimony to the House Foreign Affairs Committee on March 1, 2011, Secretary of State Clinton
confirmed to Congress that China “went along” with the UNSC sanctions on Iran only “after
much diplomatic effort and arm twisting.”

(...continued)
April 2009.
34 AP, November 18, 2005; Financial Times, September 25, 2009; New York Times, October 1, 2009.
35 Washington Post, November 26, 2009; IAEA Resolution Gov/2009/82, November 27, 2009; Jerusalem Post,
February 28, 2010; American Forces Press Service, March 11, 2010; Sunday Times, April 4, 2010; New York Times,
June 8, 2010; Jerusalem Post, October 7, 2010.
36 Guardian; Washington Post; Associated Press, April 14, 2010.
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As the United States and other nations imposed unilateral sanctions including ones that targeted
Iran’s energy sector, concerns increased that China could fill in gaps and exploit such sanctions
(as discussed above). Days before Hu Jintao’s state visit in Washington on January 19, 2011, the
United States and EU discouraged China from joining Iran’s invited tour of its nuclear sites,
rather than IAEA inspections, and China implied that it declined to visit. Days later, on January
22, China was said to stay in solidarity with others in P5+1 talks with Iran.37 The U.S.-PRC Joint
Statement
issued at that summit called for full implementation of UNSC Resolutions on Iran, but
it did not refer to the other sanctions or oppose Iran’s nuclear activities. Indeed, the statement
noted positively Iran’s right to peaceful uses of nuclear energy under the NPT. Moreover, State
Department official Robert Einhorn in March criticized China for its mixed implementation of
UNSC sanctions on Iran and said that Iran was suspected of getting nuclear-related items in
China. Earlier the same month, Malaysia seized suspected cargo on a ship from China bound for
Iran. Meanwhile, the U.N. also investigated Iran’s attempt to acquire phosphor bronze from a
company in China, though China cooperated in the seizure of the banned material in South Korea.
Further, from October 2008 to January 2011, the manager of a company in China helped a citizen
of Iran to procure U.S. materials that could be used in gas centrifuges to enrich uranium.38
On November 8, 2011, the IAEA reported in GOV/2011/65 about “possible military dimensions”
to Iran’s nuclear program and development of a “nuclear explosive device.” The IAEA warned
that, since 2002, it “has become increasingly concerned about the possible existence in Iran of
undisclosed nuclear related activities involving military related organizations, including activities
related to the development of a nuclear payload for a missile.” With Russian resistance as cover,
China urged the IAEA not to report the agency’s evidence. Upon the release of the report, China
responded that the IAEA should be “objective and just” and Iran should be flexible and sincere in
“serious” cooperation with the IAEA. Though China voted on November 18 at the IAEA Board
of Governors for a resolution of concern, it stopped short of reporting the matter to the UNSC.
Missile Technology Sales to Iran
Overview
During the Clinton Administration, PRC entities reportedly transferred equipment and technology
to Iran’s missile programs, including development of medium-range ballistic missiles. In
November 2000, the Administration determined that PRC missile technology transfers took place
but waived sanctions, citing a new PRC promise on missile nonproliferation. However, PRC
entities reportedly continued missile-related proliferation activities in Iran. In contrast to the
previous administration, the Bush Administration stressed the use of sanctions against PRC
entities, including “serial proliferators.”

37 Reuters, January 5, 2011; PRC Foreign Ministry, January 13, 2011; Washington Post, January 22, 2011.
38 Bloomberg, March 10, 2011; The Star, March 17, 2011; Utusan, March 18, 2011; Reuters, March 22, 2011;
Department of Justice, “Two Indicted for Alleged Efforts to Supply Iran with U.S. Materials for Gas Centrifuges to
Enrich Uranium” (statement on indictment of Parviz Khaki, arrested, and Yi Zongcheng, remained at large), July 13,
2012; Joby Warrick, “Nuclear Ruse: Posing as Toymaker, Chinese Merchant Allegedly Sought U.S. Technology for
Iran,” Washington Post, August 12, 2012.
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Obama Administration
The Obama Administration has continued to impose sanctions. This record raised questions about
the effectiveness of sanctions as well as the PRC’s commitment and capability to control exports
to Iran. (See Table 1 on sanctions.) In February and April 2009 and July 2010, the United States
imposed sanctions on PRC entities and Li Fangwei for missile proliferation in Iran. The United
States subsequently imposed repeated sanctions on such entities or individuals. Also, in July
2009, the State Department reportedly had concerns that Q.C. Chen (a PRC person previously
sanctioned for weapons proliferation) arranged for the sale of a test chamber to Iran’s Defense
Industries Organization that could be useful for testing missile parts. The test chamber was made
by Voetsch China (a PRC subsidiary of a German firm) and was not controlled by the MTCR.39 In
February 2011, the Section 721 Report for 2011 told Congress that PRC “entities” continued to
supply missile-related items to Iran. The report also said that entities in the PRC (and Russia and
North Korea) likely supplied key components for Iran’s production of ballistic missiles.
North Korea’s Missile and Nuclear Weapons Programs
Suspected Missile Supplies
Since 1998, there have been public reports about and U.S. government confirmation of PRC
assistance to North Korea’s missile program. There were questions about whether the PRC had
interests in North Korea’s missile advances. Lieutenant General Xiong Guangkai, a Deputy Chief
of General Staff of the People’s Liberation Army (PLA), visited North Korea in early August
1998, before the surprising launch of a medium-range Taepo Dong-1 missile on August 31, 1998.
However, increased worries about North Korea’s missile program spurred U.S. and Japanese
support for missile defenses opposed by China. Some said PRC entities acted on their own.
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-1 MRBM program, the Washington Times reported (February 23,
1999). An NSA report dated March 8, 1999, suggested that China sold specialty steel for use in
North Korea’s missile program, reported the 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, according to the Washington Times (July 20, 1999).
An October 20, 1999, classified report said that China’s Changda Corp. sought to buy Russian
gyroscopes that were more of the same that China supplied to the North Korean missile program
earlier that year, reported the Washington Times (November 19, 1999). In December 1999, the
NSA discovered an alleged PRC deal to supply unspecified PRC-made missile-related items to
North Korea through a Hong Kong company, said the Washington Times (January 1, 2000).
The DCI first publicly confirmed PRC supplies to North Korea, or Democratic People’s Republic
of Korea (DPRK), in July 1999. The DCI’s April 2003 Section 721 Report said that, in the first
half of 2002, North Korea continued to procure missile-related raw materials and components
from foreign sources, but it dropped a previous reference about those foreign supplies as
especially going through DPRK firms in China. There were direct implications for U.S. national

39 “Inside the Ring,” Washington Times, February 3, 2011.
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China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues

security, because of North Korea’s nuclear weapons and nuclear programs as well as delivery
systems. PRC technology transfers have further implications for secondary, or retransferred,
proliferation, since North Korea reportedly supplied technology to Iran, Syria, Pakistan, Egypt,
Libya, and Yemen. The DNI’s Section 721 Report of May 2007 told Congress that PRC “entities”
continued in 2005 to assist North Korea’s ballistic missile program.
There were indications that some sensitive exports from China continued to North Korea. Taiwan
raided in July 2010 Ho Li Enterprises that received orders since March 2007 from Dandong Fang
Lian Trading Company in Dandong, PRC, with an alleged association with the DPRK’s military,
for two dual-use, high-technology machine tools that ended up in North Korea earlier in 2010.40
By early 2011, the DPRK reportedly built a new facility to launch long-range ballistic missiles,
located close to China.41 Further, the Section 721 Report for 2011 noted that the DPRK continued
to procure missile-related materials and components from foreign sources. This ability still raised
questions about China’s control of trade at the PRC-DPRK border and compliance with UNSC
resolutions that imposed sanctions on North Korea’s missile and nuclear programs.
After the DPRK’s failed launch of a Taepo Dong-2 missile on April 13, 2012, a military parade
two days later in Pyongyang showed an apparent KN-08 ICBM on a 16-wheel transporter-
erector-launcher (TEL) that reportedly originated from the PRC. The suspected PRC TEL raised
concerns that included implications for threats to U.S. security, violations of UNSC sanctions,
China’s credibility as a UNSC Member that committed to and then undermined UNSC
resolutions, U.S.-PRC cooperation, and whether U.S. sanctions would apply. Representative
Michael Turner sent a letter on April 17 to Secretary of State Hillary Clinton and DNI James
Clapper, asking about the suspected transfer of the TEL. At a hearing of the House Armed
Services Committee two days later, Representative Turner asked Defense Secretary Leon Panetta,
who testified that the DPRK’s missile and nuclear capabilities posed threats and that the PRC
provided help for the DPRK’s missile program, though he did not specify the assistance. On April
19, the Foreign Ministry claimed that the PRC has implemented UNSC resolutions and PRC
nonproliferation policies and export controls, and the State Department said at a news conference
it took China at its word on the allegations. Still, in diplomatic channels, the State Department
raised the alleged transfer with the PRC as a weapons proliferation concern. Meanwhile, an
unnamed official of the Obama White House downplayed the PRC’s help for the DPRK’s missile
program as “poor performance” in implementing sanctions (not “willful proliferation”) and not a
clear violation of UNSC sanctions, because the transfer supposedly entailed the chassis (not a
complete TEL) and that could have been sold for “civilian” use by a DPRK front company.42 The
Obama Administration did not impose sanctions for the PRC transfer.
Nonetheless, the suspected WS51200 TEL in the DPRK was produced as a 122-ton vehicle by the
Hubei Sanjiang Space Wanshan Special Vehicle Company, which is a part of the China Space
Sanjiang Group under the China Aerospace Science and Industry Corporation (CASIC). They
belong to the PRC’s state-owned aerospace defense industry, producing products for the PLA.
The Wuhan Sanjiang Import and Export Company shipped (on the Harmony Wish) four WS51200
vehicles from Shanghai to North Korea in August 2011, marking them on a shipping document as
“off-road trucks.”43 Moreover, the PRC has controls at its border with the DPRK. Further, UNSC

40 Associated Press and Kyodo, September 7, 2010.
41 Washington Post, February 16, 2011.
42 Mark Landler, “Suspected Sale by China Stirs Concern at White House,” New York Times, April 20, 2012.
43 The Telegraph, June 8; Asahi Shimbun, June 12; Kyodo, June 13; Jane’s Defense Weekly, June 14, 2012.
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Resolution 1695 of 2006 required all States to prevent transfers of missile and missile-related
items, materials, goods, and technology to the DPRK’s missile or WMD programs. Also adopted
in 2006, UNSC Resolution 1718, inter alia, required all States to prevent the direct or indirect
transfer to the DPRK of missiles, missile systems, or related materiel, determined by the UNSC
or a special committee. UNSC Resolution 1874 of 2009 expanded that ban to cover all arms
(except for small arms) and related materiel as well as financial transactions, technical training,
advice, services, or assistance related to the provision, manufacture, maintenance, or use of such
arms. Visiting Beijing on May 22, Special Representative for North Korea Policy Glyn Davies
acknowledged to reporters that he raised the issue of how to reinforce UNSC-approved sanctions
and take them seriously, though he insisted that the United States and China share interests of
peace, stability, and denuclearization. Further, at the press briefing on June 13, the State
Department confirmed concerns that PRC entities assisted the DPRK’s missile program and the
U.S. expectation that China enforce the U.N.’s sanctions. A U.N. panel found that many of the
violations of sanctions involved China’s entities, and China resisted releasing the report. Also,
South Korea suspected that, in December 2012, China exported bauxite (aluminum ore), a
material that could be used to manufacture missiles, to a weapons plant in North Korea.44
Secret Nuclear Programs
A serious case of secondary weapons proliferation involves North Korea’s secret program to
enrich uranium to develop nuclear weapons, a program that U.S. officials said was surprisingly
acknowledged by North Korea to visiting Assistant Secretary of State James Kelly during talks in
Pyongyang on October 4, 2002. This acknowledgment was not publicly disclosed by the Bush
Administration until October 16, 2002, at a time when President Bush sought congressional
authorization for the war against Iraq. By early 2007, however, U.S. officials restated the
assessment of the highly enriched uranium (HEU) program.
The DCI’s April 2003 Section 721 Report stated that the United States was suspicious of an
uranium enrichment program in North Korea for “several years” but did not obtain “clear
evidence indicating that North Korea had begun constructing a centrifuge facility until recently.”
While the DCI previously reported that North Korea has another program using plutonium that
produced one or two nuclear weapons, the Washington Post reported on April 28, 2004, that U.S.
intelligence newly estimated that North Korea had at least eight nuclear weapons.
DCI George Tenet testified to the Senate Intelligence Committee on February 24, 2004, that U.S.
intelligence judged in the mid-1990s that North Korea had produced “one, possibly two, nuclear
weapons” and the 8,000 fuel rods that North Korea claimed to have reprocessed into plutonium
metal would provide enough plutonium for “several more.” On February 16, 2005, the Director of
the Defense Intelligence Agency, Vice Admiral Lowell Jacoby, testified that North Korea’s Taepo
Dong 2 intercontinental ballistic missile, which could have been ready for testing, “could deliver
a nuclear warhead to parts of the United States in a two-stage variant and target all of North
America with a three-stage variant.” However, a test of that missile failed in July 2006.
This case raised a question about whether China’s nuclear technology indirectly contributed to
North Korea’s nuclear weapons program through Pakistan, since China was the “principal
supplier” to Pakistan’s nuclear weapons program. There also were questions about whether China
shared useful intelligence about its knowledge of any Pakistani-North Korean cooperation.

44 Asahi Japan Watch, June 22, 2012; TV Chosun, January 13, 2013.
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The New York Times and Washington Post reported on October 18, 2002, that U.S. officials
believed Pakistan provided equipment, including gas centrifuges, for the North Korean uranium
enrichment program, in return for North Korea’s supply of Nodong MRBMs to Pakistan by 1998.
The Washington Post added on November 13, 2002, that the Bush Administration had knowledge
that Pakistan continued to provide nuclear technology to North Korea through the summer of
2002. Henry Sokolski of the Nonproliferation Policy Education Center wrote in National Review
Online
(November 19, 2002) that “one might call on Pakistan, Russia, and China to detail what
nuclear technology and hardware they allowed North Korea to import.”
The New York Times reported on January 4, 2004, about a history of nuclear technology
proliferating from Pakistan’s Khan Research Laboratories headed by Abdul Qadeer Khan and
disclosed that he had transferred designs for uranium-enrichment centrifuges to China first. DCI
George Tenet confirmed to the Senate Intelligence Committee on February 24, that North Korea
pursued a “production-scale uranium enrichment program based on technology provided by A.Q.
Khan.” Particularly troubling was the reported intelligence finding in early 2004 that Khan sold
Libya a nuclear bomb design that he received from China in the early 1980s (in return for giving
China centrifuge technology), a design that China already tested in 1966 and developed as a
compact nuclear bomb for delivery on a missile.45 That finding raised an additional question of
whether Khan also sold that bomb design to others, including Iran and North Korea.
Moreover, PRC firms could have been involved directly or indirectly in North Korea’s nuclear
weapons programs or weapons proliferation to other countries. In June 1999, authorities in India
inspected the North Korean freighter Kuwolsan and found an assembly line for Scud ballistic
missiles intended for Libya, including many parts and machines from China or Japan, according
to the Washington Post (August 14, 2003). The Washington Times reported on December 9 and
17, 2002, that a PRC company in the northeastern coastal city of Dalian sold to North Korea 20
tons of tributyl phosphate (TBP), a dual-use chemical that U.S. intelligence reportedly believed
would be used in the North Korean nuclear weapons program.
PRC Border, Ports, and Airspace
Questions have arisen about China’s compliance with or enforcement of UNSC resolutions and
even enabling of the DPRK’s activities in allowing cross-border trade and transactions to and
from North Korea as well as Pakistani, North Korean, and Iranian ships and planes to use PRC
ports and airspace (and perhaps military airfields). China’s possible cooperation in interdiction,
restrictions in the use of its ports and airfields, law-enforcement, and intelligence-sharing has
become a salient question in light of the Bush Administration’s PSI announced in May 2003
(which China did not join). As part of the military trade between Pakistan and North Korea, in
July 2002, Pakistan flew a C-130 transport aircraft to pick up missile parts in North Korea,
reported the New York Times (November 24, 2002). In December 2002, the Spanish and U.S.
navies interdicted a North Korean ship (So San) with Scud missiles bound for Yemen, and the
Spanish Defense Minister reported that the ship’s last port of call was in China. In addition, an
Iranian ship stopped at the Tianjin port in China and picked up missile components before sailing
on to North Korea to take delivery of missiles and rocket fuel in February and November 2002,
reported the South Korean newspaper, Joong Ang Ilbo (December 19, 2002). From April to July

45 Joby Warrick and Peter Slevin, “Libyan Arms Designs Traced Back to China,” Washington Post, February 15, 2004;
William Broad and David Sanger, “As Nuclear Secrets Emerge in Khan Inquiry, More Are Suspected,” New York
Times
, December 26, 2004.
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2003, China reportedly gave overflight rights to Iranian Il-76 cargo planes that flew to North
Korea at least six times to pick up wooden crates suspected of containing cruise missiles, and the
Bush Administration lodged a diplomatic protest with Beijing, reported Time (Asian edition) on
July 14, 2003. At a hearing held by the Senate Foreign Relations Committee on September 11,
2003, on U.S.-China ties, Assistant Secretary of State James Kelly confirmed to Senator Russell
Feingold that the State Department raised with China the problem of North Korean planes flying
through PRC airspace or making refueling stops in China.
Then, in June 2005, China (and a Central Asian country) agreed to deny over-flight rights to an
Iranian cargo plane that had landed in North Korea allegedly to pick up missile components. In
November 2007, the Bush Administration reportedly raised concerns with China that an Iran Air
plane was flying from North Korea via Beijing’s airport to Iran with a shipment of missile jet
vanes for Iran’s missile program. In August 2008, India denied use of its airspace to a North
Korean plane that stopped in Burma (Myanmar) and was scheduled to fly on to Iran with
suspected cargo related to weapons proliferation.46 Such incidents raised the question of whether
China allowed overflight by planes from North Korea, had knowledge of their cargo, or shared
intelligence with the U.N., United States, or other countries.
After North Korea’s second nuclear test in May 2009 and the UNSC applied sanctions under
Resolution 1874, the United Arab Emirates, in August 2009, seized a ship (ANL Australia)
transporting North Korean weapons to Iran. However, after originating in North Korea, the cargo
was first transferred in June to a PRC ship that docked at China’s port cities of Dalian and
Shanghai, where the cargo was then moved to the ANL Australia.47 Then, in December 2009, a
plane carrying weapons in contravention of U.N. sanctions headed from North Korea for Sri
Lanka and other countries, with the North Korean weapons bound for Iran. Thailand’s air force
seized the Il-76 plane, when it landed in Bangkok to refuel. In November 2009, South Africa
seized North Korea’s weapons cargo bound for Congo, in violation of UNSC Resolution 1874,
and the shipment was first loaded onto a ship docked in Dalian. China’s port of Dalian, close to
North Korea’s port of Nampo, has been one of the critical transshipment points in China for
North Korea’s cargo.48 China apparently has not seized such arms shipments.
On April 12, 2011, Senator Lugar introduced S.Con.Res. 12, which called for a presidential
report on North Korean ships and planes that visited Burma via China. A report by a U.N. Panel
of Experts, blocked at the UNSC by China in May 2011, found that Iran and the DPRK traded
illicit missile technology using Air Koryo and Iran Air, involving transshipment through China. In
May 2011, a monitored DPRK ship sailed near Shanghai to the South China Sea, possibly bound
for Burma or Bangladesh with missiles and related parts, and turned around. In May 2012, South
Korea seized sensitive graphite cylinders useable in a missile program that North Korea shipped
on a PRC ship en route to Syria. In August, Japan seized five aluminum alloy rods (which could
be used in nuclear centrifuges) from North Korea bound for Burma, among cargo on a Taiwan-
owned ship that departed from Dalian, China. In late 2012, North Korea reportedly agreed to
supply Scud missile parts to Egypt by air cargo through China, and missile technicians from the

46 New York Times, October 24, 2005; Jay Solomon, Krishna Pokharel, and Peter Wonacott, “North Korean Plane Was
Grounded at U.S. Request,” Wall Street Journal, November 1, 2008; John Pomfret, “U.S. Asked China to Keep Missile
Parts from Iran,” Washington Post, November 29, 2010.
47 Financial Times, August 28, 2009; Yonhap, September 10, 2009; Washington Post, December 3, 2009.
48 Reuters, December 13, 2009; Wall Street Journal, December 22, 2009; Yomiuri Shimbun, January 10, 2010; Reuters,
February 22, 2010 AFP, February 25, 2010; Chosun Ilbo, March 10, 2010; Asahi Shimbun, July 20, 2010.
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China Precision Machinery Import-Export Corporation (CPMIEC) reportedly went to Egypt to
work with North Korean technicians.49
PRC-DPRK Military Relationship
Questions have arisen about the PRC’s military relationship with the DPRK, including any PLA
contingency planning in the event of a crisis or collapse in North Korea and support for the
DPRK regime (even as it attacked South Korea’s naval ship and island in 2010). A related issue
concerns the challenge in talking with the PLA about contingencies that also could involve the
U.S. military and allies. Other key questions are about the PLA’s knowledge of the DPRK’s
missile and nuclear programs, plans to secure weapons and nuclear material, willingness to share
information with the United States and U.S. allies, and aim to exert control that could complicate
U.S. and Republic of Korea (ROK) operations. The PLA has called the DPRK a “buffer,” keeping
U.S. and ROK forces below the 38th parallel. Concerning operations at sea, PLA General Ma
Xiaotian, in July 2010, expressed “opposition” to even U.S.-ROK exercises in the Yellow Sea.
As discussed in this report, the PRC and DPRK militaries had high-level contact just before the
missile tests of August 1998 and July 2006. Moreover, this relationship has raised questions about
China’s effectiveness in using leverage with the power-holders in Pyongyang. When asked on
October 14, 2009, whether the United States and China discussed contingencies in North Korea,
Assistant Secretary of State Kurt Campbell acknowledged talks about “every” aspect. However,
in February 2010, a professor at Peking University and a close observer of PRC policies warned
that Beijing would not accept an implosion in Pyongyang or watch passively if other countries
gain political and military control in North Korea. The professor later wrote in March 2012 that
while Beijing seeks denuclearization, some PRC leaders actually hold the United States, rather
than the DPRK, more responsible for tensions on the Korean peninsula.50
Indeed, China seemed to have shifted from pressuring North Korea with the military relationship
to propping up the DPRK regime’s security and survival. In August 2003, Wen Wei Po (a PRC-
owned newspaper in Hong Kong) printed an article questioning whether the PRC-North Korean
alliance under the 1961 Treaty of Friendship, Cooperation, and Mutual Assistance continued to
serve China’s interest. China took steps that appeared to pressure North Korea, including using
the PLA. In September 2003, China replaced paramilitary People’s Armed Police (PAP) troops
with PLA soldiers along its border with North Korea, as confirmed by the PRC Foreign Ministry
and the official People’s Daily (September 16, 2003), apparently to warn North Korea against
provocations. Reports appeared in 2006 to confirm the PLA’s construction of fences along the
border, although that construction reportedly had started in 2003. The Defense Department
reported to Congress in 2004 with a skeptical critique that China “avoided taking real steps to
pressure North Korea.” Nonetheless, the report confirmed that “as a potential hedge against
uncertainty, the PLA assumed responsibility for border security along the northeast frontier in fall

49 Telegraph, May 12; Reuters, May 14; New York Times, May 14; Kyodo, May 17; Reuters, May 18, 2011; Wall Street
Journal
, June 14, 2011; Reuters and Korea Times, November 14, 2012; PRC Foreign Ministry, November 14, 2012;
State Department’s statement, November 15, 2012; Asahi Japan Watch, November 24, 2012; Wall Street Journal,
November 28, 2012; Free Beacon, December 13, 2012, and January 29, 2013; AFP, March 18, 2013.
50 Wang Jisi as quoted in Korea Herald, Seoul, February 24, 2010; Kenneth Lieberthal and Wang Jisi, “Addressing
U.S.-China Strategic Distrust,” Brookings Institution, March 30, 2012.
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2003, increasing security along the porous border with North Korea and strengthening China’s
ability to stem refugee flows or respond to a breakdown of the North Korean regime.”51
At the same time, China pursued military contacts with the United States (including Secretary of
Defense Donald Rumsfeld’s visit to Beijing in October 2005), even while China’s traditional
military friendship with North Korea showed greater candor. When PRC ruler Hu Jintao visited
Pyongyang in October 2005 and Kim Jong Il visited China in January 2006, PRC media
downplayed Hu’s third position as Chairman of the Central Military Commission (CMC) (in
addition to other positions as Communist Party General-Secretary and PRC President). On March
9, 2006, General B.B. Bell, Commander of U.S. Forces Korea, testified to the House Armed
Services Committee that PRC-North Korean military engagement was “quite low” and that
despite the friendship treaty, “the amount of military support that the PRC provides to the North
is minimal.” The PLA hosted the visit in May 2006 of Admiral William Fallon, Commander of
the Pacific Command, to the Shenyang Military Region (close to the border with North Korea).
PRC Defense Minister and CMC Vice Chairman Cao Gangchuan visited North Korea in April
2006 for three days. But he did not get an audience with Kim Jong Il, raised the controversy of
the DPRK’s nuclear program, and then visited South Korea for five days in the same month. Just
months after General Cao’s visit, Pyongyang tested a Taepo Dong-2 missile in July 2006 and a
nuclear device in October 2006. When the top PLA officer and another CMC Vice Chairman,
General Guo Boxiong, visited Washington in July 2006, he criticized North Korea’s July 4
missile test, even citing the UNSC’s Resolution that condemned the test. Further indicating
strains, on the day after the DPRK’s nuclear test on October 9, 2006, the PRC Foreign Ministry
publicly said that the test had a “negative impact” on PRC-DPRK ties and denied that China was
North Korea’s “ally.” A PRC-owned newspaper in Hong Kong reported that PLA and PAP troops
were on high alert at the PRC-DPRK border.52 On October 16, the PLA commemorated the death
of a soldier who was killed by North Korean soldiers a year earlier.53
However, following Pyongyang’s second nuclear test in May 2009, PRC Defense Minister Liang
Guanglie visited North Korea for five days on November 22-27. General Liang reportedly
recalled that he was a veteran of the Korean War in which PRC-DPRK friendship was “sealed in
blood.” He met with Kim Jong Il but did not mention North Korea’s nuclear program or
denuclearization, in contrast to reporting of Defense Minister Cao’s visit in 2006.
After South Korea announced on May 20, 2010, an international finding that North Korea
attacked South Korea’s naval ship, Cheonan, on March 26, killing 46 sailors, CMC Vice
Chairman Guo Boxiong visited the Shenyang Military Region apparently in early June, including
its troops at the border with North Korea. In July, the PLA also “opposed” U.S.-ROK maritime
exercises in the whole Yellow Sea, seemingly supporting the DPRK which was the target of the
exercises to enhance deterrence and defense. In August, the PRC Executive Vice Minister of
Public Security Liu Jing visited North Korea to hold talks and donate equipment to the Ministry
of People’s Security which was identified as under the National Defense Commission. At a higher
level, PRC Minister of Public Security Meng Jianzhu visited Pyongyang on February 13-14,
2011, arriving two days after protestors in Egypt ousted President Hosni Mubarak. Minister Meng
signed an agreement to cooperate with the DPRK, before he got a meeting with Kim Jong Il. In

51 Defense Department, “Report on PRC Military Power,” May 29, 2004.
52 Wen Wei Po, October 13, 2006.
53 South China Morning Post, October 17, 2006.
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April, the DPRK allegedly launched a cyberattack that was staged from China against South
Korea, in the first public report of a cyberattack by one country against another’s bank. In July,
the PRC gave or sold 3,000-4,000 military trucks and jeeps to North Korea. The next month, PRC
Defense Minister, General Liang Guanglie, met with a DPRK military officer on logistics.54
In November 2011, Kim Jong Il and Kim Jong Un received PLA General Li Jinai, a CMC
Member who conveyed greetings from Hu Jintao as Party leader but not CMC Chairman. Just
after the PLA’s visit, the DPRK announced on November 30 that it made progress in uranium
enrichment. However, after Kim Jong Il died, Hu Jintao on December 20 expressed condolences
also as the CMC Chairman, in a rare invocation of this military title in dealing with North Korea.
Hu promptly expressed support for Kim Jong Un, even before he was named as Supreme Leader.
In mid-2012, the PLA and civilian forces held exercises at the Yalu River and elsewhere near the
DPRK (including in a counter-terrorism scenario), but with no reported DPRK participation.
During PRC Defense Minister Chang Wanquan’s visit to Washington in August 2013, the PLA’s
Director of Foreign Affairs spoke to selected reporters and called for the U.S. side to be “flexible”
toward North Korea and spoke against sanctions to deal with its nuclear weapons program. The
next month, however, Under Secretary of Defense for Policy James Miller called on the PRC to
maintain and increase pressure on North Korea to achieve denuclearization.
Trilateral and Six-Party Talks in Beijing
Overview and PRC Policy
After the Bush Administration’s October 2002 disclosure about North Korea’s ongoing nuclear
weapons programs, it sought a multilateral effort (not just bilateral negotiations) to achieve the
complete, verifiable, and irreversible dismantlement (CVID) (not just a freeze) of North Korea’s
nuclear weapons programs (uranium and plutonium programs) as well as nuclear weapons. The
Administration’s strategy relied on securing China’s cooperation and central role. At the October
25, 2002, summit in Crawford, TX, top PRC ruler Jiang Zemin agreed with President Bush on the
goal of a nuclear-free Korean peninsula achieved through a peaceful resolution, although Jiang
claimed to be “completely in the dark” about North Korea’s nuclear weapons.
However, some have raised issues of whether China has been helpful in fully using its leverage
with North Korea, whether it seeks North Korea’s denuclearization with as much urgency as the
United States and its allies, whether China’s role warrants a closer U.S.-PRC relationship that
risks other U.S. interests, and whether China actually undermines regional stability, given its
support for the status quo that includes a provocative, belligerent DPRK. China has balanced its
own various concerns that include (1) sustainment of a “friendly” U.S. approach toward China;
(2) U.S. security policies (suspected of provoking instability and collapse of a fellow Communist
regime, with loss of a perceived “buffer” between PLA and U.S. forces); (3) diminished global
standing in any appearances of isolated PRC influence; (4) Beijing’s losses and wins with
Washington, including any limits to U.S. arms sales to Taiwan; (5) U.S. alliances with Japan and
South Korea; (6) a stronger Japan (with missile defense and even possibly nuclear weapons); (7)
stability and PRC influence on a weak North Korea; (8) a strong, unified Korea; and (9)
sustaining a fellow Communist regime and legacies of past leaders to preserve power.

54 Chosun Ilbo, August 23, 2011; Xinhua, August 26, 2011; Washington Post, August 30, 2011.
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China commonly has cited a concern about “stability” (e.g., jeopardized by DPRK refugees).
However, China’s view appears different from that of the United States and others. In response to
Kim Jong Il’s death in December 2011, PRC Foreign Minister Yang Jiechi called for “peace and
stability,” but Secretary of State Clinton’s statement did not use “stability.” Some have suspected
the PRC’s preference for the status quo, even though that involves the DPRK’s provocations of
instability and repression. Beijing’s citied concern was belied by the continuation into 2012 of
smuggling of drugs and people plus other illicit activity across the PRC-DPRK border and more
relaxed military patrols and other controls on China’s side of the border. Also, the PRC
acknowledged in February that it repeatedly repatriated certain DPRK citizens over 10 times.55
Initially, China did not respond to multilateral cooperation with the urgency and to the extent
sought by the United States. Then, North Korea further escalated the situation by expelling IAEA
inspectors and reactivating its nuclear reactor at Yongbyon in December 2002, and by
withdrawing from the NPT in January 2003. On February 7, 2003, Bush said he had to “remind”
Jiang of “joint responsibilities” in achieving “common” objectives concerning North Korea. Two
days later, Secretary of State Colin Powell said in an interview on Fox News Sunday that China
had “considerable influence with North Korea.” Powell reported that North Korea depended on
China for 80% of its energy and economic activity, and urged China to play an active role in the
dispute. Later, in November, Powell said that after he had pressed the need for China to “rise to
its responsibilities in dealing with this regional problem,” PRC Vice Premier Qian Qichen made
an “important contribution” in March 2003 by delivering the message in North Korea that “there
would be no alternative to multilateral talks” that involved China and other countries.56
Starting in 2003, as North Korea further exacerbated the security situation, China’s stance shifted
to sponsor multilateral talks to denuclearize the Korean peninsula, to be openly critical of North
Korea, and to support tough UNSC resolutions that condemned the July 2006 missile firings and
that imposed sanctions for the October 2006 nuclear test by the DPRK. However, the PRC also
urged the United States to provide aid to North Korea, to lift sanctions, to hold bilateral U.S.-
DPRK talks by 2007 (even outside of Beijing), and to show flexibility for a final settlement.
While skeptics pointed to progress as limited to the process of the Beijing-sponsored talks, there
appeared some initial progress in results by the summer of 2007, with the shutdown of North
Korea’s Yongbyon nuclear reactor. Nonetheless, in spite of the PRC’s role in sponsoring
negotiations with and supporting North Korea, its “isolated” position in multilateral negotiations,
and the seeming fragility of the health of the North Korean ruler and economy, the North Korean
regime retained time to stall denuclearization, diplomatic leverage, economic gains, repression of
its people, ways for weapons proliferation, and a capability for additional nuclear tests.
Trilateral Talks (April 2003)
After the PRC’s pressure on North Korea in March 2003, China hosted Trilateral Talks among
China, the DPRK, and the United States on April 23-25, 2003. Secretary Powell noted positively
that “China has stepped up.” However, the DCI’s Section 721 Report (of November 2004)
confirmed that, at the meeting, North Korea threatened to “transfer” or “demonstrate” its nuclear
weapons. On June 9, 2003, in Tokyo, Deputy Secretary of State Richard Armitage “saluted”
China’s cooperation on North Korea and declared “a new phase of our relationship with China.”

55 Jane’s Intelligence Review, January 27, 2012; PRC Foreign Ministry, press conference, February 28, 2012.
56 Department of State, “Secretary of State Colin L. Powell’s Remarks at Conference on China-U.S. Relations,”
College Station, Texas, November 5, 2003.
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1st Round of Six-Party Talks (August 2003)
Responding to U.S. insistence on expanded multilateral talks, China hosted the first round of the
Six-Party Talks (also including South Korea, Japan, and Russia) on August 27-29, 2003.
However, North Korea again threatened to transfer or test a nuclear weapon, as confirmed by the
DCI’s Section 721 Report of November 2004. Then, China seized a shipment of tributyl
phosphate (TBP), a material used for nuclear weapons, suspected by the CIA on a train bound for
North Korea in the summer of 2003, reported Asahi Shimbun (February 22, 2004). The DCI’s
Section 721 Report confirmed that, in September 2003, at the border with North Korea, China
stopped a shipment of chemicals that could have been used in the DPRK’s nuclear program.
2nd Round (February 2004)
The Bush Administration sought another round of multilateral talks before the end of 2003, with a
tentative date set by November for around December 17,57 but the talks were not held then. When
PRC Premier Wen Jiabao visited President Bush at the White House on December 9, 2003, the
Taiwan question eclipsed the issue of North Korea. The Washington Post disclosed on January 7,
2004, that at a meeting in Seoul the week before, a PRC diplomat, Fu Ying, questioned the
credibility of U.S. intelligence that Pyongyang had a highly enriched uranium program.
China then hosted the second round of Six-Party Talks on February 25-28, 2004, for which
Assistant Secretary of State James Kelly expressed appreciation. However, North Korea denied
the suspected uranium enrichment program. The State Department’s statement after the talks did
not report any progress in either freezing or dismantling North Korea’s nuclear weapons
programs, but pointed to “progress on a regularized process” for peacefully resolving this issue.
3rd Round (June 2004)
Before China hosted another round of Six-Party Talks, PRC Deputy Foreign Minister Zhou
Wenzhong publicly questioned the credibility of U.S. intelligence about North Korea’s uranium
enrichment and expressed support for North Korea’s arguments (in an interview with the New
York Times
, June 9, 2004). China hosted the third round of talks on June 23-26, 2004. The DPRK
again threatened to test a nuclear weapon. Afterward, National Security Adviser Condoleezza
Rice traveled to Beijing and told CMC Chairman Jiang Zemin and President Hu Jintao that “A.Q.
Khan was not engaged in academic research” and that “North Korea has a highly enriched
uranium program,” reported the Washington Times on July 14, 2004.
Despite the lack of any breakthrough in the Trilateral Talks and three rounds of Six-Party Talks
held since April 2003, Assistant Secretary of State James Kelly contended at a hearing of the
Senate Foreign Relations Committee in July 2004 that multilateral diplomacy was useful and that
the talks held in Beijing yielded progress in dealing with the threat of North Korean nuclear
weapons.58 In answer to Senator Chuck Hagel, Kelly acknowledged that “there could be and
probably should be a role for the United Nations Security Council (UNSC),” but reported that
China likely will not be interested in dealing with the threat at the UNSC. In answer to Senator

57 Kyodo News, November 24, 2003.
58 Senate Foreign Relations Committee, hearing, A Report on Latest Round of Six-Way Talks Regarding Nuclear
Weapons in North Korea,
July 15, 2004.
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Lincoln Chaffee, Kelly denied that China linked cooperation on North Korea to U.S. concessions
on Taiwan (including arms sales), by saying that China did not pose Taiwan “as a tactical issue”
in discussions about North Korea. Kelly acknowledged to Senator Bill Nelson that it remained
unclear as to whether China’s preference for positive incentives (over pressure) will work.
In early February 2005, President Bush sent Michael Green, the National Security Council’s
Senior Director for Asian Affairs to Beijing, Tokyo, and Seoul to intensify diplomatic pressure on
Pyongyang. In Beijing, Green met with President Hu Jintao and reportedly presented urgent U.S.
intelligence findings that North Korea had processed several tons of uranium hexafluoride (which
could be enriched to make nuclear bombs) and sold some to Libya perhaps in early 2003.59 Other
reports, however, pointed to intelligence findings that the material originated in North Korea but
that Pakistan bought the uranium hexafluoride and supplied it to Libya.60
Suspension of Six-Party Talks
On February 10, 2005, North Korea again escalated tensions by announcing that it would
indefinitely suspend its participation in the Six-Party Talks and that it had manufactured nuclear
weapons. North Korea’s announcement further called into question China’s preference for
positive inducements and raised the issue of using sanctions to pressure Pyongyang, including
consideration of action by the UNSC. Instead of using China’s economic and other leverage on
North Korea, the Foreign Ministry contended at a news conference on February 17 that sanctions
would only complicate the situation (a position that Foreign Minister Li Zhaoxing argued to
Secretary of State Rice on February 12). China instead urged U.S.-North Korean bilateral talks.
The Bush Administration then stepped up pressure on the PRC to use its leverage to bring North
Korea back to the talks. On March 21, 2005, Secretary of State Rice met with top PRC officials
including President Hu in Beijing, after visiting other Asian capitals. She urged China in
particular to help restart the Six-Party Talks, publicly saying that “China has the closest
relationship with North Korea,” that “it is not a U.S.-North Korean issue,” and that “there are
other options in the international system.”61 In Beijing on April 26, 2005, Assistant Secretary of
State Chris Hill reportedly raised the idea of an interruption of oil flows from China to North
Korea, but China refused.62 On April 28, President Bush reminded China about his agreement
with Jiang Zemin and mentioned Secretary Rice’s option of going to the U.N. Security Council
(where China has veto power). A PRC Foreign Ministry official publicly blamed Washington for
a “lack of cooperation” and Bush for calling Kim Jong Il a “tyrant” at a news conference.63 At a
congressional hearing on May 26, Hill said that China had “enough influence” to convince North
Korea to return to the talks but had not done it. He also made China accountable for any failure of
the Six-Party Talks if it failed to get its “very close friend” back to the talks.64

59 David Sanger and William Broad, “Tests Said to Tie Deal on Uranium to North Korea” and “U.S. Asking China to
Press North Korea to End its Nuclear Program,” New York Times, February 2 and 9, 2005.
60 Glenn Kessler and Dafna Linzer, “Nuclear Evidence Could Point to Pakistan,” Washington Post, February 3, 2005;
Dafna Linzer, “U.S. Misled Allies About Nuclear Export,” Washington Post, March 20, 2005.
61 Secretary Condoleezza Rice, “Remarks to the Press in China,” Beijing, March 21, 2005.
62 Glenn Kessler, “China Rejected U.S. Suggestion to Cut Off Oil to Pressure North Korea, Washington Post, May 7,
2005.
63 Joseph Kahn, “China Says U.S. Impeded North Korea Arms Talks,” New York Times, May 13, 2005.
64 House International Relations Subcommittee on Asia and the Pacific, hearing on Northeast Asia, May 26, 2005.
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Meanwhile, Secretary Rice also offered a strengthened U.S.-PRC relationship and agreed that
Deputy Secretary of State Robert Zoellick would hold the first “Senior Dialogue” with his PRC
counterpart, a meeting which was scheduled for early August 2005. PRC ruler Hu Jintao had
requested what China called “strategic talks” when he met with President Bush in November
2004.65 One day after North Korea announced on July 9 that it would return to the talks, Secretary
Rice visited China, but this time before visiting U.S. allies (Thailand, Japan, and South Korea).66
4th Round and Joint Statement (July-September 2005)
After a period of 13 months without talks, China announced the start of the fourth round of the
Six-Party Talks in Beijing on July 26, 2005, and described China’s role as both a “host” to
“facilitate” the talks and a “participant.” The inconclusive first phase of this round ended on
August 7, when the countries agreed to recess and resume talks on August 29. Pakistani President
Pervez Musharraf provided support for U.S. reports of North Korea’s uranium enrichment
program, when he said that A.Q. Khan supplied North Korea with centrifuges and their designs.67
North Korea did not return to the talks as agreed but returned later on September 13. Meanwhile,
President Bush agreed to meet at the White House with Hu Jintao in early September but had to
postpone because of Hurricane Katrina. Bush then met with Hu in New York on September 13.
China proposed a joint statement that recognized North Korea’s insistence on a light water reactor
and had no explicit mention of a uranium program. On September 17, PRC Vice Foreign Minister
Dai Bingguo presented China’s draft as the “most realistic” and put pressure on the United States
to agree to it.68 Along with other countries, the United States agreed to sign the Joint Statement
of Principles (not an agreement) on September 19, 2005
, in which North Korea committed to
abandon “all nuclear weapons” and “existing nuclear programs” and to return to the NPT and
IAEA safeguards; and the other countries agreed “to discuss, at an appropriate time, the subject of
the provision of a light water reactor.” However, the United States had to clarify separately that
dismantlement of nuclear weapons must be verifiable; that nuclear programs included plutonium
and uranium; and that an “appropriate time” for “discussion” of a light water reactor would be
when North Korea has verifiably eliminated all nuclear weapons and all nuclear programs.69
At a hearing of the House International Relations Committee on October 6, 2005, Representative
Ileana Ros-Lehtinen asked about PRC pressure to accept the deal. Assistant Secretary of State
Chris Hill did not deny that Beijing exerted pressure and noted that there were earlier PRC drafts
that were “absolutely unacceptable,” while the mention of a light water reactor was “not
welcomed.” He testified, nonetheless, that the United States benefitted from China’s strong desire
to reach a deal and that “we can work well with the Chinese.” He also described China’s role as
that of a “secretariat” (producing drafts), seemingly a neutral role.

65 Department of State, Daily Press Briefing, April 8, 2005; Deputy Secretary of State Robert Zoellick, “Remarks at
U.S. Embassy Beijing,” August 2, 2005; and Glenn Kessler, “Zoellick Details Discussions With China on Future of the
Korean Peninsula,” Washington Post, September 7, 2005.
66 Secretary Condoleezza Rice, Press Availability in Beijing, July 10, 2005.
67BBC, August 24, 2005; and New York Times, September 13, 2005.
68 Xinhua [New China News Agency], September 17, 2005; and Joseph Khan and David Sanger, “U.S.-Korean Deal On
Arms Leaves Key Points Open,” New York Times, September 20, 2005.
69 Department of State, “Joint Statement of the Fourth Round of the Six-Party Talks,” Beijing, and “North Korea—U.S.
Statement,” New York City, September 19, 2005.
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5th Round (November 2005)
After the joint statement of September 2005 was signed, PRC Vice Premier Wu Yi traveled to
North Korea on October 8-11, 2005, promising new economic aid. Top PRC leader Hu Jintao
then followed with a visit on October 28-30 and attended a ceremony to sign economic
agreements. On November 1, China announced that the next round would start on November 9.
While there was progress in the process, when the meeting for the 5th round of the Six-Party Talks
ended on November 11, no progress in results was announced for the implementation of the joint
statement to dismantle North Korea’s nuclear weapons. Moreover, there continued to be
differences between the U.S. and PRC approaches in continuing the Six-Party Talks. While
President Bush called for “firm resolve” in a speech given in Kyoto, Japan, on November 16,
2005, the PRC’s Hu Jintao called for “greater flexibility” in a speech in Seoul the next day.
PRC Communist Party General-Secretary Hu Jintao hosted North Korean ruler Kim Jong Il in
China on January 10-18, 2006, and Hu expressed support for the Six-Party Talks. The PRC
proposed a meeting on January 18 in Beijing between Assistant Secretary of State Chris Hill and
North Korean negotiator Kim Kye-gwan. China’s media said that PRC diplomat Wu Dawei “also
joined” the implied U.S.-DPRK bilateral meeting (vs. the U.S. view of a three-nation meeting).
On February 3, 2006, Senators Harry Reid (Democratic Leader), Carl Levin (Ranking Democrat
of the Armed Services Committee), Joseph Biden (Ranking Democrat of the Foreign Relations
Committee), and John Rockefeller (Vice Chairman of the Intelligence Committee) wrote a letter
to President Bush, saying that U.S. policy “still has not resulted in an elimination, freeze, or even
a slowing of North Korea’s nuclear and ballistic missile activities.” At a hearing of the House
International Relations Subcommittee on Asia and the Pacific on March 8, 2006, Chairman James
Leach critiqued President Bush’s “reactive” approach to the Six-Party Talks that “appear
moribund,” calling for U.S. leadership, “initiative” for more dialogue, “greater flexibility” for
diplomacy, sending Assistant Secretary of State Chris Hill (the witness) to Pyongyang,
negotiation of a permanent peace on the peninsula at a separate forum, direct contacts with North
Korean officials, and liaison offices to solve a “problem of communication.” Leach argued
against continuing to “transfer the initiative to others, indebting us to the diplomacy of countries
that may have different interests or simply ensconcing the status quo.”
Indeed, despite its considerable influence, China’s balanced role placed its stance as more neutral
than supportive of the United States and its allies. Moreover, while Beijing pursued the “process”
of the talks, results remained elusive. The burden increased on China’s preferred diplomacy to
achieve the DPRK’s nuclear disarmament. The impasse also threatened to strain U.S.-PRC ties.
Missile Tests (July 2006)
The impasse continued into the summer of 2006, when China failed to prevent North Korea from
test-firing seven ballistic missiles, including the first test of a Taepo Dong-2 ICBM under
development with a range (perhaps 3,700 miles) that could reach Alaska.70 After the DPRK began
preparations in May, Congress expressed concerns, including in a letter from Senators Carl Levin
and Hillary Clinton to President Bush on June 15. At a hearing of the House Armed Services

70 In a radio interview on July 8, 2006, Secretary of Defense Donald Rumsfeld said that North Korea announced it has
nuclear weapons and ballistic missiles, but it is uncertain whether North Korea has the ability to mate a nuclear weapon
with a ballistic missile. Also, he said that North Korea has 3-5 more “Taepodong-2 airframes.”
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Committee on June 22, some Members asked about China’s role. Brigadier General John Allen,
the Pentagon’s Principal Director for Asian and Pacific Affairs, testified that the PRC tried to
dissuade North Korea from steps that would be destabilizing and undermine the Six-Party Talks.
However, the PRC’s use of leverage, including the PLA’s opposition or acquiescence to the
DPRK’s missile program, was unclear. Indeed, there was high-level military contact between the
PRC and DPRK shortly before the July 2006 missile tests, similar to that before the August 1998
missile firing. On June 21, 2006, the PLA Chief of General Staff, General Liang Guanglie, told a
DPRK military visitor that the PLA will “expand cooperation” with the Korean People’s Army.
On July 4, 2006 (Washington time), North Korea provocatively fired a Taepo Dong-2 ICBM that
failed in less than 40 seconds after launch and several short-range Scuds and medium-range
Nodongs. On July 5, Senator John McCain stated that China and Russia have the most leverage
over North Korea and warned that their postures would have a heavy impact on our relations.
In a phone call with President Bush on July 6, PRC ruler Hu Jintao expressed “deep concerns”
about the “situation” but also warned against actions that might “aggravate the situation.”71 On
July 7, with U.S. support, Japan sponsored a UNSC resolution that invoked Chapter VII of the
U.N. Charter (language for sanctions and/or force), but China countered with a non-binding
statement by the UNSC president with no mention of Chapter VII. China’s draft statement of July
10 called for resuming the Six-Party Talks, preventing technology and financial transfers to North
Korea’s missile and WMD programs, and other voluntary measures. Tokyo and Washington
agreed on July 10 to postpone a vote on their resolution to give time for Beijing’s diplomacy.
China sent a scheduled delegation led by Vice Premier Hui Liangyu to Pyongyang on July 10-15
to commemorate the 45th anniversary of the bilateral friendship treaty, and Hui reportedly signed
a new agreement on economic aid. But Kim Jong Il snubbed the PRC visitor. Although China was
given time for this mission, Beijing intensified its criticism of Tokyo on July 11, calling its
resolution an “overreaction.” Assistant Secretary of State Chris Hill reported from Beijing on July
12 that China’s delegation failed to achieve progress in getting Pyongyang back to the talks.
On July 12, China (and Russia) reportedly dropped their pursuit of a draft statement to sponsor a
draft UNSC resolution that countered Japan’s resolution primarily by withholding authority under
Chapter VII (for sanctions or use of force). Still, China’s resolution called for nations to resume
the Six-Party Talks and refrain from supplying technology or funds to the DPRK’s missile
program. Despite similar goals, Beijing’s envoy threatened to veto Tokyo’s resolution.
Ultimately, negotiations led to UNSC Resolution 1695 that was adopted unanimously on July 15,
2006, condemning the DPRK’s missile launches, demanding that it suspend its missile program,
requiring all countries to prevent technology transfers to its missile or WMD programs, requiring
countries to prevent missile proliferation from the DPRK and financial transfers to its missile or
WMD programs, as well as urging the DPRK in particular to show restraint and return to the Six-
Party Talks (with implementation of the September 2005 Joint Statement and abandonment of all
nuclear weapons and nuclear programs). While in St. Petersburg, Russia, for the Group of Eight
summit, President Bush thanked Hu Jintao for his “leadership” on the resolution. Also, on July
26, 2006, the White House confirmed reports that in late 2005, China had frozen North Korean
assets at the Bank of China for counterfeiting the PRC currency.72

71 The official China Daily, July 7, 2006.
72 Yonhap News, July 24, 2006; Reuters and Zhongguo Tongxun She, July 26, 2006.
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Nonetheless, at a hearing of the Senate Foreign Relations Committee on July 20, 2006, Chairman
Richard Lugar pointed out that China facilitated talks on the DPRK while continuing to supply
key energy and lifelines into North Korea. He warned that although China wanted to avoid
regional instability, the missiles tests were destabilizing; China’s ability to secure global benefits
for its high economic growth rates depended on continued cooperation with the West; and
“Beijing must reassess its regional priorities.” It remained unclear whether China supported use
of Chapter VII, although Assistant Secretary Hill testified that the resolution’s language on
“international peace and security” was a reference to Chapter VII. Despite the UNSC resolution,
China criticized Japan’s sanctions on September 19 and refused to attend a meeting of eight
countries to discuss the DPRK at the U.N. two days later.
In September 2006, the House and Senate passed the conference report for the FY2007 NDAA
(P.L. 109-364), which required the President to appoint a North Korea Policy Coordinator to
review policy and report to Congress. The Administration did not comply with an appointment.
Congress later repealed the requirement in the FY2008 NDAA (P.L. 110-181).
First Nuclear Test (October 2006)
On October 3, 2006, North Korea warned that it would conduct a nuclear test, and China reacted
the next day by singling out North Korea to use restraint. On October 9, North Korea conducted a
nuclear test. On the same day, even as President Bush reacted with no confirmation of the test,
China confidently expressed its “opposition” to North Korea for “flagrantly” conducting a nuclear
test. The next day, a PRC-owned newspaper in Hong Kong specifically reported that North Korea
conducted a nuclear test 300 meters underground with an explosion of 800 tons.73 China’s
strongly negative reaction to this nuclear test reflected a heighten fear of instability on its
periphery and frustration at North Korea’s defiance of China’s leaders. (On October 16, 2006, the
Director of National Intelligence publicly confirmed this nuclear test of “less than a kiloton.”
President Bush issued a formal determination on December 7, 2006, declaring that North Korea
detonated a nuclear explosive device on October 9, 2006.)
The PRC Foreign Ministry urged resuming the Six-Party Talks. China also agreed to UNSC
sanctions but opposed using force or the PSI, which China did not join.74 The United States and
Japan compromised with China and Russia, which urged “balance” (targeted arms embargo, no
ban on ships and aircraft, restrictive language for “measures under Article 41” (sanctions) of
Chapter VII, and “cooperative” action including cargo “inspections” to prevent proliferation).
On October 14, 2006, China voted with all other members of the UNSC for Resolution 1718,
imposing sanctions to prevent the supply of major weapons as well as items that could contribute
to the DPRK’s nuclear, missile, or other WMD programs; luxury goods; transfers of funds for
those programs; travel by people responsible for those programs; and inspection of cargo to
prevent WMD proliferation. Secretary Rice praised China for its “remarkable evolution.” On
October 17, Rice left for Japan and South Korea (allies first), China, and Russia, saying she

73 Ta Kung Pao, October 10, 2006.
74 China likely has concerns about any military action by Japan, including logistical support for U.S. naval ships
conducting inspection and interdiction at sea. Also, China became highly sensitive to U.S. inspection or interdiction at
sea in 1993, when China was the target of U.S. inspection of a cargo ship called Yinhe, which was suspected of
supplying chemicals to Iran. See CRS Report 96-767, Chinese Proliferation of Weapons of Mass Destruction:
Background and Analysis
, by Shirley A. Kan.
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expected every country to “fully implement all aspects” of Resolution 1718. She defended the
Administration’s approach, saying “what the President has done in putting together this coalition,
with China at the center of it willing to go along with Chapter 7, is quite remarkable.”75 In
remarks in Beijing on October 20, Rice asserted that China was now committed to the DPRK’s
denuclearization, rather than Washington dealing bilaterally with Pyongyang.
However, China’s enforcement of the resolution was questionable, as it called for “cooperative
action” in “inspection” (and not interception or interdiction) of cargo. Also, while any PRC
sanctions under its strict interpretation of Resolution 1718 might seek to counter the DPRK’s
weapons-related activities, they might not be sufficiently broad or effective in achieving the
ultimate, unrealized goal of the dismantlement of North Korea’s nuclear weapons and programs.
China’s agreement to ban luxury goods could have indicated its disapproval of the defiance of
Kim’s regime. However, “luxury goods” were not defined, and North Korean elites reportedly
continued to enjoy shopping sprees across the border in Dandong, China.76 Indeed, China
increased the export of banned luxury goods to North Korea from 2006 to 2007.77
Immediately after voting for the resolution, the PRC ambassador stated his reservations that
“China does not approve of the practice of inspecting cargo” to and from the DPRK. After
imposition of sanctions, China’s customs agents reportedly carried out more stringent inspections
of cross-border traffic, perhaps to prevent dangerous transfers.78 China seemed to have tightened
“inspections” (to the letter of the resolution), without participation in military inspection or
interdiction at sea. Also, after the nuclear test, China’s major state-owned banks suspended
financial transactions with North Korea and then relaxed restrictions around mid-November.79
Other than these initial and limited actions, PRC and foreign reports portrayed business as usual
in PRC trade with North Korea.80 The PRC Foreign Ministry also declared on October 17 that the
“China-DPRK border is normal.” China had numerous other options, including limiting its
exports to and imports from North Korea, valued at $1.6 billion in 2005.81 Limiting investments
there and cracking down on smuggling were other PRC options. On October 22, PRC media
reported the arrest of two people for smuggling uranium, possibly from North Korea, but that
arrest took place in September 2006, before the nuclear test.82 China also could have cut crude oil
supplies (up to 90% of the DPRK’s supplies). Some stoppage of supplies (in February 2005,
February 2006, and September 2006) was reported, but that took place before the DPRK’s nuclear
test and not as sanctions. Also, PRC provision of diesel fuel as aid to North Korea continued. The
amount of crude oil that the PRC exported to the DPRK remained the same in 2005 to 2007.83

75 Secretary Condoleezza Rice, “Briefing on Upcoming Trip to Asia,” October 16, 2006.
76 Gordon Fairclough, “Close-out Sale: North Korea’s Elite Shop While They Can,” WSJ, December 18, 2006.
77 Nicholas Kralev, “Chinese Exports Blunt U.N. Sanctions,” Washington Times, December 19, 2008, citing a report by
the Peterson Institute for International Economics.
78 AP, October 16, 2006; Yonhap, October 17, 2006; China Daily, October 19, 2006.
79 JijiWeb, Tokyo, October 25, 2006; a State Department official, November 13, 2006; JijiWeb, November 26, 2006;
Nihon Keizai Shimbun, November 28, 2006. The PRC foreign ministry denied on October 24 that the PRC ordered the
banks to stop “normal” commercial transactions with North Korea but did not deny the suspension of transactions.
80 Wen Wei Po, October 17, 2006; Huanqiu Shibao, October 19, 2006; New York Times, October 27, 2006.
81 Zhongguo Jingying Bao, October 16, 2006.
82 Liaoning Jingwang, Shenyang, October 22, 2006; Chosun Ilbo, Seoul, October 24, 2006.
83 New York Times, October 31, 2006; Yonhap, November 8, 2006; and Global Trade Atlas.
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Continued 5th Round, Bilateral Meetings, and February 2007 Statement
On October 31, 2006, the PRC announced a trilateral meeting among PRC, DPRK, and U.S.
officials in Beijing, at which they agreed to resume the Six-Party Talks “soon.” Meeting reporters
in the Oval Office, President Bush publicly thanked China for this bit of news. Nearly two
months later, what China called the “second phase” of the fifth round took place in Beijing on
December 18-22, 2006. China proposed “working groups”—including bilateral ones—and issued
a statement citing “useful” talks on how to implement the September 2005 Joint Statement.
However, Assistant Secretary Hill reported no breakthrough.
Significantly, on January 16-17, 2007, separately from the Six-Party Talks and for the first time
outside of Beijing, Hill traveled to Berlin and held a bilateral meeting with his North Korean
counterpart to make progress in the process of meetings. Hill indicated U.S. willingness and
flexibility to use a “bilateral mechanism,” with the specific approval of President Bush and
Secretary Rice to resolve the problem.84 Meanwhile in Beijing, Deputy Assistant Secretary of
Treasury Daniel Glaser held separate talks with the North Koreans on sanctions that froze North
Korean assets at a bank in Macau, the Banco Delta Asia (BDA). On January 30, 2007, Glaser
resumed those talks in Beijing, and China said that the “third phase” would start on February 8.
On February 13, 2007, the six countries agreed to a Joint Statement based upon which North
Korea would shut down the Yongbyon nuclear facility and allow IAEA inspections. The DPRK
also would “discuss” with other parties a list of all nuclear programs that would be abandoned.
The United States agreed to start bilateral talks with the goal of a diplomatic relationship and the
removal of the DPRK from the list of state sponsors of terrorism. Five Working Groups were
established: (1) denuclearization of the Korean Peninsula; (2) normalization of U.S.-DPRK
relations; (3) normalization of DPRK-Japan relations; (4) economic and energy cooperation; and
(5) Northeast Asian Peace and Security Mechanism. Based on the DPRK’s progress in meeting
the terms of the agreement, economic aid (including a total of 1 million tons of heavy fuel oil), a
ministerial meeting including Secretary of State Rice, and negotiations for permanent peace on
the Korean Peninsula were promised. Rice also said that the United States agreed to resolve,
through a separate channel, the issue of whether to release North Korean funds at BDA.
Restated Assessment of Uranium Program
Shortly after the February 2007 Joint Statement, Assistant Secretary Hill updated the assessment
of the DPRK’s highly enriched uranium (HEU) program, saying that North Korea purchased
some equipment (including Pakistani centrifuges from A.Q. Khan) and that there was a question
of whether its procured aluminum tubes were used in a HEU program. Hill also said that “the
North Koreans have not acknowledged having an HEU program.”85 Moreover, Joseph DeTrani,
the DNI’s Mission Manager for North Korea, testified on February 27 that whereas U.S.
intelligence had “high confidence” in October 2002 that North Korea was acquiring material
sufficient for a production-scale capability to enrich uranium, there was a change to “mid-
confidence.”86 An unnamed U.S. official clarified in June 2007 that the 2002 finding of the

84 State Department, Christopher Hill’s briefing, Berlin, Germany, January 17, 2007.
85 Christopher Hill, “Update on the Six-Party Talks,” remarks to the Brookings Institution, Korea Economic Institute,
and Asia Society, February 22, 2007.
86 Senate Armed Services Committee, hearing on the “Annual Threat Assessment of the Director of National
Intelligence,” February 27, 2007.
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DPRK’s acquisition of equipment did not change, but confidence about the progress of the HEU
program changed.87 This re-statement could have given credence to the PRC’s stated doubts about
U.S. intelligence. The intelligence community (IC) told Congress in the Section 721 Report for
2007 that although North Korea halted and disabled portions of its plutonium production, “we
assess with high confidence it has in the past pursued a uranium enrichment capability that we
judge is for nuclear weapons and assess with at least moderate confidence that it continues to
pursue such a capability.” For 2008, the IC reported that “although North Korea has halted and
disabled portions of its plutonium production program, we continue to assess North Korea has
pursued a uranium enrichment capability at least in the past. Some in the IC have increasing
concerns that North Korea has an ongoing covert uranium enrichment program.”
6th Round and October 2007 Statement
The “sixth round” of talks began on March 19, 2007, and then adjourned on March 22, with
North Korea demanding that its frozen funds (about $25 million) be released from BDA in
Macau. After the Treasury Department worked with Russia to release the $25 million to North
Korea on June 14, 2007, diplomacy resumed on the dismantlement of nuclear programs.
Again meeting bilaterally and not in Beijing, Assistant Secretary of State Hill visited Pyongyang
on June 21 and briefed reporters in Washington four days later on U.S. goals for the disablement
of the DPRK’s Yongbyon nuclear reactor by the end of 2007 and “complete clarity” on the highly
enriched uranium program. With the IAEA’s verification, the DPRK shut down the reactor and
related facilities at Yongbyon on July 14. The “Six-Party Talks” resumed on July 18-20. However,
the Joint Statement issued by the PRC did not include a deadline for the DPRK’s declaration of
all nuclear programs and disablement of all nuclear facilities.
On September 1-2, 2007, Assistant Secretary Hill again held negotiations with North Korean
officials outside of the Six-Party Talks in Beijing, this time in Geneva. He announced an
agreement that the DPRK would provide a full declaration of all nuclear programs and disable
nuclear programs by the end of 2007. Hill asserted that this was “not a bilateral process,” but the
PRC applauded the improved U.S.-DPRK relationship.88
Meanwhile, on September 16, China provided its first shipment of 50,000 tons of heavy oil to
North Korea. When China hosted the “second session of the 6th round of the Six-Party Talks” on
September 27-30 in Beijing, PRC Vice Foreign Minister Wu Dawei stressed the progress made by
the Working Groups. Days later, China issued a Joint Document on October 3, 2007. In the
statement, the DPRK agreed to disable all nuclear facilities, and this disablement focused on three
facilities (including the Yongbyon reactor site) to be completed by December 31, 2007. The
United States alone agreed to lead disablement work and provide funding. The DPRK also agreed
to provide a “complete and correct declaration” of all nuclear programs. The DPRK reaffirmed its
commitment on nuclear nonproliferation. The statement also discussed normalization of the U.S.-
DPRK and Japan-DPRK relationships and a ministerial-level meeting with no set dates.

87 Bill Gertz, “Data on N. Korea Centrifuges Sought,” Washington Times, June 12, 2007.
88 State Department, “North Korea to Disable Nuclear Programs by End of 2007,” Geneva, Switzerland, September 2,
2007; “U.S.-DPRK Bilateral Working Group Talks End; DPRK Agrees to Declare its Nuclear Programs and Disable Its
Nuclear Facilities,” China News Agency, September 3, 2007; Xinhua, September 4 and 6, 2007.
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Implementation and Impasse
However, the PRC-sponsored Joint Document of October 2007 raised a number of questions
about implementation, including about the disposition of nuclear equipment (in North Korea,
China, Russia, or elsewhere); disablement of nuclear facilities aside from the three cited; ultimate
dismantlement of nuclear facilities; U.S.-only funding and work for disablement; declaration of
nuclear weapons in addition to nuclear programs; clarification of uranium as well as plutonium
programs; missile and nuclear proliferation (with the North Korean-built nuclear reactor in Syria
just bombed by Israel in September);89 nuclear testing sites; verification and monitoring;
timelines for bilateral normalization; other concerns of the United States and Japan about human
rights, terrorism, and abductions; strains in the U.S.-Japan alliance; coordination with Seoul; and
the State Department’s consultations with Congress, Defense Department, and European allies.
In November 2007, the Energy and State Departments assigned liaison officials in Pyongyang to
monitor and pay for disablement at Yongbyon, including the unloading of reactor fuel rods. (U.S.
officials said they worked productively until the DPRK regime kicked them out during the week
of April 13, 2009.) Approaching the end of 2007 deadline for disablement and declaration,
Assistant Secretary of State Hill went on his second visit to Pyongyang in early December 2007,
bringing a letter from President Bush to Kim Jong Il. Upon the deadline of December 30, 2007,
the State Department said it was “unfortunate” that North Korea failed to provide a complete and
correct declaration of all nuclear programs and slowed down disablement work.
In early 2008, some critics contended that China failed to exert strong economic and diplomatic
leverage with North Korea even as it claimed credit for hosting the talks. Former Under Secretary
of State John Bolton wrote that “we are long past the point of allowing China to cover for Kim
Jong Il without any cost in its relations with the U.S.” Jay Lefkowitz, President Bush’s Special
Envoy on North Korean human rights, questioned the “misguided assumption” that China would
apply significant pressure on North Korea to abandon nuclear weapons. He noted that the PRC’s
assistance to and trade with North Korea have “persisted with only brief interruptions.”90
As the impasse continued into 2008, China’s role came into greater question. China reportedly
suspended food aid to North Korea at the start of 2008.91 Hill and DPRK Vice Foreign Minister
Kim Kye Gwan met bilaterally in Beijing on February 19 and in Geneva on March 13, 2008. In
another meeting in Singapore in April, the United States and North Korea reached an compromise
agreement (without a released text) that North Korea would declare its plutonium but separately
“acknowledge” its uranium enrichment program and the nuclear reactor it built in Syria that Israel
bombed the previous September.92 On May 8 in Pyongyang, the DPRK provided to visiting U.S.
State Department official, Sung Kim, documents related to plutonium production since 1986 at
the Yongbyon facilities. The State Department continued to call for a complete and correct
declaration from North Korea for outside verification.

89 Barbara Opall-Rome and Vago Muradian, “Bush Privately Lauds Israeli Attack on Syria,” Defense News, January
14, 2008; Paul Richter, “West Says N. Korea, Syria Had Nuclear Link,” Los Angeles Times, January 17, 2008.
90 John Bolton, “North Korea’s True Colors,” Wall Street Journal, January 11, 2008; and Jay Lefkowitz, U.S. Special
Envoy for Human Rights in North Korea, “North Korean Human Rights and U.S. National Security,” speech at AEI,
January 17, 2008.
91 Hankyoreh, Seoul, January 5, 2008.
92 Glenn Kessler, “U.S. Ready to Ease Sanctions on N. Korea,” Washington Post, April 11, 2008.
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Partial Declaration and Verification Protocol
On June 17-19, 2008, PRC Vice President and Communist Party Politburo Standing Committee
Member Xi Jinping visited Pyongyang and promised gifts or aid to the DPRK regime in the form
of 5,000 tons of aviation fuel and about $15 million.93
Secretary Rice gave a speech on June 18, defending the “Six Party Talks” and reliance on China.
She said, “our decision to support China as the chair of the six-party talks has also been a strong
incentive for Beijing to conduct itself responsibly” on North Korea. She said that a goal is to
formalize “these patterns of cooperation” into a Northeast Asian peace and security mechanism.
She noted that the goal remained to verifiably eliminate “all of North Korea’s nuclear weapons
and programs.” Rice stated that North Korea has proliferated nuclear technology to Syria and has
pursued a uranium enrichment program, although the extent of those activities was unclear. She
disclosed that there was troubling new information about North Korea’s uranium enrichment
capability. She said that after North Korea delivered its declaration of nuclear programs to China,
President Bush would notify Congress of his intention to remove North Korea from the list of
State Sponsors of Terrorism and to lift sanctions under the Trading with the Enemy Act. But she
warned that “before those actions go into effect,” the United States would assess North Korea’s
cooperation in verifying that nuclear declaration. Rice stressed, “we are insisting on verification.”
She called for rigorous verification as based on a detailed plan and involving the other five
countries as well as the IAEA; on-site access to facilities; collection and removal of samples;
forensic analysis of materials and equipment at North Korean sites and facilities; access to design
documents and other records “for all facilities associated with production and processing of all
nuclear materials in North Korea;” and interviews with North Koreans.94
A week after Xi Jinping’s visit to Pyongyang, the DPRK complied with a partial declaration on its
plutonium program. PRC Vice Foreign Minister Wu Dawei issued a statement on June 26, 2008,
telling the DPRK to submit its declaration to China that day and the United States to remove the
DPRK from the list of State Sponsors of Terrorism and from U.S. sanctions. Wu stated that there
was agreement only on a “set of principles to guide the establishment of a verification regime.”
On the same day, President Bush quickly complied with U.S. actions. He removed North Korea
from sanctions under the Trading with the Enemy Act and notified Congress of his intention to
rescind North Korea’s designation as a State Sponsor of Terrorism to be possible in 45 days. Bush
did not condition his actions on verification of the DPRK’s nuclear programs, weapons, and
proliferation, saying that “we will work through the six-party talks to develop a comprehensive
and rigorous verification protocol.” National Security Advisor Stephen Hadley acknowledged that
he had not yet seen the declaration and that he was relying on a “process” to get a verification
protocol in place within 45 days.95 The next day, U.S. officials traveled to Yongbyon to see the
destruction of the cooling tower of the reactor. The Administration agreed to pay $2.5 million for
that televised explosion and to accept a concession for North Korean “acknowledgments” on
uranium and proliferation. Bush agreed with PRC demands to keep the declaration secret.96

93 Yonhap, Seoul, July 4, 2008; PRC Foreign Ministry news conference, Beijing, July 8, 2008.
94 Secretary of State Condoleezza Rice, “U.S. Policy Toward Asia,” speech at the Heritage Foundation, June 18, 2008.
95 White House, “Statement by the Press Secretary on North Korea,” “Memorandum for the Secretary of State,”
“President Bush Discusses North Korea,” and “National Security Advisor Hadley Holds White House News Briefing
on the North Korean Nuclear Declaration,” June 26, 2008.
96 Glenn Kessler, “Message to U.S. Preceded Nuclear Declaration by North Korea,” Washington Post, July 2, 2008;
(continued...)
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Secretary of State Rice then traveled to Beijing at the end of June to praise China’s “leading role”
and to press for the need for a framework for verification and monitoring, acknowledging that
“we moved some of the verification steps up into the second phase.” (As discussed above, the
Joint Document of October 2007 left a number of unsettled questions about implementation,
including verification.) While Rice stressed the need to agree on verification and monitoring,
PRC Foreign Minister Yang Jiechi did not mention this need in their public comments.97
For the first time since the previous September, the formal format of the Six-Party Talks resumed
in Beijing on July 10-12, 2008, along with a bilateral U.S.-DPRK meeting in Beijing on July 8, to
discuss the broad U.S. proposal for a verification protocol. The “Six-Party Talks” issued a press
statement on agreeing to set up a verification framework, but that fell short of the U.S.
requirements for rigorous verification, as Secretary Rice specified in June. There was no primary
role for the IAEA and no mention of sampling, forensics, or schedules. Still, Rice allowed a
ministerial meeting with her DPRK counterpart on July 23 at a regional meeting in Singapore.
President Bush did not take the DPRK off the terrorism list when legally possible on August 11.
North Korea announced on August 26 that it suspended disablement at Yongbyon on August 14.
Assistant Secretary of State Hill returned to Beijing in early September, contending that China
understood the “urgency” and praising China’s role in chairing the talks as “excellent,” “active,”
“superb,” and “crucial.” He outlined the limited goal for the DPRK, “not asking for the
declaration to be verified now,” but “simply asking for the rules of how it will be verified.” He
acknowledged that the DPRK’s declaration was not yet verifiable. Still, Hill also stated that after
North Korea agreed on a verification protocol, then the United States would immediately remove
North Korea from the list of State Sponsors of Terrorism. In the same month, National Security
Advisor Hadley conceded that North Korea’s nuclear declaration “was not the complete and
correct declaration that we had hoped.” Nonetheless, he stated that after the DPRK accepts the
verification protocol, it would be taken off the terrorism list.98 Instead, on September 22, the
DPRK provocatively asked IAEA inspectors to remove surveillance cameras and seals at the
reactor and then announced intention to resume nuclear reprocessing at Yongbyon.
Hill went back to Pyongyang on October 1-3, and afterwards, China applauded those bilateral
negotiations. On October 11, 2008, in Washington, the United States announced a bilateral
“agreement” with North Korea on “verification measures” that would include sampling and
forensics and would be applied to plutonium, uranium, and proliferation programs. But there
would not be a standard, primary role for the IAEA. The State Department issued a press
statement and a fact sheet, but not the U.S.-DPRK “agreement” itself. The State Department
vaguely cited agreement in a written joint document and “certain other understandings” for
measures that “will serve as the baseline for a Verification Protocol.”99

(...continued)
Bill Gertz, “Inside the Ring,” Washington Times, July 24, 2008.
97 Secretary of State Condoleezza Rice, “Remarks with Chinese Foreign Minister Yang” and “Remarks with the Press
in Beijing,” Beijing, June 29 and 30, 2008.
98 Assistant Secretary of State Christopher Hill, “Evening Walkthrough at Six-Party Talks,” September 6; “Press
Briefing by National Security Advisor Stephen Hadley on Upcoming U.N. General Assembly,” September 20, 2008.
99 State Department, “U.S.-DPRK Agreement on Denuclearization Verification Measures,” “Fact Sheet, U.S.-North
Korea Understandings on Verification,” “On the Record Briefing: Special Envoy for the Six-Party Talks Ambassador
Sung Kim, Assistant Secretary of State for Public Affairs Sean McCormack, Assistant Secretary of State for
Verification, Compliance, and Implementation Paula DeSutter, and Acting Assistant Secretary of State for International
Security and Nonproliferation Patricia McNerney on North Korea,” October 11, 2008.
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However, despite the lack of a verification protocol, a timeline for one, or an agreement at the
“Six-Party Talks,” the Secretary of State “immediately” rescinded the designation of the DPRK as
a State Sponsor of Terrorism. This controversial decision was a retreat from the earlier U.S.
position of first getting DPRK acceptance of a verification protocol, as officials stated.
Even then, on November 12, 2008, the DPRK denied it had agreed to all the U.S. verification
measures, specifically sampling, in the written agreement negotiated with Hill. After bilateral
talks between Hill and his DPRK counterpart in Singapore on December 4-5, negotiators
convened the “Six-Party Talks” in Beijing on December 8-11. They failed to get the DPRK’s
agreement on an effective verification protocol, despite the U.S.-DPRK “agreement” in October
and what the United States called China’s “crucial” role.
Missile and Nuclear Tests (April and May 2009)
After December 2008 and particularly after the DPRK’s second nuclear test in May 2009, China’s
role has come under greater criticism. In a U.S. policy debate, critics charged that the “Six-Party
Talks” saw their “final collapse,” failed even to address the DPRK’s nuclear weapons, and drove
wedges into U.S. alliances with Japan and South Korea. In this view, during the Six-Party Talks,
the DPRK continued to proliferate suspected nuclear technology to countries such as Syria and
Burma. Moreover, successive U.S. administrations failed to keep North Korea free of nuclear
weapons, while it advanced its ballistic missile and nuclear weapon programs. In contrast to U.S.
compliments to China, some stressed that China failed to tighten aid to the North Korean military
and party elite and that Beijing failed to use its leverage effectively on Pyongyang. Thus, the
question in 2009 became how the United States should work with China while recognizing the
problems if not failure in the Six-Party Talks. Some argued that the United States should
recognize China as less critical, given its different priorities and support for the DPRK regime. In
such a view, if the United States dealt directly and proactively with the DPRK, Washington could
mitigate muddled or mixed messages controlled by Beijing in its own interests. The United States
could center its approach on allies (not a Sino-centric approach) and enhance the role of Russia.
In another view, the United States could continue to engage China given the DPRK’s dependence
on China and the U.S. goal of moving to broader resolution of tensions in Northeast Asia and
contingencies in a crisis. Consistent with this consideration, a former Deputy Assistant Secretary
of State focused on China in the second Bush Administration contended in 2011 that the PRC was
constructive and “assertive” toward the DPRK between 2006 and 2008 and that the United States
should promote a return of that PRC approach. Still, a strategic review by Henry Kissinger noted
that the DPRK reversed two decades of negotiations with multilateral and bilateral efforts, while
“process has overwhelmed substance.” He added that “Pyongyang has used the negotiating
forums available to it in a skillful campaign of procrastination, alternating leaps in technological
progress with negotiating phases to consolidate it.”100

100 “Condi’s Korean Failure,” editorial, Wall Street Journal, December 16, 2008. Yoichi Kato, “Richard Armitage:
Bush Administration Lacked Accountability,” Asahi Shimbun, December 27, 2008. John Bolton, “Obama Promises
Bush III on Iran,” Wall Street Journal, January 2, 2009. Victor Cha called for urging China to tighten aid to North
Korea in a PacNet article, “Bad Advice for Secretary Clinton,” March 9, 2009. Dan Blumenthal and Robert Kagan, in
“What to Do About North Korea,” Washington Post, May 26, 2009, wrote that the proposition of looking to China for
help has been discredited. But Michael McDevitt wrote in “North Korea as a Nuclear Weapons State,” PacNet #41A,
June 2, 2009, that the United States should start a serious discussion with China about all options in a strategic
approach to North Korea, including regime change. Tom Christensen, “Advantages of an Assertive China: Responding
to Beijing’s Abrasive Diplomacy,” Foreign Affairs, March/April 2011. Henry Kissinger, “North Korea Throws Down
the Gauntlet,” New York Times, June 4, 2009; and “The North Korean Fallout,” Washington Post, August 9, 2009.
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On January 23, 2009, the DPRK’s Kim Jong Il met with Wang Jiarui, the visiting Director of the
International Liaison Department of the Communist Party of China, and pledged to the
“denuclearization of the Korean Peninsula” and praised China’s role in the Six-Party Talks. On
February 13, Secretary of State Hillary Clinton called the Six-Party Talks “a very important
forum,” indicating that President Obama would not reject the talks while seeking results. A week
later, she appointed Stephen Bosworth as the Special Representative for North Korea Policy, but
on a part-time basis. PRC Foreign Ministry official Wu Dawei quietly visited Pyongyang on
February 17-19 on the eve of Clinton’s visit to Beijing, but North Korea asked for light water
reactors.101 However, by early February, satellites detected that North Korea was preparing
another test of its Taepodong-2 inter-continental ballistic missile (after a previous test in 2006).102
North Korea claimed on February 23 that it would launch a “satellite,” not test a missile.
Still, North Korea launched a Taepodong-2 missile on April 5, 2009, which passed over the Sea
of Japan and the nation of Japan. According to the North American Aerospace Defense Command
(NORAD), the missile’s first stage fell into the Sea of Japan, and the other stages with the
payload fell into the Pacific Ocean, but no object entered into orbit. The DPRK’s missile
appeared to have flown as far as 2,390 miles.103 President Obama issued a statement that day,
saying that the DPRK’s launch of the Taepodong-2 missile was a clear violation of UNSC
Resolution 1718 that prohibited North Korea from activities related to ballistic missiles, and he
called for action by the UNSC. The U.S. position saw such activities as covering the similar space
launch vehicles and did not see a “satellite launch” as allowed in a loophole. PRC official media
published a rare interview with a specialist of the PLA’s Second Artillery (missile force) who
stressed that missile and satellite launches involved similar technologies, except for a warhead.104
In the end, on April 11, China agreed to a compromise to condemn the launch as a violation of
Resolution 1718 but with a UNSC Presidential Statement rather than a resolution as preferred
by the United States and Japan.105 On April 13, the UNSC issued a presidential statement that
condemned the launch, with no mention of any “satellite,” and called for designating targets of
sanctions under 1718. China’s enforcement of such sanctions again raised a concern.
On April 13, the DPRK regime responded by kicking out U.S. Departments of Energy and State
officials and IAEA inspectors, and re-starting nuclear facilities. Then, the DPRK regime
conducted a second nuclear test on May 25, 2009, Memorial Day in the United States. (The
Director of National Intelligence (DNI) issued a statement on June 15 that North Korea probably
conducted an underground nuclear explosion on May 25, 2009, that yielded a few kilotons. The
DNI’s Section 721 Report for 2009 assessed progress in the DPRK’s nuclear program, reporting
to Congress that the nuclear test in 2009 was apparently more successful than the test in 2006. On
February 16, 2011, the DNI testified to the Senate Select Committee on Intelligence that the
United States did not know whether the DPRK produced nuclear weapons, despite the tests.)
On the day of the nuclear test, the UNSC issued a Presidential Statement to condemn the
nuclear test as a violation of Resolution 1718. The United States, South Korea, and Japan agreed
to seek a new UNSC resolution with sanctions. In addition, South Korea announced that it finally

101 JoonAng Daily, February 27, 2009; Kyodo, March 19, 2009.
102 Jay Solomon and Siobhan Gorman, “U.S. Believes North Korea May Be Preparing Long-range Missile Test,” Wall
Street Journal
, February 3, 2009.
103 Craig Covault, “North Korean Rocket flew Further Than Earlier Thought,” Spaceflight Now, April 10, 2009.
104 Qingnian Cankao, Beijing, April 7, 2009.
105 Colum Lynch, “Key U.N. Powers Agree on N. Korea Statement,” Washington Post, April 12, 2009.
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joined the U.S.-led PSI, a step that could convince China that the situation in the Korean
peninsula was destabilizing and to take stronger steps against North Korea. (On June 26, 2009,
Representative Ros-Lehtinen introduced H.Res. 604 in part to congratulate South Korea for
joining PSI and to urge China and other nations not in PSI to implement UNSC resolutions. Later,
in October 2010, South Korea hosted a multinational PSI drill for the first time.)
On May 30, 2009, even the PLA’s lower-level representative to the Asian defense ministers’
conference (Shangri-la dialogue) in Singapore, Deputy Chief of General Staff Ma Xiaotian,
criticized North Korea’s second nuclear test. But that was not the first time that a senior PLA
officer criticized North Korea’s provocations. As discussed above, the top PLA officer, General
Guo Boxiong, visited Washington in July 2006 and criticized North Korea’s July 4 missile tests.
The question was whether China would change its calculation about the situation in North Korea,
shift its approach, and work more effectively to change the DPRK’s behavior. In late May and
June 2009, PRC policy analysts and academics in civilian and military domains in Beijing
engaged in a heated debate about North Korea and whether its actions threatened China’s
interests, even to include whether China should abandon the special friendship that has protected
the DPRK as a “buffer” for China. In a much-cited survey reported in an official newspaper, 10
academics favored severe sanctions on North Korea, while 10 opposed such abandonment of
North Korea. The newspaper also published highly critical commentaries, including one
suggesting that China would have to deal with the problem of the DPRK regime.106 China was
most concerned with the addition of more nuclear powers on its periphery, with North Korea and
possibly Japan and South Korea (rather than another U.S. concern, that of North Korea’s
proliferation of nuclear technology to rogue regimes and terrorists). However, while there was
academic anger in Beijing, official observers remained conservative and some pointed to the
United States instead of reflecting on China’s ambivalent approach. The PRC seemed to value
retaining its unique central role and elevated importance in U.S. policy. Despite North Korea’s
defiance in seeking nuclear power status, there remained uncertainty about a major change in
PRC policy including whether it would implement sanctions under existing or new UNSC
resolutions. Reportedly, PRC policymakers reviewed their approach toward North Korea.
On June 5, 2009, Deputy Secretary of State James Steinberg met in Beijing with State Councilor
Dai Bingguo and other officials to discuss the response at the UNSC and the broader Northeast
Asian situation, before concluding his visits that took him also to Singapore, Tokyo, and Seoul,
and flying back to Washington that night. However, Foreign Minister Yang Jiechi told Steinberg
that there would be no major change in PRC policy, according to official PRC media.
Five days later, China agreed with other countries at the UNSC on new sanctions in a draft
resolution. Then, on June 12, 2009, the UNSC approved Resolution 1874 to expand the sanctions
previously imposed under Resolution 1718 in 2006. This time, the sanctions banned all of the
DPRK’s arms exports but banned only some arms imports, with exclusion of small arms and light
weapons (reportedly because China insisted on the right to sell arms to North Korea). Resolution
1874 called for denial of services for and inspections of ships suspected of carrying banned cargo,
but excluded the use of force and required consent of the flag state for inspections on the high
seas. It called for denying financial support and services that could contribute to the DPRK’s

106 Author’s consultations in Beijing; also Tang Xiang, “Many Noted Chinese Scholars Support More Severe Sanctions
to be Imposed on DPRK,” Huanqiu Shibao [Global Times], May 26, 2009; Sun Zhe, “DPRK Conducts Nuclear
Blackmail,” Huanqiu Shibao, May 26, 2009; Zhu Feng, “China Must Defend the Authority of the Six-Party Talks,”
Huanqiu Shibao, June 4, 2009; Zhu Feng, “North Korea Nuclear Test and Cornered China,” PacNet #41, June 1, 2009.
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proliferation activities and prohibited programs. It called on countries to implement the previous
Resolution 1718. China expressed opposition to the DPRK’s nuclear test but also opposition to
use of force and called for restraint and resumption of the Six-Party Talks.
However, concerns increased not only about China’s enforcement of sanctions but also whether
it could benefit by expanding its economic interests as other countries reduced ties to North
Korea. Only on April 24, 2009, did the UNSC list three North Korean entities subject to sanctions
imposed under 1718. Then on July 16, 2009, the UNSC designated some entities, goods, and
individuals sanctioned under Resolution 1718. On August 3, China submitted a required report to
the UNSC on its implementation of the sanctions under Resolutions 1718 and 1874, promising
generally to implement controls according to the UNSC’s lists of items embargoed for export to
the DPRK, to freeze assets of listed individuals or entities, and to deny entry into China of listed
people. However, the PRC did not report specific steps, promised only to “refrain” from
exporting weapons to the DPRK (excepting small arms and light weapons while these could be
used domestically in the DPRK), did not include a ban on exporting luxury goods to the DPRK,
and stood against sanctions that affect the DPRK’s “national development,” “lives,” or “normal”
international ties. In spite of Resolution 1718’s sanctions announced in 2006 on luxury goods, the
UNSC did not issue a list of such banned goods imported by the DPRK’s elite.107
In addition to the previous questions about China’s enforcement of that ban on luxury goods for
North Korea, an unnamed PRC company tried to complete an order made in February 2009 by an
Austrian firm for two yachts suspected of going to Kim Jong Il instead of China as claimed. Italy
blocked the $18 million contract in July 2009.108 Meanwhile, in June, Japan arrested a South
Korean resident for exporting in October and December 2008 34 pianos and four Mercedes-Benz
cars (the cars that North Korean diplomats and other elites have used for decades) from Japan to
the Rungra Trading Company in Pyongyang (also called Room 39 to benefit Kim Jong Il) through
the Dalian Global Company in Dalian, China. In July 2009, the Department of the Treasury had
information that the China Guangfa Bank engaged in business with the DPRK’s arms dealer,
Global Trading and Technology (a front for Korea Mining Development Trading Corporation).109
Also, in December 2009, Japan arrested two traders who exported expensive cosmetics from
Japan to North Korea in October 2008, again through Dalian Global. In addition, about 100 cars,
called F3 and made by BYD in China, crossed the border to North Korea through Dalian in April
2010.110 (On November 4, 2010, the United States imposed sanctions on the DPRK regime’s
Green Pine Associated Corporation, Reconnaissance General Bureau, and Office 39.) China’s
port city of Dalian has been named as a major trans-shipment point for the DPRK regime.
Concerning maritime interdiction, in June 2009, just after the UNSC passed Resolution 1874 to
sanction North Korea after its second nuclear test on May 25, the U.S. Navy’s USS John McCain
tracked a North Korean ship (Kang Nam 1) as it sailed toward Burma. Surprisingly, Burma then
told North Korea that the ship would not be allowed to dock if it carried weapons or banned
materials, and the ship returned to North Korea. Meeting at the Defense Consultative Talks in
Beijing on June 24, Under Secretary of Defense Michele Flournoy said that she and the PLA did
not discuss enforcement of the resolution against the ship off China’s coast, claiming the meeting

107 On December 5, 2011, the UNSC issued Implementation Assistance Notice No. 3: Guidelines for the
Implementation of Measures Regarding “Luxury Goods” Contained in Security Council Resolutions 1718 and 1874.
108 Financial Times, July 22, 2009; Associated Press, July 23, 2009.
109 South China Morning Post, September 10, 2011.
110 Kyodo, June 9, 2009, December 1, 2009; Sankei Shimbun, February 3, 2010; TV Asahi, April 14, 2010.
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was not “appropriate” to discuss such “operational” details.111 But at the ASEAN Regional Forum
(ARF), Secretary of State Hillary Clinton said on July 23 that the United States asked China and
Southeast Asian countries to convey to Burma concerns about the North Korean ship. She also
confirmed concerns about military, including nuclear, cooperation between North Korea and
Burma. (Back in November 2005, Senator Richard Lugar wrote of concerns about their military
cooperation to the State Department.) Clinton praised China for “full implementation” of 1874.
In July, China released information through a local newspaper that Customs agents confiscated a
rare metal used to produce alloy steel (called vanadium) being smuggled to North Korea. In the
same month, China’s NHI Shenyang Mining Machinery Company suspended construction of a
bronze mine in North Korea with a company subject to U.N. sanctions. In August, the DPRK’s
Korea Kwangson Banking Corporation, under U.S. sanctions, closed in Dandong, China.112 After
the DPRK’s nuclear test in October 2006, there were also reports of China’s initial actions.
On October 4, PRC Premier Wen Jiabao visited Pyongyang and signed bilateral agreements to
provide economic and technical assistance. Then the day after, Kim Jong Il reportedly told Wen
that North Korea would attend multilateral talks that include “Six-Party Talks,” but depending
upon U.S.-DPRK talks on “peaceful” ties. Assistant Secretary of State Kurt Campbell promptly
visited Beijing on October 14 and praised U.S.-PRC coordination as “tight and close,”
reminiscent of his predecessor Chris Hill’s praise in 2008. U.S. coordinator of sanctions Philip
Goldberg visited Beijing on October 20 and called on China to implement sanctions.
Thus, despite a debate, the PRC leadership apparently decided against a fundamental change in
policy toward North Korea in part because of an assessment that its nuclear program presented no
direct threat to China; that it instead posed a challenge to U.S. interests; that Beijing could buy
time for stability; and that Beijing perceived no strong U.S. pressure to help on a top priority.113
Critics have suspected China’s preference for a process to talk, bolster its role, and sustain the
status quo (that includes a divided Korean peninsula), in contrast to the United States and allies,
particularly South Korea and Japan, that seek real results in the stated goals for the DPRK. China
stepped up engagement with the DPRK, rather than isolating it. As discussed above, PRC
Defense Minister Liang Guanglie visited Pyongyang in November 2009. In December, China’s
Minister of Public Security hosted and promised material aid to his North Korean counterpart.
China’s continued support for the DPRK regime could have induced it to negotiate with a greater
sense of security, but bolstering the regime proved counterproductive as it became less willing (if
it had been willing) to forego its nuclear program as it developed more capabilities.
China could not charge the United States for lack of engagement with China or with the DPRK.
President Obama visited Beijing for a summit in November 2009 and discussed with Hu Jintao
the goal of the verifiable elimination of North Korea’s nuclear weapons program, including
through the resumption of the Six-Party Talks “as soon as possible.” The Administration also
stepped up signals for a robust bilateral dialogue by sending Special Representative Stephen
Bosworth to Pyongyang on December 8, 2009, to seek North Korea’s return to the Six-Party

111 Quoted by Voice of America, June 24, 2009.
112 Dandong Ribao, July 28, 2009; Chosun Ilbo, July 30, 2009; Yomiuri Shimbun, October 1, 2009.
113 Author’s consultations with close PRC observer of policymaking in Beijing, October 2009; Jonathan Pollack, “Kim
Jong Il’s Clenched Fist,” Washington Quarterly, October 2009. As one indication of attitudes in the PRC, a poll
conducted by the Lowry Institute and MacArthur Foundation in August-September 2009 found that 34% of those
polled considered the United States as the greatest threat, while just 3% considered North Korea as the greatest threat.
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Talks and commitment to implement the Joint Statement of 2005. However, Bosworth said that
his visit was exploratory, with no commitment from the DPRK, while he reportedly told the
DPRK that future talks would have to cover its uranium enrichment program.114
DPRK’s Attacks and Uranium Enrichment (March and November 2010)
Even after the PRC protested President Obama’s notifications to Congress on January 29, 2010,
of arms sales to Taiwan, General Secretary Hu Jintao of the Communist Party of China (CPC)
sent CPC Director of International Liaison Wang Jiarui to North Korea on February 8 to meet
with Kim Jong Il and seek his return to the Six-Party Talks. However, the DPRK’s media did not
mention a discussion on the Six-Party Talks. Meanwhile, another challenge to re-starting the
“Six-Party Talks” to negotiate with North Korea came after it attacked South Korea’s naval ship,
Cheonan, on March 26, 2010, killing 46 sailors. As of late April, Secretary of State Clinton and
PRC State Councilor Dai Bingguo still discussed getting North Korea back to the “Six-Party
process.” However, when Kim Jong Il visited the PRC on May 3-7 and discussed the Six-Party
Talks, the State Department on May 4 shifted to stress that South Korea’s investigation of the
Cheonan’s sinking should be completed before any announcement from Beijing of a return by
North Korea to the talks. On May 20, South Korea announced the finding that North Korea sank
the Cheonan. At the G-20 summit in Toronto on June 27, 2010, President Obama criticized China
for “willful blindness” toward North Korea. Nonetheless, taking a different stance from the
United States, South Korea, and other countries, China refused to condemn directly North Korea,
including in negotiations for a UNSC Presidential Statement issued on July 9. Still, in that
statement, the UNSC condemned the “attack.” Later, in July, the PRC’s military and then
followed by the Foreign Ministry (apparently facing the PLA’s pressure) expressed “opposition”
to U.S.-ROK exercises in the Yellow Sea aimed at deterring North Korea and improving South
Korea’s defense, even before the United States and South Korea announced on July 20 they will
hold a series of exercises. The State Department’s Special Advisor Robert Einhorn acknowledged
to the press in Tokyo on August 4, 2010, that the Obama Administration discussed with China the
need to tightly enforce sanctions under UNSC Resolutions 1718 and 1874 against North Korea,
rather than to capitalize on sanctions imposed by other countries.
With its diplomacy on the defensive, the PRC sent Special Representative Wu Dawei to
Washington and other capitals in late August and early September to press for resuming the Six-
Party Talks, including suggesting a three-step process of U.S.-DPRK talks, informal talks among
the six countries, and then the Six-Party Talks. Later in the month, CPC General Secretary Hu
Jintao hosted Kim Jong Il, expressed concern about developments only after the UNSC’s
statement on the Cheonan, and stressed “peace and stability” on the Korean peninsula ahead of
mentioning “denuclearization.” Given the DPRK’s missile and nuclear tests, and sinking of the
Cheonan, the Obama Administration shifted to call the talks explicitly the “six-party process,”
while doubting the credibility of any announcement in Beijing of repeated talks and looking for
results in North Korea’s implementation of the existing Joint Statement of 2005.
On September 16, 2010, the Senate Armed Services Committee held a hearing with testimony
from the Departments of Defense and State about efforts for stability in the Korean peninsula.
However, the challenge continued with North Korea’s artillery attack against South Korea on
November 23. The month before, the DPRK held a military parade for the 65th anniversary of the
Workers’ Party of Korea that was reviewed by Kim Jong Il as well as his son, Kim Jong Un, who

114 Washington Post, December 28, 2009.
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was newly installed as a Vice Chairman of the Central Military Commission. The PRC sent Zhou
Yongkang, a member of the top Standing Committee of the Politburo of the CPC to stand next to
Kim Jong Il at the military parade on October 10. Days later, the PRC Defense Minister, General
Liang Guanglie, hosted in Beijing a DPRK military delegation, with a meeting attended by a PLA
Major General of the General Staff Department in charge of military training and arms. Later in
the same month, the highest-ranking PLA officer, General Guo Boxiong, a Vice Chairman of the
Central Military Commission, visited Pyongyang and met with Kim Jong Il, and in a meeting
with his DPRK counterpart, Guo was not reported to raise the nuclear problem.
The PRC faced greater pressure and isolation concerning its support for North Korea. In
November 2010, reports revealed that the PRC was blocking a report by a U.N. Panel of Experts
on the DPRK’s supplies to the nuclear programs of Syria, Iran, and Burma.115 Russian President
Dmitry Medvedev, on November 10, expressed “alarm” about North Korea’s nuclear ambitions.
Siegfried Hecker of Stanford University saw a sophisticated DPRK uranium enrichment facility
with 2,000 centrifuges in a visit on November 12.116 The DPRK’s program raised questions about
what equipment and financial transfers across the border did the PRC allow and whether the PRC
knew of the uranium enrichment efforts. (Later, on February 16, 2011, the DNI testified to the
Senate Select Committee on Intelligence that the DPRK’s disclosure supported the longstanding
U.S. assessment of the DPRK’s uranium enrichment, that the claimed construction in less than 20
months of the new uranium enrichment site at Yongbyon was possible only with previous efforts
or foreign assistance, and that the DPRK likely had other such sites.) Then, on November 23, the
DPRK launched an artillery attack on South Korea’s Yeonpyeong Island, killing four people. On
the same day, a PRC delegation went to Pyongyang and signed an economic agreement. Also on
the same day, U.S. envoy Stephen Bosworth was in Beijing, and he condemned the DPRK’s
aggression and called the DPRK’s uranium enrichment a violation of UNSC resolutions. The
PRC side did not. China responded to the DPRK’s provocations by again calling for
“consultations” under the Six-Party Talks. While rejecting the Six-Party Talks as a substitute for
changes in North Korea’s behavior, the State Department shifted from calling for North Korea to
comply with international obligations to calling also for China to heed its own obligations.
U.S.-PRC Summit (January 2011) and Later Dialogues
After that DPRK attack and in preparing for PRC leader Hu Jintao’s state visit in January 2011,
the Obama Administration sought to stabilize the relationship with the PRC and stepped up
pressure for it to restrain North Korea and influence its decisions for denuclearization. In
December 2010, PLA Air Force General Ma Xiaotian, a Deputy Chief of General Staff, visited
Washington for the 11th Defense Consultative Talks (DCT). Under Secretary of Defense for
Policy Michele Flournoy and the Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen,
pressed the PLA side to help end North Korea’s provocations and get it to denuclearize. During
his visit to Seoul the same month, Admiral Mullen also publicly criticized China for its “tacit
approval” of North Korea. President Obama finally spoke with the PRC’s Hu Jintao on December
5, but the White House blamed “scheduling” difficulties for the delayed discussion on North
Korea. The PRC was the only country to oppose a UNSC statement on North Korea on December
19, with Russia closer to the U.S. side. Showing that it can influence the DPRK, the PRC called

115 Reuters, November 9, 2010; Daily NK, Seoul, November 11, 2010.
116 Siegfried Hecker, “A Return Trip to North Korea’s Yongbyon Nuclear Complex,” November 20, 2010. Also see
David Albright and Paul Brannan, “Satellite Image Shows Building Containing Centrifuges in North Korea,” ISIS,
November 21, 2010; Siegfried Hecker, “What I Found in North Korea,” Foreign Affairs, December 9, 2010.
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the next day for “maximum restraint,” and the DPRK did not fire at the ROK when it held an
artillery exercise. The United States also warned North Korea through the U.N. channel.
In January 2011 the PLA belatedly hosted Defense Secretary Robert Gates to provide a positive
atmosphere for Hu Jintao’s state visit later that month. Gates expressed U.S. appreciation for
PRC’s help in restraining North Korea but also declared that North Korea, with its programs for
nuclear weapons and ICBMs, was becoming a “direct threat” to the United States, a point that
President Obama repeated to Hu at the summit. In the U.S.-PRC Joint Statement issued at Hu’s
visit on January 19, 2011, the PRC agreed to express “concern” about the DPRK’s uranium
enrichment program but stopped short of saying that the program violated the September 2005
Joint Statement and UNSC Resolutions. President Obama unilaterally said that the DPRK’s
uranium enrichment program was in violation of international obligations. President Obama also
stressed to Hu that if China did not restrain North Korea, the United States would have to increase
its military presence and military exercises in Northeast Asia.117 Moreover, at a UNSC meeting on
February 23, the PRC blocked adoption and release of a report by the U.N. Panel of Experts on
North Korea’s uranium enrichment and compliance with U.N. resolutions.118 Testifying to the
Senate Foreign Relations Committee on March 1, Assistant Secretary of State Kurt Campbell
stressed cooperation with U.S. allies in Asia before China and Russia. Campbell claimed that
China shared the same “goals” of peace and stability, and denuclearization, despite PRC support
for the DPRK. He called on China to enhance “effective” implementation of sanctions under
UNSC Resolutions 1718 and 1874. In contrast to China’s call for Six-Party Talks, Campbell
called for a U.N. response to the DPRK’s uranium enrichment program. He noted Russia’s
backing for discussion at the UNSC, confirming China’s isolation along with the DPRK.
China stepped up cooperation but remained a concern to the United States and its allies. In April
2011, the PRC proposed another three-step process for resuming ROK-DPRK talks, U.S.-DPRK
talks, and Six-Party Talks. However, the United States looked for more than talks to actions by
the DPRK that demonstrated better behavior. In May, the State Department called for the release
of a report by a U.N. Panel of Experts, reportedly blocked at the UNSC by China, finding that
Iran and the DPRK traded illicit missile technology using Air Koryo and Iran Air, including with
transshipment through China, and reporting on the DPRK’s uranium enrichment program.119 In
May, at a trilateral Japan-ROK-PRC summit in Tokyo, the PRC did not repeat in the declaration
its “concern” about the DPRK’s uranium enrichment program, contrary to the cited “concern” in
the U.S.-PRC Joint Statement in January. The PRC again hosted Kim Jong Il.
Again, the PRC could not deny U.S. efforts at direct dialogue with the DPRK. After the meeting
in Pyongyang in December 2009, Special Representative for North Korea Policy Bosworth held
another “exploratory meeting” with a “constructive” DPRK delegation at the U.S. Mission to the
U.N. in New York on July 28-29, 2011. The United States sought the DPRK’s dialogue with the
ROK and implementation of obligations under UNSC Resolutions 1718 and 1874 and the Joint
Statement of 2005. On August 26, PRC media reported that DPRK ruler Kim Jong Il again visited
the PRC and told State Councilor Dai Bingguo that it would resume the Six-Party Talks, but the
DPRK’s media did not report such a statement. There was another round of U.S.-DPRK talks on
October 24-25 in Geneva, but Bosworth reported no breakthrough.

117 New York Times, January 20, 2011.
118 Reuters, February 17, 2011; Telegraph, February 24, 2011; Chosun Ilbo, February 25, 2011.
119 Telegraph, May 12; Reuters, May 14; New York Times, May 14; Kyodo, May 17; Reuters, May 18, 2011.
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“Leap Day” Agreement and Missile Tests (2012)
The new full-time Special Representative for North Korea Policy, Glyn Davies, visited Beijing in
February 2012 for bilateral talks with the DPRK. Afterwards, on February 29, the United States
and the DPRK issued “Leap Day” statements about an agreement on the DPRK’s missile and
nuclear programs and U.S. nutritional aid. However, the statements did not explicitly cover a
satellite launch, which was announced for April by the DPRK on March 16. The State
Department warned that a launch would violate UNSC Resolutions. The PRC singled out the
DPRK for “concern and worry” but did not warn of a violation of UNSC Resolutions. At the
Nuclear Security Summit (that included Hu Jintao) in Seoul, President Obama called on March
25 for China to recognize that its long-time approach has not changed the DPRK’s behavior. On
April 13, the DPRK launched a Taepo Dong-2 intercontinental ballistic missile. However, the
launch failed and the first stage fell into the Yellow Sea about 100 miles west of South Korea,
according to NORTHCOM. The UNSC issued a Presidential Statement (not resolution) that
condemned the DPRK’s missile launch as a serious violation of Resolutions 1718 and 1874.
In late November 2012, Xi Jinping, the new General Secretary of the Communist Party of China
(CPC), sent CPC Politburo Member Li Jianguo to Pyongyang with a message about Northeast
Asian peace and stability but without reported mention of denuclearization. One question has
been whether Xi would change China’s approach to North Korea. DPRK leader Kim Jong Un met
with Li. The next day, however, North Korea announced that it will conduct a “satellite” launch.
The PRC Foreign Ministry reacted with a rare reference to restrictions of UNSC resolutions. On
December 11, North Korea conducted its first apparently successful test of the three-stage Taepo
Dong-2 long-range missile
, whose first stage fell into the Yellow Sea and second stage fell into
the Philippine Sea and which launched an object into orbit. The National Security Council called
the test a violation of UNSC Resolutions 1718 and 1874. China called for a “prudent and
moderate” response. Considering how to change China’s calculus on the situation, an unnamed
senior official of the Obama Administration said that U.S. steps (including increased naval patrols
in Asia and military exercises with allies) to enhance the region’s security in face of North
Korea’s missile threat “are indistinguishable” from actions that China perceives as part of
“containment” aimed at China.120 Other options would target financial assets, including in China.
Third Nuclear Test (2013)
As North Korea threatened another nuclear test, the PRC Foreign Ministry, on January 14, 2013,
shifted to stress “denuclearization” ahead of “stability.” Xi Jinping then met on January 23 with
an envoy of South Korea’s president-elect Park Geun-hye and stressed “denuclearization” on the
Korean peninsula. The PRC voted with all other members of the UNSC for Resolution 2087 to
condemn the DPRK’s missile test over a month before, and impose travel bans and asset freezes
on DPRK entities, including in the PRC. China reportedly tightened customs inspections at
Dandong and Dalian for trade with North Korea. Still, North Korea conducted its third nuclear
test
on February 12. The White House called the DPRK’s missile and nuclear programs “a threat
to U.S. national security.” South Korea reported that the test at an underground site detonated a
nuclear device with a yield of 6-7 kilotons, more powerful than that in past tests.
Observers questioned whether there would be a critical change in China’s calculus about the
DPRK, including that its missile and nuclear programs undermine the PRC’s goal of “stability.”

120 New York Times, December 13, 2012.
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PRC media editorials, academic articles, and public opinion on the Internet called for toughening
up on or abandoning North Korea. Official military news reported on the UNSC’s condemnation
of the nuclear test and a drill in the Shenyang Military Region that involved a scenario of nuclear,
biological, or chemical warfare. The PRC publicly announced monitoring of any nuclear fallout.
Nonetheless, PRC officials expressed opposition to the test and stressed denuclearization but did
not condemn the test as a flagrant violation of UNSC resolutions and called for calm and
restraint. Beijing continued its balanced approach that includes support for Pyongyang along with
incremental implementation of UNSC sanctions. After some U.S.-PRC negotiations, the UNSC
voted on March 7 to approve Resolution 2094, inter alia, to expand the sanctions of 2006 against
DPRK entities or individuals, to prevent the provision of financial services or financial transfers
if they could contribute to the DPRK’s nuclear or missile programs, to call for inspection of
cargo, and to define luxury goods (already sanctioned in 2006) for the first time.
Legislation included H.Res. 65 (Royce), H.R. 673 (Ros-Lehtinen), and S. 298 (Menendez). The
House Foreign Affairs Committee and Senate Foreign Relations Committee held hearings on
March 5 and March 7, 2013. Davies testified that China’s full and transparent implementation of
sanctions remained critical and that China remained central to altering the DPRK’s cost calculus.
On March 11, National Security Advisor Tom Donilon said in a speech that no country, including
China, should conduct “business as usual” with North Korea as it threatens its neighbors. The
Obama Administration took some steps to shape China’s calculations as well as deter the DPRK.
Defense Secretary Chuck Hagel announced on March 15 the deployments of 14 additional
Ground-Based Interceptors (GBIs) at Fort Greely, Alaska, and another TPY-2 radar in Japan; a
study for an additional GBI site; and restructuring the SM-3 missile defense program. An
unnamed U.S. official stressed a signal to China about the “price to be paid for letting the North
Koreans stay on the current path.” The PRC took note and responded negatively that stronger
missile defenses and military alliances will only intensify antagonism and not solve problems,
without mentioning the DPRK. On March 18, Deputy Defense Secretary Ashton Carter said that
the Air Force flew B-52 strategic bombers from Guam to South Korea on March 8 and 19 for
“routine” exercises, extended deterrence, and a commitment to the alliance with South Korea. (In
August, a PLA official, who visited the United States with Defense Minister Chang Wanquan,
spoke against pressure and sanctions against North Korea and U.S. military exercises. But in a
sign of a debate even in the PLA, a former deputy commander of the Nanjing Military Region
wrote in a published article that the DPRK’s development of nuclear weapons threatens China.121)
However, days later, PRC ruler Xi reverted to stressing “stability” before “denuclearization,” in a
telephone conversation with ROK President Park on March 20. China did not join the PSI. China
reportedly enforced UNSC sanctions against certain DPRK entities and banks operating in China
or acted against the DPRK’s Korea Kwangson Bank sanctioned by the U.S. Department of the
Treasury in 2009. China also opposed UNSC sanctions against the DPRK’s Foreign Trade Bank,
but its account at the Bank of China was closed after the Treasury Department sanctioned the
DPRK bank on March 11.122 Visiting Beijing on May 15, Glyn Davies said that the Bank of China
took the “significant step,” but not as a PRC government decision. China’s response to the
DPRK’s announcement about re-starting the nuclear reactor at Yongbyon in April was to call for
re-starting the Six-Party Talks. China’s exports of crude oil to North Korea in January-March
2013 increased 6.7% from the previous year’s period, and economic links continued to expand

121 New York Times, March 15; Foreign Ministry, March 18; Xinhua, August 20; Global Times, December 16, 2013.
122 Reuters, March 19; Chosun Ilbo, March 20; Asahi, March 21; Reuters, March 26 and May 7, 2013.
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(including in trade, investment, railways, roads, power, and parks). The PRC’s support for North
Korea persisted despite PRC debates, negative public opinion, and the DPRK’s actions against
China’s interests, including the DPRK military’s kidnapping of PRC fishermen in May.123 The
DPRK released the fishermen days before Kim Jong Un sent an envoy to meet with Xi on May
24. Xi shifted to stress “denuclearization” before “stability,” but Kim’s envoy did not mention
denuclearization. President Obama asserted to PBS on June 17 that his summit with Xi at
Sunnylands, CA, showed he was serious about the DPRK’s rejection of denuclearization.
Nonetheless, as Davies said in Seoul on September 10, North Korea continued to assert a status
with nuclear weapons and did not show a positive attitude about the purpose of the Six-Party
Talks, namely, denuclearization. On September 23, the PRC issued a long list of dual-use items
for missile and WMD programs banned from export to the DPRK, in order to implement UNSC
resolutions. But Xi indicated a more relaxed attitude, telling ROK President Park in Bali on
October 7 that the situation on the Korean peninsula “gradually eased.” PRC official Wu Dawei
visited Washington later in October, but the Administration did not agree to China’s call for
renewed Six-Party Talks. With concern about the DPRK’s continuing nuclear programs, issues
include whether to restart the PRC-preferred talks if they are credible and cover uranium
enrichment, press the PRC for more pressure against the DPRK, apply more sanctions against the
DPRK, and/or cooperate more closely or trilaterally with allies, Japan and South Korea.
Missile Technology Sales to Syria
A Pentagon report in 2001 said that PRC firms, in addition to North Korean and Russian entities,
contributed equipment and technology to Syria’s liquid fuel missile program.124 However, while
criticizing DPRK and Russian aid to Syria’s ballistic missile development, Under Secretary of
State John Bolton did not cite PRC help in a speech at the Heritage Foundation on May 6, 2002.
The “Section 721 Reports” did not specify PRC aid for Syria’s missile program, until the report
for 2010 told Congress in February 2011 that PRC entities supplied missile-related items to Syria.
Policy Issues and Options
Issues for Policy
Weapons proliferation by the PRC and/or its organizations raises policy issues concerning (1)
assessments of the nature and seriousness of the PRC government’s role in the proliferation
threat; (2) the priority of this issue relative to other U.S. interests (i.e., other security issues,
Taiwan, trade, human rights); and (3) U.S. leadership and leverage (including the use of sanctions
and diplomacy, and congressional actions) to obtain China’s cooperation in nonproliferation.

123 Yonhap, April 24; Global Times, May 20; Wall Street Journal, June 6; Yonhap, October 7, November 5, 2013,
Reuters, November 23, 2013.
124 Secretary of Defense, Proliferation: Threat and Response, January 2001.
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Debate
Successive Administrations have pursued a policy of “engagement” with Beijing. Some
policymakers and advocates stress a cooperative approach. In 1998, President Clinton issued
certifications to implement the 1985 Nuclear Cooperation Agreement. The Clinton
Administration also encouraged the PRC to join the MTCR and proposed to allow more PRC
satellite launches. In November 2000, the State Department agreed to waive sanctions and
consider new satellite exports in return for another missile non-proliferation pledge from China.
Some officials and experts cite PRC nonproliferation statements as signs that the United States
made progress in nonproliferation goals. Some also say that U.S. sanctions are counterproductive
and are too broad. Rather, they assert that China needs to recognize nonproliferation for its own
national interests and develop stronger export controls, perhaps with U.S. assistance. Also, some
stress that China would be more cooperative if brought in to draw up “the rules.” Some argue that
“entities” in China largely operate without the PRC government’s knowledge.
Critics argue that the “engagement” policy needs a tougher approach to counter China’s activities
that undermine U.S. security interests. They note that PRC weapons proliferation activities have
continued and repeated PRC assurances have proved to be unreliable. Also, they say that U.S.
security interests are better served with a stronger approach to stigmatize sensitive transfers,
which would include some sanctions. Some argue that the United States should not subsidize
China’s missile and nuclear industries. These proponents tend to see U.S. leverage over China as
stronger than China’s influence against the United States. Some are skeptical that China sees
nonproliferation as in its national interest, since Beijing has made progress in nonproliferation
commitments as part of improving relations with Washington (surrounding summits) and tried to
use its sales as a form of leverage against Washington, especially on the issue of U.S. arms sales
to Taiwan. They stress that PRC export controls are weak, even as government repression can be
harsh (e.g., against journalists or dissidents). They also doubt that trade in sensitive nuclear
weapons and missile technology can continue without the knowledge of the PRC government
and/or its military, especially given the status of certain state-owned and defense-industrial
enterprises as “serial proliferators.”
The PRC Government’s Role
Concerning the debate about any knowledge or approval of the PRC government, at a hearing of
the Senate Armed Services Committee on March 19, 2002, DCI George Tenet told Senator Carl
Levin that while PRC firms sometimes operate on their own, there are instances in which
“activities are condoned by the government.” The DCI’s January 2003 Section 721 Report to
Congress noted that PRC entities could have continued contacts with Pakistani nuclear weapons
facilities “without Beijing’s knowledge or permission,” but this comment was dropped from the
April 2003 report. The Director of the Defense Intelligence Agency (DIA), Vice Admiral Lowell
Jacoby, testified to the Senate Intelligence Committee on February 24, 2004, that PRC entities
“remain involved with nuclear and missile programs in Pakistan and Iran,” while “in some cases,”
the entities were involved without the government’s knowledge, implying that there were cases in
which the PRC knew of the relationships. The Bush Administration repeatedly waived missile
proliferation sanctions on certain activities of the PRC government (vs. “entities”). Reportedly,
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the State Department communicated to China numerous concerns about proliferation activities in
Iran, Syria, North Korea, and Pakistan for many years, including in cables in 2003-2009.125
No matter what options are pursued, many argue that U.S. leadership and a forward-looking and
credible 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 often center 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 in 1993 and argued that “comprehensive
engagement” with China advances U.S. security goals, including 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 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 unresolved missile proliferation issue in Shanghai in October 2001 and
in Beijing in February 2002. As Deputy Secretary of State Richard Armitage arrived in Beijing to
discuss the Bush-Jiang summit in Crawford, TX, on October 25, 2002, China, on August 25,
2002, published the missile export control regulations promised in November 2000, along with a
control list that is modeled on the MTCR. In addition, on October 14, 2002, the PRC issued
regulations for export controls over dual-use biological agents. China continued to approach
weapon nonproliferation as more a part of the U.S.-PRC relationship than a commitment to
international standards. President Bush called China an “ally” in the fight against terrorism.
With the improvement in U.S.-PRC relations, however, some observers said that President Bush
did not forcefully press China’s leaders on weapons nonproliferation as a priority issue, even
while imposing numerous U.S. sanctions.126 Briefing reporters on President Bush’s meeting with
PRC President Hu Jintao in France on June 1, 2003, a senior White House official acknowledged

125 “Inside the Ring,” Washington Times, July 13 and September 7, 2011.
126 For example, Robert Einhorn, former Assistant Secretary of State for Nonproliferation in the Clinton
Administration, criticized the Bush Administration saying that “sanctions are used, but they are usually simply imposed
rather than used as a vehicle for trying to leverage better behavior. ... There seems to be no real strategy today to try to
promote continued improvement in China’s nonproliferation record,” (“China and Non-Proliferation,” National
Interest
, April 2, 2003). William Kristol, of the Project for the New American Century, in a memo to opinion leaders,
dated June 4, 2003, argued that “real progress in U.S.-China relations is unlikely if the president is less than forceful
and candid with his Chinese counterpart on issues of importance to the United States.” Also see Susan Lawrence, “U.S.
Presses China on Arms, Quietly,” Wall Street Journal, October 30, 2003.
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that the two leaders did not discuss U.S. sanctions on NORINCO (which the Administration had
just imposed on May 23, 2003, for missile technology transfers to Iran) and that President Hu did
not respond to Bush’s general concerns about Iran’s nuclear weapons program.127 In Thailand in
October 2003, at another meeting between the two presidents, Bush asserted that they had a “very
constructive dialogue” on trade, Iraq, counter-terrorism, and North Korea, but he did not mention
weapons proliferation as an issue with China, although the Administration had imposed another
set of missile proliferation sanctions on NORINCO a month earlier.128 As discussed above,
President Obama also has used summitry but renewed President Clinton’s use of joint statements.
Counter-Terrorism Campaign
The 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 as well as cooperation in not further
adding to instability in South Asia. Also, the 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. If the Administration lifts
sanctions for cooperating countries, options include waiving proliferation sanctions on the PRC.
Missile Defense
On December 11, 2002, President Bush issued his National Strategy to Combat WMD, resting on
the three pillars of counter-proliferation, nonproliferation, and response. The first pillar, counter-
proliferation, included interdiction, deterrence, and defense (including preemptive measures and
missile defenses). Some say that missile defense plays a critical role in the strategy to counter the
proliferation threat. Others say the September 2001 attacks increased doubts 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 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, reported the Washington Post (July 14,
2000). Others say that PRC proliferation activities and missile buildups continued regardless.
Proliferation Security Initiative (PSI) and 9/11 Commission
On May 31, 2003, in Poland, President Bush announced the Proliferation Security Initiative (PSI)
to step up multinational efforts at interdiction and intelligence-sharing. The United States faces a
challenge in obtaining China’s cooperation in counter-proliferation (e.g., interdiction of
shipments, inspections, or intelligence-sharing), given its long-lasting negative and emotional

127 White House, “Background Press Briefing by Senior Administration Official on the President’s Meeting with
Chinese President Hu,” Evian, France, June 1, 2003.
128 White House, “Remarks by President Bush and President Hu Jintao of China,” Bangkok, October 19, 2003.
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reaction to U.S. inspection in 1993 of the PRC ship, Yinhe, which was suspected of carrying
chemicals for Iran. Also, China could doubt further the credibility of U.S. intelligence after
President Bush launched the controversial war in Iraq in 2003 and failed to find WMD there.
China has not joined the PSI. China did not join the 11 original PSI members plus Norway,
Denmark, Singapore, and Canada in sending representatives to a meeting in Washington on
December 16-17, 2003, even though it took place just days after Premier Wen Jiabao’s visit to
Washington.129 In October 2004, a PRC Foreign Ministry spokesman expressed concerns that the
PSI might allow “military interception, which is beyond the limits of international law.”130
Nonetheless, Under Secretary of State for Arms Control and International Security John Bolton
visited Beijing on February 16, 2004, and he revealed that “in the past several years, we have had
cooperation with China in some interdiction efforts.” While in Tokyo on October 27, 2004,
Bolton said that “we are pleased with China’s cooperation with the United States to block the
export of chemicals that could have been used in North Korea’s nuclear weapons programs.”
The 9/11 Commission issued its final report on July 22, 2004, and it urged that the United States
encourage China (and Russia) to join the PSI. The 110th Congress considered H.R. 1, the
Implementing Recommendations of the 9/11 Commission Act of 2007. The House-passed bill of
January 9, 2007, noted that the Commission called on China to participate in PSI. The Senate
passed its bill on July 9 without such language. The Conference Report of July 25 adopted the
House provisions on the commission’s recommendations and on the sense of Congress that the
President should expand and strengthen the PSI. The bill became P.L. 110-53 on August 3, 2007.
Export Control Assistance
The United States could assist China to strengthen export controls, including the areas of
regulations, licensing, customs, border security, and law-enforcement. The Departments of
Commerce and State testified to the Senate Governmental Affairs Subcommittee on International
Security, Proliferation, and Federal Services on June 6, 2002, that such exchanges were limited.
Linkage to the Taiwan Question
Periodically, China has tried to link the issues of missile proliferation and U.S. conventional arms
sales for Taiwan’s self-defense. Congress has exercised oversight of the Administration’s
response to any direct or indirect linkage. After President George H. W. Bush approved the sale of
150 F-16A/B fighters to Taiwan in September 1992, the PRC ended its participation in the “Arms
Control in the Middle East” talks. Moreover, as discussed above, in November 1992, the PRC
delivered 34 M-11 missiles to Pakistan, although that transfer took place probably with prior
planning and regardless of President Bush’s announcement. During the 1998 summit in Beijing,
the Clinton White House reportedly considered a PRC request for a U.S. pledge to deny missile
defense sales to Taiwan, if China promised to stop missile sales to Iran; but no agreement was
reached, reported the 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, an unnamed PRC Foreign Ministry official told

129 Department of State, “Proliferation Security Initiative: Next Experts Meeting, China’s Role,” December 3, 2003.
130 “Ministry of Foreign Affairs Says China Will Not Participate in Proliferation Security Initiative,” Zhongguo Xinwen
She
, October 26, 2004.
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the Associated Press that the United States “can’t just accuse us of violating our commitments
and at the same time, sell large amounts of arms to Taiwan,” since such arms sales are “also a
kind of proliferation.” On July 24, 2004, Wen Wei Po, a PRC-owned newspaper in Hong Kong,
quoted an unnamed official of the Foreign Ministry as linking weapons nonproliferation to U.S.
arms sales to Taiwan. Nonetheless, State Department officials said that China did not pose Taiwan
as a “tactical issue” in discussions about North Korea. (See discussion on North Korea above.)
Thus, for many years, the United States has faced challenges in getting China’s responsible
cooperation in international nonproliferation problems while continuing U.S. policy toward
Taiwan, as governed by U.S. interests and the Taiwan Relations Act (TRA) of 1979, P.L. 96-8.
(See CRS Report RL30957, Taiwan: Major U.S. Arms Sales Since 1990, by Shirley A. Kan.)
Economic Controls
Satellite Exports
There have been debates about using satellite exports to gain China’s cooperation in missile
nonproliferation. Since 1988, the policy of granting licenses to export satellites 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 Corporation (the same company sanctioned for
missile proliferation) and—increasingly—for China’s own use. In the Clinton Administration, the
National Security Council, in a purported Secret memo on talks leading up to the 1998 U.S.-PRC
summit (dated March 12 and printed in the March 23, 1998, 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,
again process—not necessarily approve—licenses (suspended in February 2000) to export
satellites to China, and discuss an extension of the bilateral space launch agreement (which later
expired at the end of 2001), in return for another PRC promise on missile nonproliferation.
However, on September 1, 2001, the Bush Administration imposed sanctions for two years on the
China Metallurgical Equipment Corporation (CMEC), for proliferation of missile technology to
Pakistan, denying satellite exports to China. Before those sanctions expired, the State Department
determined on August 29, 2003, that NORINCO substantially contributed to missile proliferation
of Category II MTCR items and imposed sanctions that again effectively banned satellite exports
to China. (See Sanctions below.) The last presidential waiver for satellite exports to China was
issued in 1998. (See CRS Report 98-485, China: Possible Missile Technology Transfers Under
U.S. Satellite Export Policy
Actions and Chronology, by Shirley A. Kan.)
In 2009, Congress passed the FY2010 National Defense Authorization Act (NDAA) (enacted on
October 28, 2009, as P.L. 111-84) with Section 1248 to require a report from the Secretaries of
Defense and State that assessed the risks of removing the control of satellite exports from the U.S.
Munitions List (USML) of the State Department, not later than 180 days after enactment. The
Obama Administration submitted an interim “Section 1248 Report” on May 6, 2011, and did not
issue the final “Section 1248 Report” until April 18, 2012. The report discussed reform of the
space export control policy and found that some satellites and components can be moved from the
USML to the Commerce Control List (CCL) without harm to national security. Nonetheless, the
departments recommended that the CCL support nonproliferation policy and prohibit licenses for
the transfer of dual-use satellites and related technology destined for launches by the PRC until it
controls missile proliferation activities as it had committed. Congress passed the NDAA for
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FY2013 (P.L. 112-239) with Section 1261 to remove satellites and related items from the USML,
by repealing a section in the FY1999 NDAA (P.L. 105-261). However, Congress continued to
prohibit the transfer of satellites to the PRC (and the DPRK and any state sponsor of terrorism).
Sanctions and the “Helms Amendment”
Policy debates concerning PRC technology transfers have often centered on the questions of
whether to impose unilateral sanctions under U.S. laws, to enact new legislation to tighten
mandates for sanctions or reports, or to integrate the multiple laws. Also, there have been the
issues of whether to target the PRC government or PRC “entities” (usually state-owned defense
industrial organizations, like CPMIEC or NORINCO) and whether the PRC government lacks
the will or the capability to enforce its stated nonproliferation policy. Decisions on sanctions
impact U.S. credibility and leverage on the non-proliferation issue. While certain PRC transfers
might not violate any international treaties, sanctions could be required under laws that Congress
passed to set U.S. nonproliferation policy and shore up nonproliferation treaties and standards.
These laws, as amended, include
• Export-Import Bank Act (P.L. 79-173)
• Arms Export Control Act (AECA) (P.L. 90-629)
• Export Administration Act (EAA) (P.L. 96-72)
• Nuclear Proliferation Prevention Act (Title VIII of P.L. 103-236)
• Iran-Iraq Arms Nonproliferation Act (P.L. 102-484)
• Iran Nonproliferation Act (P.L. 106-178); that became the Iran, North Korea, and
Syria Nonproliferation Act (P.L. 109-353)
• Executive Order 12938, as amended by Executive Order 13094
• Executive Order 13382
• Iran Sanctions Act of 1996 (P.L. 104-172); expanded by the Comprehensive Iran
Sanctions, Accountability, and Divestment Act of 2010 (P.L. 111-195).
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.
Some argue that a cooperative approach, rather than sanctions, is more effective. Others say that
current sanctions are not effective in countering the PRC’s proliferation practices (especially with
certain entities being repeatedly sanctioned, negligible penalties, and sanctions targeting
companies but not the government) and that legislation requiring sanctions should be toughened.
Still others say sanctions stigmatize countries, signal U.S. resolve, and shore up U.S. credibility
on this important security problem. Another approach is to use senior-level diplomacy to achieve
goals along with sanctions to deter proliferation. In any case, by 2006, China’s government and
state-owned defense industrial corporations under U.S. sanctions started to seek U.S. training to
strengthen export controls and nonproliferation practices. (See discussion below on training and
Internal Compliance Programs (ICPs).) This evolution showed that U.S. sanctions worked, with
negative impacts on the business of sanctioned entities. Still, any real improvement in policies
and practices in response to sanctions could be a basis for lifting sanctions.
As for whether to impose or waive missile proliferation sanctions, on November 21, 2000, the
Clinton Administration agreed to waive missile proliferation sanctions, again process—not
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necessarily approve—licenses to export satellites to China, and discuss an extension of the
bilateral space launch agreement, in return for a new PRC pledge on missile nonproliferation and
a promise to issue missile export controls. However, continued PRC transfers raised the issue of
imposing sanctions. By July 2001, the United States protested to China about its non-compliance
with the agreement, reported the Washington Post (July 27, 2001). Visiting Beijing ahead of
President Bush’s trip to Shanghai in October 2001, Secretary of State Powell, on July 28, 2001,
noted “outstanding issues” about China’s implementation of its November 2000 commitment.
In contrast to the Clinton Administration, the Bush Administration repeatedly imposed sanctions
on PRC “entities” (but not the PRC government) for transfers (related to ballistic missiles,
chemical weapons, and cruise missiles) to Pakistan and Iran, under the Arms Export Control Act,
Export Administration Act, Iran Nonproliferation Act of 2000, Iran-Iraq Arms Nonproliferation
Act of 1992, Executive Order 12938, and Executive Order 13382. (See Table 1: PRC Entities
Sanctioned for Weapons Proliferation
.) About half of the PRC entities, “serial proliferators,” have
faced repeated sanctions, raising questions about effectiveness.
Among the actions, on September 1, 2001, the Bush Administration imposed sanctions (for two
years) on a PRC company, the China Metallurgical Equipment Corporation (CMEC), for
proliferation of missile technology (Category II items) to Pakistan. The sanctions had the effect of
denying licenses for two years for 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, P.L. 90-629) as all PRC
government activity affecting the development or production of missiles, electronics, space
systems, and military aircraft, and the State Department considers that satellites are covered by
the MTCR Annex (since it includes satellite parts).
In Beijing with the President in February 2002, National Security Advisor Condoleezza Rice said
that the PRC should stop “grandfathering” contracts signed before November 2000. On August
25, 2002, the PRC published missile export control regulations (promised in November 2000),
just before Deputy Secretary of State Richard Armitage arrived in Beijing to discuss an upcoming
summit, showing that China still viewed nonproliferation in the context of ties with the United
States. Armitage welcomed the new regulations but added that further discussions were needed.
The State Department stressed that questions remained about enforcement of the controls and
reductions in PRC proliferation practices. With questions about enforcement and effectiveness of
the controls, President Bush did not waive the sanctions imposed in September 2001.
Moreover, the regulations raised a number of questions, including the roles of the Ministry of
Foreign Trade and Economic Cooperation (MOFTEC) and Ministry of Foreign Affairs. Part 1 of
that control list (missiles and other delivery systems) and dual-use items (in Part 2) for military
use are subject to the Regulations on Administering Arms Exports issued in 1997, under the
jurisdiction of the State Council and Central Military Commission. Also, unlike the MTCR, the
PRC’s regulations on missile-related exports do not state a strong presumption to deny transfers
of Category I items or any missiles or other items judged to be intended to deliver any WMD.
In the 107th Congress, Senator Fred Thompson inserted a section in the FY2003 NDAA (enacted
as Section 1209 in P.L. 107-314) to require the DCI to submit semi-annual reports that identify
PRC and other foreign entities contributing to weapons proliferation. However, in his signing
statement, President Bush stated that he would construe this and several other sections in a
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manner consistent with the President’s constitutional authority to “withhold information,” if
disclosure could harm foreign relations, national security, or the Executive Branch’s duties.
Before the September 2001 sanctions expired, the State Department determined on August 29,
2003, that NORINCO substantially contributed to missile proliferation of Category II MTCR
items in a publicly unidentified country and imposed sanctions for two years that banned the
issuance to NORINCO of export licenses or U.S. government contracts for missile equipment or
technology, and that banned the importation of NORINCO’s products. Complicating U.S.
considerations, the “Helms Amendment” again applied—denying exports of satellites to China.
But the Bush Administration contended that it was “essential to national security” to waive for
one year the sanction on imports when applied to other PRC government activities relating to
missiles, electronics, space systems, and military aircraft. The sanctions took effect on September
19, 2003. Within a year, the Administration had to decide on the broader sanctions on imports of
non-NORINCO products, which could have affected an estimated $12 billion in imports from the
PRC, according to one estimate.131 After the one-year waiver passed, the State Department, for
five times, extended the waiver on the import sanction against certain activities of the PRC
government for six more months and permanently waived the sanction in March 2007. However,
the Bush Administration did not point to any new nonproliferation cooperation from China.
Still, by 2006, after more U.S. sanctions, China’s government and defense-industrial corporations
started to seek U.S. training (e.g., from the University of Georgia) to improve export controls and
nonproliferation practices. Sanctioned entities such as NORINCO, CMEC, and CGWIC set up
Internal Compliance Programs (ICP), working with the Ministries of Foreign Affairs and
Commerce. In December 2008, NORINCO and CMEC’s presidents signed their companies’
statements on adherence to weapons nonproliferation, export control, and internal compliance.
However, in July 2011, NORINCO, CPMIEC, and China Xinxing Import and Export Company
tried to sell arms worth $200 million to Libya’s Muammar al Qadhafi, despite UNSC sanctions.132
Options for Congress include maintaining, deleting, or amending the “Helms Amendment,” such
as changing the language that broadly covers “electronics” or a review by the Commerce
Department on whether to change China’s “non-market economy” status, based upon which the
“Helms Amendment” has broadened missile proliferation sanctions. Another question for
congressional oversight concerned whether the Executive Branch enforced sanctions that already
were imposed, particularly import bans. In late 2009 and early 2010, the Wisconsin Project on
Nuclear Arms Control and the Wall Street Journal reported that sanctioned PRC entities,
including sub-units of CPMIEC and LIMMT Economic and Trade Co., exported products to U.S.
firms or through U.S. ports to other countries after 2006.133 Afterwards, the Treasury
Department’s Office of Foreign Assets Control named for sanctions the CPMIEC Shanghai
Pudong Company (aka China JMM Import and Export Shanghai Pudong Corporation).
Capital Markets
In the 106th Congress, in May 2000, Senator Fred Thompson introduced S. 2645, the “China
Nonproliferation Act,” to require annual reviews (based on “credible information”), sanctions,

131 Author’s interview with the State Department, November 2003; Far Eastern Economic Review, November 6, 2003.
132 Globe and Mail, September 2; Los Angeles Times, September 5; New York Times, September 12, 2011.
133 Matthew Godsey, “Chinese Companies Evade U.S. Trade Ban,” Wisconsin Project on Nuclear Arms Control,
December 15, 2009; Peter Fritsch, “Chinese Evade U.S. Sanctions on Iran,” Wall Street Journal, January 4, 2010.
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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. In the 107th Congress, Senator Thompson inserted a section in the
FY2003 Intelligence Authorization Act (enacted on November 27, 2002, as Section 827 in P.L.
107-306) to require the DCI to submit annual reports on PRC and other foreign companies that
are involved in weapons proliferation and raise funds in U.S. capital markets. Reporting the bill
on May 13, 2002, the Senate Intelligence Committee (in S.Rept. 107-149) added that it did not
intend to restrict access to those markets. The 108th Congress passed the FY2004 Intelligence
Authorization Act (P.L. 108-177) that included Section 361(e) to repeal the reporting requirement.
Nuclear Cooperation and U.S. Export of Reactors
After the PRC promised not to start new nuclear cooperation with Iran on the eve of the 1997
U.S.-China summit, President Clinton, on January 12, 1998, signed certifications (as required by
P.L. 99-183) on China’s nuclear nonproliferation policy and practices to implement the 1985
Nuclear Cooperation Agreement. According to President Clinton, the agreement would serve 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 labs,
universities, and nuclear facilities.
On February 28, 2005, Westinghouse submitted a bid to sell four AP1000 nuclear power reactors
to China, with the NRC’s approval. The Bush Administration supported Westinghouse’s bid to
sell nuclear reactors to China. However, critics said that the United States, including its Export-
Import Bank, should not support nuclear exports to China, given proliferation concerns. On June
28, 2005, Representative Bernard Sanders introduced Amendment 381 to the Foreign Operations,
Export Financing, and Relations Programs Appropriations Act for FY2006 (H.R. 3057) to
prohibit funds from being used by the Export-Import Bank to approve an application for a loan or
loan guarantee for a nuclear project in the PRC. The House adopted the amendment (313-114)
and passed H.R. 3057 on June 28, 2005, with the language in Section 589. However, this section
was dropped in the conference committee (H.Rept. 109-265). While in Beijing on December 16,
2006, Secretary of Energy Samuel Bodman signed a bilateral Memorandum of Understanding
that granted the deal to Westinghouse. (See CRS Report RL33192, U.S.-China Nuclear
Cooperation Agreement
, coordinated by Shirley A. Kan.)
Policymakers have options that affect nuclear cooperation with China. Indeed, in 1998, Deputy
Assistant Secretary of State for Nonproliferation Robert Einhorn testified to Congress that
We must, therefore, approach implementation of the agreement with a healthy skepticism.
President Reagan’s advice to trust but verify is clearly warranted here. So we will be
monitoring China’s behavior carefully, and the Chinese will know that any actions
inconsistent with their commitments will jeopardize future cooperation.134

134 House International Relations Committee, hearing, “Implementation of the U.S.-China Nuclear Cooperation
Agreement,” February 4, 1998.
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U.S. Import Controls
While sanctions may affect U.S. exports, some options may affect imports of products produced
by PRC military or defense-industrial entities suspected of contributing to proliferation. Import
controls have been included as possible sanctions for missile proliferation under Section
73(a)(2)(C) of the AECA and Section 11B(b)(1)(B)(iii) of the EAA, 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 are a policy tool, because U.S. technology provides one source of leverage with
respect to Beijing. After the Cold War, U.S. export restrictions have been re-focused to the threat
of WMD and missiles. Some in Congress are concerned about U.S. technology reaching hostile
states with WMD programs through China. U.S. arms sales to China have been banned under
sanctions imposed after the 1989 Tiananmen Crackdown (in P.L. 101-246). However, there are
competing economic interests in exporting dual-use technology.
Nonproliferation and Arms Control
Nonproliferation Regimes (MTCR, NSG, etc.)
Another policy approach is to strengthen the international nonproliferation regimes. There are
two prongs in such efforts: (1) encouraging PRC support for strengthening the regimes (e.g., the
IAEA’s verification authority) to enforce compliance and (2) filling gaps in China’s participation.
Some say that efforts to include China would capitalize on its desire to be treated as a “great
power” and to be perceived as a responsible world leader. In addition, they stress that China
would be more cooperative if it helped to draw up the “rules.” Others argue that China’s
participation would risk its obstruction of tighter export controls, possible derailing of arms
control efforts, linkage of nonproliferation issues to the Taiwan issue, and access to intelligence-
sharing. One basis for this view is the experience with the Arms Control in the Middle East effort
in the early 1990s, in which China refused to cover missiles in the effort and later suspended its
participation after President George H. W. Bush decided in 1992 to sell Taiwan F-16 fighters.
Options for U.S. policy have included support or opposition to China joining 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), Wassenaar
Arrangement (military and dual-use export controls), and International Code of Conduct Against
Ballistic Missile Proliferation. Previously, President Clinton’s National Security Council, in a
purported 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 NDAA (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
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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. In 2004, China applied to join
the MTCR but was not accepted as a member, according to the DNI’s Section 721 Report to
Congress of 2006. Though China is not a member, the MTCR Chair has contacted China.
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.
For years, China was the only major nuclear supplier to shun the multinational 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). In January
2004, China applied to join the NSG. However, on May 5, 2004, China signed a contract to build
a second nuclear power reactor (Chashma-2) in Pakistan. This contract raised questions because
of continuing PRC nuclear cooperation with Pakistan and its signing right before a decision by
the NSG on China’s membership. With a pre-existing contract, Chashma-2 would be exempted
from the NSG’s requirement for full-scope safeguards.135 The Bush Administration supported
China’s membership, after reportedly strident debate between officials who questioned China’s
commitment to nonproliferation and those who wanted to encourage China’s cooperation.136
On May 18, 2004, the House International Relations Committee held a hearing to question
whether the Administration should support China’s membership in the NSG, given concerns about
PRC nuclear cooperation with Pakistan and Iran, about whether China would be a spoiler in the
NSG, and about loss of U.S. leverage. Assistant Secretary of State John Wolf testified that the
United States urged China to join the NSG since 1995, that China was not a spoiler in the
Zangger Committee, and that NSG membership would add multilateral influence on China’s
nuclear technology export policies. Wolf conceded, however, that Pakistan had a nuclear weapons
program and did not accept full-scope safeguards, and that the United States preferred that no
country provide Pakistan with benefits of peaceful nuclear cooperation. He noted that the
Chashma-2 plant will be under IAEA safeguards, but the NSG exempts full-scope safeguards for
contracts signed before NSG membership. Wolf also acknowledged that the Administration did
not request that Beijing use its influence with Islamabad to secure tighter Pakistani export
controls. Moreover, he conceded that the Administration had not seen the contract for Chashma-2
nor received the requested “full information” on any ongoing nuclear cooperation projects that
China sought to grandfather. A memo dated May 26, 2004, by the Project for the New American
Century criticized the Administration’s decision for turning a “blind eye to China’s reactor sales
to Pakistan.” The NSG decided at a meeting on May 28 to accept China as a member. In later
years, China has bolstered the concerns about whether it has played a spoiler by providing
additional reactors to Pakistan, beyond Chashma-2. The Carnegie Endowment argued in 2011 that
China’s so-called “grandfathering” of Chashma-3 and -4 reactors further eroded the NSG and
warned of damage to the NSG’s credibility.137

135 “Pakistan, China Agree on Second Chashma Unit,” Nucleonics Week, May 6, 2004.
136 Carol Giacomo, “U.S. Backs China Joining Nuclear Group,” Reuters, May 11, 2004.
137 Toby Dalton, Mark Hibbs, and George Perkovich, “A Criteria-Based Approach to Nuclear Cooperation with
Pakistan,” Carnegie Endowment for International Peace, June 22, 2011; Mark Hibbs, “The Future of the Nuclear
Suppliers Group,” Carnegie Report, December 2011.
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CTBT, Fissile Materials, and Nuclear Security
China, on July 30, 1996, began a moratorium on nuclear testing and signed the Comprehensive
Test Ban Treaty (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. The PRC could follow if the United States ratified the CTBT. President Obama issued
a U.S.-PRC Joint Statement at the Obama-Hu summit in Beijing on November 17, 2009, in which
the two countries committed to pursue “ratification” of the CTBT “as soon as possible,” to work
together for the early entry into force of the CTBT, and to support the launching of negotiations
on the Fissile Material Cut-off Treaty. At Hu Jintao’s state visit in Washington on January 19,
2011, the U.S.-PRC Joint Statement did not mention ratification in calling again for the early
entry into force of the CTBT. The two countries reaffirmed cooperation based on the Nuclear
Security Summit in Washington in April 2010 (attended by Hu Jintao) and signed a Memorandum
of Understanding to set up a “Center of Excellence on Nuclear Security” in China.
Congress passed the NDAA for FY2011 (P.L. 111-383). Section 1303 limited the use of funds to
no more than $500,000 in FY2011 under the Cooperative Threat Reduction program to set up a
center of excellence in any country outside of the former Soviet Union until 15 days after the
Defense Secretary submitted a report with required information. Also, Section 1304 required the
Secretaries of Defense and Energy to submit by April 1, 2011, a plan to Congress concerning
activities with the PRC under the Cooperation Threat Reduction Program and Defense Nuclear
Nonproliferation Program during FYs 2011 through 2016, including costs paid by the PRC.
The House on May 26, 2011, passed H.R. 1540, the NDAA for FY2012, with Section 3112 to
stipulate that not more than $7 million may be obligated or expended for the U.S.-China Center of
Excellence on Nuclear Security until the Secretary of Energy reports to Congress on a review of
the PRC’s capacity to develop and implement training in best practices for nuclear security and
on how the center’s activities could contribute to improving China’s record on proliferation. The
Senate Armed Services Committee reported S. 1253 on June 22, without a similar section.
Enacted on December 31, 2011, Section 3111 of P.L. 112-81 stipulated that not more than 25% of
authorized funds may be used to establish a center of excellence in a country that is not of the
former Soviet Union (dropping explicit mention of China) until Congress receives the report.
Intermediate-range Nuclear Forces (INF) Treaty
Under the 1987 Treaty on the Elimination of Intermediate-Range and Shorter-Range Missiles
(INF Treaty) with the Soviet Union, the United States eliminated by 1991 all ground-launched
ballistic and cruise missiles with ranges between 500 and 5,500 km. By 2010, China had the
world’s most active land-based ballistic and cruise missile program, including development of the
world’s only anti-ship ballistic missile (ASBM). Former Pentagon officials proposed in 2011 an
option to expand the INF Treaty to include China, as a response to the instability raised by its
missile buildup for Taiwan, Asian allies, the United States, and others.138

138 Mark Stokes, Dan Blumenthal, “Why China’s Missiles Should Be Our Focus,” Washington Post, January 2, 2011.
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Table 1. PRC Entities Sanctioned for Weapons Proliferation
Entity/Person (or successor, sub-unit, subsidiary)
Reason: Statutes
Effective Dates
- China Great Wall Industry Corporation
Missile Proliferation:
June 25, 1991
- China Precision Machinery Import/Export Corp.
§73(a)(2)(A), Arms Export Control Act
waived on March 23, 1992
(CPMIEC)
§11B(b)(1)(B)(i), Export Administration Act
(Category II items in MTCR Annex to Pakistan)
Ministry of Aerospace Industry, including CPMIEC,
Missile Proliferation:
August 24, 1993
and related entities, including:
§73(a)(2)(A), Arms Export Control Act
waived on November 1, 1994
- China National Space Administration
§11B(b)(1)(B)(i), Export Administration Act
- China Aerospace Corp.
(Category II items in MTCR Annex to Pakistan)
- Aviation Industries of China
- CPMIEC
- China Great Wall Industry Corp. or Group
- Chinese Academy of Space Technology
- Beijing Wan Yuan Industry Corp. (aka Wanyuan
Company or China Academy of Launch Vehicle
Technology)
- China Haiying Company
- Shanghai Astronautics Industry Bureau
- China Chang Feng Group (aka China Changfeng
Company)
CRS-63


Entity/Person (or successor, sub-unit, subsidiary)
Reason: Statutes
Effective Dates
5 PRC citizens:
CW Proliferation:
May 21, 1997
- Liao Minglong
§81(c), Arms Export Control Act

- Tian Yi
§11C(c), Export Administration Act
- Chen Qingchang (aka Q.C. Chen)
(dual-use chemical precursors, equipment, and/or
- Pan Yongming
technology to Iran)
- Shao Xingsheng
2 PRC companies:
- Nanjing Chemical Industries Group
- Jiangsu Yongli Chemical Engineering and Technology
Import/Export Corp.
1 Hong Kong company:
- Cheong Yee Ltd.
Jiangsu Yongli Chemicals and Technology Import/Export
CW/BW Proliferation:
June 14, 2001
Corp.
§3, Iran Nonproliferation Act
for two years
China Metallurgical Equipment Corp. (aka CMEC,
Missile Proliferation:
September 1, 2001
MECC)
§73(a)(2)(A), Arms Export Control Act
for two years
§11B(b)(1)(B)(i), Export Administration Act
(MTCR Category II items to Pakistan)
- Liyang Chemical Equipment
CW/BW Proliferation:
January 16, 2002
- China Machinery and Electric Equipment
§3, Iran Nonproliferation Act
for two years
Import/Export Co.
(Australia Group controls)
- Q.C. Chen
CRS-64


Entity/Person (or successor, sub-unit, subsidiary)
Reason: Statutes
Effective Dates
- Liyang Yunlong (aka Liyang Chemical Equipment Co.)
Weapons Proliferation:
May 9, 2002
- Zibo Chemical Equipment Plant (Chemet Global Ltd.)
§3, Iran Nonproliferation Act
for two years
- China National Machinery and Electric Equipment
(AG-controlled items and conventional weapons-related

Import and Export Co.
technology related to unspecified missiles)
- Wha Cheong Tai Co.

- China Shipbuilding Trading Co.
- CPMIEC
- China Aero-Technology Import/ Export Corp.
(CATIC)
- Q.C. Chen
- Jiangsu Yongli Chemicals and Technology Import
Weapons Proliferation:
July 9, 2002
Export Corp.
§1604(b), Iran-Iraq Arms Non-Proliferation Act
for two years
- Q.C. Chen
and

- China Machinery and Equipment Import Export Corp.
§81(c), Arms Export Control Act
Sanctions were lifted on June 21, 2013, on China
- China National Machinery and Equipment Import
§11C(c), Export Administration Act
Machinery and Equipment Import Export Corporation,
Export Corp.
China National Machinery and Equipment Import Export
(chemical weapons technology to Iran)
- CMEC Machinery and Electric Equipment Import
Corporation, CMEC Machinery and Electric Equipment
Export Co.

Import and Export Company, CMEC Machinery and
Electrical Import Export Company, and China Machinery
- CMEC Machinery and Electrical Import Export Co.
and Electric Equipment Import and Export Company.
- China Machinery and Electric Equipment Import Export

Co.
- Wha Cheong Tai Co.
- China Shipbuilding Trading Co.
only under Iran-Iraq Arms Nonproliferation Act

(cruise missile technology)
North China Industries Corporation (NORINCO)
Missile Proliferation:
May 23, 2003
Executive Order 12938 (amended by Executive Order
for two years
13094)
(missile technology to Iran)
CRS-65


Entity/Person (or successor, sub-unit, subsidiary)
Reason: Statutes
Effective Dates
- Taian Foreign Trade General Corporation
Missile Proliferation:
June 26, 2003
- Zibo Chemical Equipment Plant
§3, Iran Nonproliferation Act
for two years
- Liyang Yunlong Chemical Equipment Group Company
- NORINCO
- CPMIEC
CPMIEC Missile
Proliferation:
July 30, 2003
Executive Order 12938 (as amended by Executive
for indefinite period
Order 13094)
(missile technology to publicly unnamed country)
NORINCO Missile
Proliferation:
September 19, 2003
§73(a)(2)(A) and (C), Arms Export Control Act
for two years; waived for one year on import ban for
§11B(b)(1)(B)(i) and (iii), Export Administration Act
non-NORINCO products; waiver extended on
September 18, 2004, for six months; waived for six
(Substantial contribution in proliferation of MTCR
months on March 18, 2005; waived for six months on
Category II technology to publicly unnamed country)
September 18, 2005; waived for six months on March
18, 2006; waived on September 18, 2006, for six
months; permanently waived on March 18, 2007.
- Beijing Institute of Opto-Electronic Technology
Weapons Proliferation:
April 1, 2004
(BIOET)
§3, Iran Nonproliferation Act
for two years
- NORINCO
(transfers to Iran controlled under multilateral export
- CPMIEC
control lists or having the potential to make a material
- Oriental Scientific Instruments Corporation (OSIC)
contribution to WMD or cruise or ballistic missiles)
- Zibo Chemical Equipment Plant (aka Chemet Global
Ltd., South Industries Science and Technology Trading
Company)
- Xinshidai (aka China Xinshidai Company, XSD, China
Missile proliferation:
September 20, 2004
New Era Group, or New Era Group)
Executive Order 12938 (as amended by Executive
for two years
Order 13094)

(material contribution to missile proliferation in publicly
unnamed country)
CRS-66


Entity/Person (or successor, sub-unit, subsidiary)
Reason: Statutes
Effective Dates
- Beijing Institute of Aerodynamics
Weapons Proliferation:
September 23, 2004
- BIOET
§3, Iran Nonproliferation Act
for two years
- China Great Wall Industry Corporation
(transfers to Iran controlled under multilateral export
- NORINCO
control lists or having the potential to make a material
contribution to WMD or cruise or ballistic missiles)
- LIMMT Economic and Trade Company, Ltd.
- OSIC
- South Industries Science and Technology Trading Co.
- Liaoning Jiayi Metals and Minerals Co.
Weapons Proliferation:
November 24, 2004
- Q.C. Chen
§3, Iran Nonproliferation Act
for two years
- Wha Cheong Tai Co. Ltd.
(transfers to Iran controlled under multilateral export
- Shanghai Triple International Ltd.
control lists or having the potential to make a material
contribution to WMD or cruise or ballistic missiles)
- Beijing Alite Technologies Company Ltd.
Weapons Proliferation:
December 27, 2004
- CATIC
§3, Iran Nonproliferation Act
for two years
- China Great Wall Industry Corporation
(transfers to Iran controlled under multilateral export

- NORINCO
control lists or having the potential to make a material
contribution to WMD or cruise or ballistic missiles)
- Q.C. Chen
- Wha Cheong Tai Company (aka Wah Cheong Tai Co.,
Hua Chang Tai Co.)
- Zibo Chemet Equipment Corp. (aka Chemet Global
Ltd)
-CATIC
Missile and CW Proliferation:
December 23, 2005
-NORINCO
§3, Iran Nonproliferation Act
for two years
-Hongdu Aviation Industry Group
(transfers to Iran controlled under multilateral export
-LIMMT Metal urgy and Minerals Company Ltd.
control lists or having the potential to make a material
contribution to WMD or cruise or ballistic missiles)
-Ounion (Asia) International Economic and Technical
Cooperation Ltd.
-Zibo Chemet Equipment Company
CRS-67


Entity/Person (or successor, sub-unit, subsidiary)
Reason: Statutes
Effective Dates
-Beijing Alite Technologies Company Ltd. (ALCO)
Missile Proliferation:
June 13, 2006
-LIMMT Economic and Trade Company Ltd.
Executive Order 13382
On June 19, 2008, sanctions lifted against CGWIC and
-China Great Wal Industry Corporation (CGWIC)
(transfers to Iran’s military and other organizations of
G.W. Aerospace
-CPMIEC
missile and dual-use components, including items
control ed by the MTCR)
-G.W. Aerospace (a U.S. office of CGWIC)
Great Wall Airlines (aka Changcheng Hangkong)
Missile Proliferation:
August 15, 2006

Executive Order 13382
lifted on December 12, 2006
(unspecified transfers probably to Iran)
-China National Electronic Import-Export Company
Weapons Proliferation:
December 28, 2006
-CATIC
§3, Iran, North Korea, and Syria Nonproliferation Act
for two years
-Zibo Chemet Equipment Company
(transfers control ed under multilateral export control
lists or having the potential to make a material
contribution to WMD or cruise or ballistic missiles)
-CPMIEC
Weapons Proliferation:
April 17, 2007
-Shanghai Non-Ferrous Metals Pudong Development
§3, Iran, North Korea, and Syria Nonproliferation Act
for two years
Trade Company Ltd.
(transfers control ed under multilateral export control
-Zibo Chemet Equipment Company
lists or having the potential to make a material
contribution to WMD or cruise or ballistic missiles)
-China Xinshidai Company
Weapons Proliferation:
October 23, 2008
-China Shipbuilding and Offshore International
§3, Iran, North Korea, and Syria Nonproliferation Act
for two years
Corporation
(transfers control ed under multilateral export control
-Huazhong CNC
lists or having the potential to make a material
contribution to WMD or cruise or ballistic missiles)
-Dalian Sunny Industries (aka LIMMT Economic and
Missile Proliferation:
February 2, 2009
Trade Company, LIMMT (Dalian) Metallurgy and
§73(a)(1), Arms Export Control Act
for two years
Minerals Company, and LIMMT (Dalian FTZ) Economic
and Trade Organization)
§11B(b)(1), Export Administration Act
Waived for PRC government activities related to
missiles, electronics, space systems, and military aircraft
-Bellamax

CRS-68


Entity/Person (or successor, sub-unit, subsidiary)
Reason: Statutes
Effective Dates
-Dalian Sunny Industries (aka LIMMT Economic and
Missile Proliferation:
February 2, 2009
Trade Company, LIMMT (Dalian) Metallurgy and
Executive Order 12938
for two years
Minerals Company, and LIMMT (Dalian FTZ) Economic
and Trade Organization)
-Bellamax
-Fangwei LI (aka Karl LEE), c/o LIMMT Economic and
Missile Proliferation:
April 7, 2009
Trade Company
Executive Order 13382

-Karl LEE
Weapons Proliferation:
July 14, 2010
-Dalian Sunny Industries (aka LIMMT (Dalian) Metallurgy
§3, Iran, North Korea, and Syria Nonproliferation Act
for two years
and Minerals Co., LIMMT (Dalian) Economic and Trade
(transfers control ed under multilateral export control
Organization, Liaoning Industry and Trade Co.)
lists or having the potential to make a material
-Shanghai Technical By-Products International (STBPI)
contribution to WMD or cruise or ballistic missiles)
-Zibo Chemet Equipment Company
Entities in Hong Kong apparently associated with Iran:
Weapons Proliferation:
January 13, 2011
-Advance Novel Limited
Executive Order 13382

-Alpha Effort Limited
-Best Precise Limited
-Concept Giant Limited
-Great Method Limited
-Ideal Success Investments
-Logistic Smart Limited
-Neuman Limited
-New Desire Limited
-Partner Century Limited
-Sackville Holdings Limited
-Sandford Group Limited
-Sino Access Holdings Limited
-Smart Day Holdings Group
-Starry Shine International Limited
-System Wise Limited
CRS-69


Entity/Person (or successor, sub-unit, subsidiary)
Reason: Statutes
Effective Dates
-Top Glacier Company Limited
-Top Prestige Trading Limited
-Trade Treasure Limited
-True Honour Holdings Limited
-Karl LEE
Weapons Proliferation:
May 23, 2011
-Dalian Sunny Industries
§3, Iran, North Korea, and Syria Nonproliferation Act
for two years
-Dalian Zhongbang Chemical Industries Company
(transfers control ed under multilateral export control
-Xian Junyun Electronics
lists or having the potential to make a material
contribution to WMD or cruise or ballistic missiles)
-Xun WANG (PPG Paints Trading Company)
Nuclear Proliferation:
November 16, 2011
§13(c), Export Administration Act
(export of paint to Chasma 2 nuclear power plant under
control of the Pakistan Atomic Energy Commission)
-Dalian Sunny Industries (LIMMT)
Weapons Proliferation:
December 20, 2011
-Karl LEE (LI Fangwei)
§3, Iran, North Korea, and Syria Nonproliferation Act
for two years
-Zibo Chemet Equipment Company
(transfers control ed under multilateral export control
lists or having the potential to make a material
contribution to WMD or cruise or ballistic missiles)
-Zhuhai Zhenrong Company
Nuclear Proliferation:
January 12, 2012
Iran Sanctions Act, as amended by CISADA
(transfers of gasoline to Iran)
-Bank of Kunlun
CISADA
July 31, 2012
(significant financial transactions for Iran’s banks)
Entities in Beijing and Hong Kong associated with DPRK:
Weapons Proliferation:
January 24, 2013
-KIM Kwang-Il, Tanchon Commercial Bank official
Executive Order 13382
-RA Kyong-Su, Tanchon Commercial Bank official
(sales of conventional weapons and ballistic missiles)
-Leader (Hong Kong) International Trading Limited
CRS-70


Entity/Person (or successor, sub-unit, subsidiary)
Reason: Statutes
Effective Dates
-BST Technology and Trade Company
Weapons Proliferation:
February 5, 2013
-CPMIEC
§3, Iran, North Korea, and Syria Nonproliferation Act
for two years
-Dalian Sunny Industries (aka LIMMT)
(transfers control ed under multilateral export control
-Karl LEE (aka LI Fangwei)
lists or having the potential to make a material
contribution to WMD or cruise or ballistic missiles)
-Poly Technologies
-Dalian Sunny Industries
Missile Proliferation:
February 11, 2013
-Karl LEE (aka LI Fangwei)
Executive Order 12938
for two years
-Dalian Sunny Industries
Missile Proliferation:
February 11, 2013
-Karl LEE (aka LI Fangwei)
§73(a)(1), Arms Export Control Act
for two years
§11B(b)(1), Export Administration Act
Entities in Dalian associated with DPRK:
Weapons Proliferation in or by DPRK:
March 7, 2013
-YO’N Cho’ng-Nam, KOMID official
Executive Order 13382

-KO Ch’o’l-Chae, KOMID official
Entity in Dalian associated with DPRK:
Weapons Proliferation in or by DPRK:
June 27, 2013
-KIM Chol Sam, Daedong Credit Bank
Executive Order 13382
Note: This table summarizes the unclassified discussion of sanctions in this CRS Report and was compiled based on publication of notices in the Federal Register, reports
and statements of the Administration, legislation enacted by Congress, and news reports.
CRS-71

China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues


Author Contact Information

Shirley A. Kan

Specialist in Asian Security Affairs
skan@crs.loc.gov, 7-7606


Congressional Research Service
72