Order Code 98-485 F
CRS Report for Congress
Received through the CRS Web
China: Possible Missile Technology Transfers
Under U.S. Satellite Export Policy —
Actions and Chronology
Updated October 6, 2003
Shirley A. Kan
Specialist in National Security Policy
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress
China: Possible Missile Technology Transfers Under
U.S. Satellite Export Policy — Actions and Chronology
Congress has been concerned about whether U.S. firms, in activities connected
with exporting satellites, provided expertise to China for use in its ballistic missile
and space programs and whether U.S. policy has facilitated transfers of militaryrelated technology to China. This CRS Report discusses security concerns, policy
changes, congressional action, and a chronology of major developments since 1988
under President Reagan. It is updated as warranted.
Some critics opposed satellite exports to China, while others were concerned
that the Clinton Administration relaxed export controls and monitoring of
commercial satellites in moving the licensing authority from the State Department
to the Commerce Department in 1996. A range of concerns were prompted by New
York Times reports in April 1998 that the Justice Department began a criminal
investigation into whether Loral Space and Communications Ltd. and Hughes
Electronics Corp. violated export control laws. The firms allegedly shared their
findings with China on the cause of a rocket’s explosion while launching a U.S.origin satellite in February 1996. The companies reportedly provided expertise that
China could use to improve the accuracy and reliability of its future ballistic missiles,
including their guidance systems. At least three classified studies reportedly found
that U.S. national security was harmed. Congress and the Executive Branch also
investigated Hughes’ review of China’s launch failure of January 1995. After failed
satellite launches in 1992, 1995, and 1996, China has reported 28 consecutive,
successful commercial and government/military space launches. In 2000, the State
Department and Lockheed Martin agreed to a settlement with a fine of $13 million.
In 2002, Loral announced a civil settlement with a fine of $20 million. In early 2003,
Hughes and Boeing agreed to a civil penalty of $32 million.
In 1998, Congress passed the FY1999 National Defense Authorization Act (P.L.
105-261) that transferred licensing authority over satellites back to the State
Department (effective March 15, 1999). On December 30, 1998, the Cox Committee
unanimously approved a classified report said to conclude that China’s technology
acquisitions over the past 20 years, not only that associated with satellite launches,
harmed U.S. national security. The Senate Intelligence Committee released its
unclassified report on May 7, and the Cox Committee issued a declassified report on
May 25, 1999 (see CRS Report RL30220). Congress has debated whether to shift
satellite export controls back to Commerce. Congress also oversees the Bush
Administration’s actions, including any new Presidential waivers of post-Tiananmen
sanctions (after the last waiver in 1998 for Loral’s Chinasat-8); export licenses;
reviews of policy toward China on satellite exports or space cooperation; and
weapons proliferation sanctions that have banned satellite exports to China since
September 2001, with new sanctions imposed on September 19, 2003 (see CRS
Report RL31555). China has had no commercial satellite launches since 2000.
Legislation for State Department appropriations for FY2004 (H.R. 2799 and S. 1585)
would continue to require State to notify the Committees on Appropriations at least
15 days in advance of obligating or expending funds for processing licenses to export
U.S.-origin satellites to China.
Congressional Concerns and Issues for Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Security Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
China’s Aerospace Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Missile Technology or Expertise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Security Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Loral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Beyond the Loral Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Motorola . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Hughes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Lockheed Martin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Military Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Administration and Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Policies on Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Tiananmen Crackdown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Missile Proliferation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Waivers for Post-Tiananmen Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Additional Congressional Mandates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Hearings of the 105th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Cox Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Clinton Administration’s Response . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Senate Task Force . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Clinton Administration’s Response . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Export Controls and Intelligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Senator Specter’s Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
105th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
106th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
107th Congress and 108th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Denied and Pending Satellite Exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Congressional Oversight and Bush Policy Reviews . . . . . . . . . . . . . . 38
APMT and China’s Military . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Chinasat-8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Other Satellite Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Chronology of Major Events Since 1988 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
List of Tables
Table 1. Comparison of SLVs and Missiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Table 2. Presidential Waivers of Post-Tiananmen Sanctions
for Exports of Satellites or Parts to China . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Table 3. Satellite Launches: 1998-2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
China: Possible Missile Technology
Transfers Under U.S. Satellite Export Policy
— Actions and Chronology
Congressional Concerns and Issues for Policy1
Members of Congress were concerned about allegations that U.S. firms
provided expertise to the People’s Republic of China (PRC) that could be used in its
ballistic missile and space programs and that the Clinton Administration’s policies
on satellite exports facilitated legal or illegal transfers of military-related technology
to China. The New York Times reported in April 1998 that the Justice Department
began a criminal investigation into whether Loral Space and Communications Ltd.
(of New York), and Hughes Electronics Corp. (of Los Angeles) violated export
control laws.2 The firms were alleged to have shared their findings with China,
without approval from the U.S. government, on the cause of a PRC rocket’s
explosion while launching a U.S.-origin satellite in February 1996. In sharing their
conclusions, the companies allegedly provided expertise that China could use to
improve the accuracy and reliability of its ballistic missiles, including their guidance
systems. Several classified government studies reportedly concluded that the U.S.
technical assistance provided to China damaged U.S. national security by helping the
PRC to improve the guidance systems on its ballistic missiles developed for China’s
military, the People’s Liberation Army (PLA).
In addition, the media reports alleged that President Clinton in February 1998
issued a waiver of sanctions that undermined the investigation by allowing the
issuance of licenses for the export of technology or expertise similar to that in
question — despite “strong opposition” from Justice. Moreover, political
considerations allegedly influenced the Administration’s decision, with Loral’s
chairman being the largest individual donor to the Democratic Party in 1996.
Congressional investigations also led to media reports in early 1999, confirmed
by U.S. intelligence in April and the Cox Committee’s declassified report in May
This CRS study was initiated at the request of the Committee on International Relations
of the House of Representatives of the 105th Congress and has been adapted for general
congressional use with permission of the Committee.
Gerth, Jeff, “Companies are Investigated for Aid to China on Rockets,” and “Aerospace
Firms’ Ties with China Raise Questions,” New York Times, April 4 and 13, 1998.
1999, that the PRC obtained secret information on U.S. nuclear weapons.3 Members
were concerned about the PRC’s modernization of its ballistic missiles.4
There were also congressional concerns about the U.S. space industry (satellitemakers as well as space launch businesses), aside from questions about China.5
This CRS Report discusses security concerns, significant congressional and
administration action, and a comprehensive chronology pertaining to satellite exports
to China (since 1988 under the Reagan Administration). The events summarized
below, based on open sources and interviews, pertain to various issues for U.S.
foreign and security policy (including that on China and weapons nonproliferation):
Should Congress exercise strong oversight of the Administration’s
policy on satellite exports, including ensuring congressional review?
What are the benefits and costs of satellite exports to China for U.S.
economic and security interests?
Should the United States continue, change, or cease the policy in
place since the Reagan Administration that has allowed exports of
satellites to China (for its launch and, increasingly, for its use)?
Do satellites provide military applications for China?
Have U.S. firms contributed intentionally or unintentionally to
China’s development of ballistic missiles in ways that harmed U.S.
national security, and what should be the government’s response to
findings of such alleged transfers of U.S. technology?
Should the Presidential waiver (of post-Tiananmen sanctions) for
Loral’s Chinasat-8 have been issued during an ongoing criminal
investigation into alleged assistance by Loral and Hughes to China’s
Are there adequate controls and monitoring on exports of U.S.origin satellites and/or satellite technology, and on technical
exchanges with PRC engineers that could contribute to China’s
programs on missiles or military satellites and other spacecraft?
Should commercial space cooperation, especially allowing China to
gain the economic benefits of satellite launches, be used as leverage
in U.S. policy on weapons nonproliferation? Should sanctions for
missile proliferation be imposed on China’s space launch company,
China Great Wall Industry Corporation, and other companies, to
improve China’s nonproliferation practices?
Should the United States negotiate a new space launch agreement
with China, and did the country abide by the previous agreements?
See also CRS Report RL30143, China: Suspected Acquisition of U.S. Nuclear Weapon
Data, and CRS Report RL30220, China’s Technology Acquisitions: Cox Committee’s
Report — Findings, Issues, and Recommendations, by Shirley A. Kan.
See CRS Report 97-391, China: Ballistic and Cruise Missiles, by Shirley A. Kan.
On worldwide commercial space launches in general, see CRS Issue Brief IB93062, Space
Launch Vehicles: Government Activities, Commercial Competition, and Satellite Exports,
by Marcia S. Smith.
China’s Aerospace Organizations
China Great Wall Industry Corporation (CGWIC, or China Great Wall) has been
China’s commercial space launch company since 1986. It has marketed the use of
rockets developed by the China Academy of Launch Vehicle Technology (CALT)
and other aerospace academies. China Great Wall and CALT have been part of
China’s defense-related aerospace industry under the China Aerospace Corporation
(abbreviated by China as CASC). CASC, established in 1993, has overseen space
as well as missile research and development. CASC and its subordinate companies,
research academies, and factories have developed and produced strategic and tactical
ballistic missiles, space launch vehicles, surface-to-air missiles, cruise missiles, and
military (e.g., reconnaissance and communications satellites) and civilian satellites.
CASC was previously known as the Ministry of Aerospace Industry, also called the
Seventh Ministry of Machine Building. The PLA has exercised control over satellite
launches (under the new General Equipment Department since April 1998).
China reportedly launched its first satellite, Dongfanghong (“East is Red”), on
April 24, 1970. By the end of 1997, China reportedly launched 40 domestic
satellites: 17 retrievable reconnaissance satellites, 3 meteorological satellites, 8
communications and broadcasting satellites, and 12 “experimental” (probably
military) satellites. China has used satellites and space technology to enhance its
national defense, economy, and international prestige.6 On April 7, 1990, China
Great Wall launched a foreign satellite (Asiasat) for the first time. Since then, the
company has expanded its foreign business, especially with U.S. firms such as
Hughes Electronics, Lockheed Martin, and Loral Space and Communications. China
probably has sought foreign capital and technology to apply to its domestic satellite
research and development efforts, in part to lessen reliance on purchasing foreign
satellites. The president of the Chinese Academy of Space Technology said that the
PRC’s Dongfanghong (East is Red) satellites matched the capacities of advanced
satellites built by Hughes, but were backward in satellite navigation and stabilization
technologies. The Academy had hoped to sell satellites at world standards by 2000.7
China experienced a number of embarrassing and costly failed satellite launches
until 1996. In 1992, a PRC rocket stalled while attempting to launch the Optus-B1
satellite, and another rocket exploded and destroyed the Optus-B2 satellite (both built
by Hughes). In 1995, a Long March rocket exploded and destroyed the Apstar-2
satellite (built by Hughes). In 1996, another PRC rocket exploded and destroyed the
Intelsat satellite (built by Loral). Aside from the dramatic explosions, other problems
prevented the PRC rockets from successfully launching satellites into the correct
orbits. However, since the launch of a “scientific” satellite on October 20, 1996,
China reported 27 consecutive, successful space launches through 2002, raising
questions as to whether U.S. technology contributed to this achievement.
Chou Kuan-wu, “China’s Reconnaissance Satellites,” Kuang Chiao Ching (in Hong Kong),
March 16, 1998; translated in FBIS.
Parker, Jeffrey. “China to Expand Rocket Production,” Reuters, August 25, 1993.
China’s aerospace industry shifted from denying all responsibility in failed
launches of foreign satellites to a willingness to work with foreign companies in
determining the causes of explosions and other failures. This practice may have been
a strategy to learn from foreign companies methods to improve China’s rockets,
satellites, aerospace facilities, and other related space technology. China may also
have tried to reassure foreign insurance companies and satellite manufacturers that
it can solve problems with the Long March rockets.
Missile Technology or Expertise
Security Concerns. One question in the controversy involves the
applicability of satellite-launch technology to the modernization of China’s ballistic
missiles. China Great Wall uses the Long March series of rockets to launch
satellites. China’s “Long March (LM)” (“Chang Zheng”) space launch vehicles
(SLVs) are related to its “East Wind” (“Dong Feng” (DF)) intercontinental ballistic
missiles (ICBMs). China has used the LM rockets to launch its own satellites (since
1970) and foreign satellites (since 1990). The Long March boosters are also
produced as China’s CSS-3 (DF-4) and CSS-4 (DF-5A) ICBMs deployed in the
Second Artillery, the PLA’s missile force. China’s launch facilities, e.g., Xichang
Satellite Launch Center in Sichuan province, are at PLA bases.
A review of open sources found agreement that the first Long March rockets
used to launch satellites were derived from ballistic missiles developed earlier and
that there has been parallel research and development for the modernization of the
SLVs and ICBMs.8 The CSS-3 ICBM has also been produced as the booster for the
LM-1 SLV. The CSS-4 ICBM has also been used as the booster for the LM-2, LM-3,
and LM-4 series of SLVs. In a 1984 publication, the Defense Intelligence Agency
Defense Intelligence Agency, Handbook of the Chinese People’s Liberation Army,
November 1984; John Wilson Lewis and Xue Litai, China Builds the Bomb (Stanford
University Press, 1988); Lennox, Duncan, “China’s Development of Ballistic Missiles,”
Jane’s Intelligence Review, August 1991; Phillip S. Clark, “Chinese Launch Vehicles —
Chang Zheng 1,” “Chinese Launch Vehicles — Chang Zheng 2,” “Chinese Launch Vehicles
— Chang Zheng 3,” “Chinese Launch Vehicles — The Rest of the Story,” “Chinese Launch
Vehicles — Further Details,” Jane’s Intelligence Review, November 1991, May 1992,
August 1992, October 1992, June 1993; John Wilson Lewis and Hua Di, “China’s Ballistic
Missile Programs,” International Security, Fall 1992; Iris Chang, Thread of the Silkworm
(BasicBooks, 1995); “People’s Republic of China: Offensive Weapons, Jane’s Strategic
Weapon Systems, September 1997; Jane’s Space Directory 1997-98.
(DIA) called the LM-1 SLV the “booster variant” of the CSS-3, and LM-2 the
“booster variant” of the CSS-4. Indeed, this factor has made it difficult to accurately
count the numbers of ICBMs that China has produced and has allowed for China to
increase the potential number of ICBMs available for deployment.
When the Reagan Administration first decided to allow China to launch U.S.origin satellites, it cited the need to protect “legitimate U.S. national security
interests” and promised Congress that an agreement would be concluded with China
to safeguard U.S. technology from “possible misuse or diversion.”9 Such an
agreement on technology safeguards was signed on December 17, 1988, but
apparently required renegotiation. A new agreement was signed on February 11,
1993. One question concerns whether China has abided by these agreements.
After the end of the Cold War and with increase in U.S.-China trade, some said
that national security interests need not be sacrificed by commercial interests. Within
the current controversy, some argued that launching satellites from China conformed
to national security interests because of the benefits to U.S. satellite manufacturers.10
The Department of Justice’s investigation looked at Space
Systems/Loral (SS/L), Loral’s subsidiary in Palo Alto, CA, which chaired a review
committee on the launch failure of the Intelsat-708 satellite in February 1996. As for
Loral’s case, Acting Undersecretary of State John Holum confirmed on April 9,
1998, that after the accident in February 1996, the Department of State “became
aware that there may have been a violation.” The case was referred to the
Department of Justice for investigation. He said that there were “strong legal
remedies” for violations of export control laws, including a denial of future licenses.
In 1997, when China signed a $200 million contract to buy the Chinasat-8
satellite from Loral, Henry Stackpole, president of Loral Asia-Pacific, said that Loral
was “confident” that China Great Wall took steps “to overcome the systemic
problems and some of the human aspects of the engineering” to be able to launch
Chinasat-8. Stackpole also said that China Aerospace Corporation and China Great
Wall used foreign technological know-how to improve their rockets and launching
Loral issued a statement on May 18, 1998, saying that allegations that it
provided missile guidance technology to China were wrong. Loral also said that it
did not advise China “on how to fix any problems with the Long March rocket.” The
company stated that “the Chinese alone conducted an independent investigation of
the launch failure [in February 1996] and they determined that the problem was a
defective solder joint in the wiring — a `low-tech’ matter.” Loral denied that it and
Hughes conducted an independent investigation to determine the cause of that launch
“Export of U.S. Satellite to China for Launch,” Department of State Bulletin, Nov. 1988.
Hirsh, Michael (Newsweek), “The Great Technology Giveaway?” Foreign Affairs,
Sept./Oct. 1998; Clayton Mowry (executive director of the Satellite Industry Association),
“Satellites Do No Good Stuck on the Earth,” Washington Times, Sept. 8, 1998.
South China Morning Post (Hong Kong), March 22, 1997; Asian Wall Street Journal,
March 24, 1997.
failure. At the insistence of insurance companies, which required non-PRC
confirmation of resolutions of problems with Long March rockets, Loral formed an
“Independent Review Committee” of several satellite companies, including Hughes,
to review the PRC investigation. According to Loral, the “Independent Review
Committee” obtained information from the PRC and was not formed to help them
solve their problems. The review agreed with the PRC conclusion (that a defective
solder joint was responsible), without performing tests or providing any test data to
the PRC. The committee did note that further tests by China would be required to
establish certainty. Loral said that, during the review, it discussed the committee’s
work with U.S. officials. As far as Loral’s engineers could determine, the statement
said, “no sensitive information—no significant technology—was conveyed” to
Loral further disclosed that in April 1996, at China’s request, Wah L. Lim, then
a senior vice president and engineer at Loral, chaired the “Independent Review
Committee” to study China’s technical evaluation of the cause of the accident on
February 15, 1996. Loral said China had identified the problem as residing in the
inertial measurement unit (IMU) of the guidance system of the rocket. Loral believed
that it did not have to request U.S. government licensing and monitoring.
However, the first meeting of the “Independent Review Committee” was held
in Palo Alto, CA, but the second meeting took place in Beijing, China. Notably, PRC
aerospace engineers attended the meetings: four at the 1st meeting on April 22-24,
1996, and 22 participants at the 2nd meeting on April 30-May 1, 1996.12 They
included engineers and officers from:
! China Great Wall Industry Corporation
! Beijing Control Device Institute
! China Academy of Launch Vehicle Technology
! China Aerospace Corporation
Moreover, the committee held meetings in hotel rooms in China which were probably
not secure from listening devices planted by China’s intelligence service, conducted
unmonitored technical interviews with over 100 PRC engineers and technical
personnel, and generated over 200 pages of data and analyses.
Loral admitted that, contrary to its policies, “the committee provided a report
to the Chinese before consulting with State Department export licensing authorities.”
According to Loral, as soon as its executives found out in May 1996, the company
notified the Departments of State and Defense. (The Customs Service then began an
investigation in May 1996.13) In June 1996, Loral provided to the U.S. government
a detailed, written report concerning all communications with China. Loral added
that it was in full cooperation with the Justice Department in its investigation and
with congressional committees. Loral concluded that based upon its own review, it
did not believe that “any of its employees dealing with China acted illegally or
damaged U.S. national security.” In addition, the statement said that Loral’s
chairman, Bernard Schwartz, was not personally involved in any aspect of this
matter: “No political favors or benefits of any kind were requested or extended,
Documents provided by Douglas Feith, of Feith and Zell, lawyers for Loral, July 1998.
Customs Service, press release, January 10, 2002.
directly or indirectly, by any means whatever.” Loral also denied any connection
between the launch failure in February 1996 and the Presidential waiver for another
Loral-built satellite in February 1998. The export license for the latest launch (for
Chinasat-8) “applied the strictest prohibitions on technology transfer and specified
that any new launch failure investigation would require a separate license.” Loral
stressed that it complied strictly with export control laws and regulations.
Clinton Administration officials said that export licensing procedures and strict
security measures (including monitoring by the Defense Department of pre-launch
meetings and the launches) precluded any assistance to the design, development,
operation, maintenance, modification, or repair of any launch facility or rocket in
China. Moreover, Undersecretary of Commerce William Reinsch testified to
Congress on April 28, 1998, that effective export controls on dual-use technology
(with military and civilian applications) allow U.S. exporters to compete while
protecting U.S. security interests. He disputed that there were objections within the
Administration to allowing satellite exports to China, saying that after November
1996 (when the licensing jurisdiction was transferred from the Department of State
to Commerce), the Commerce Department issued three export licenses for satellites
to be launched from China — with the concurrence of all agencies.
However, at least three classified studies found serious concerns about the U.S.
firms’ assistance to China’s ballistic missile modernization program. A classified
report at the Department of Defense’s Defense Technology Security Administration
(DTSA) reportedly concluded on May 16, 1997, that Loral and Hughes transferred
expertise to China that significantly enhanced the guidance and control systems of
its nuclear ballistic missiles and that “United States national security has been
harmed.”14 Significantly, the U.S. firms were suspected of helping China to improve
quality control and diagnostic techniques that would enable its aerospace engineers
to detect problems in guidance systems applicable to missiles. These concerns were
first raised in a classified report at the Air Force’s National Air Intelligence Center
(NAIC) in March 1997 and supported by the State Department’s Intelligence and
Research Bureau (INR).15 Also, analysis by CIA at the time did not find
These reports apparently prompted the Justice
Department’s criminal investigation that began in September 1997.
Also, the Justice Department had expressed concerns about the February 1998
Presidential waiver for the Chinasat-8 satellite. A memorandum, dated February 12,
1998, written by National Security Adviser Samuel Berger for President Clinton,
acknowledged that the Justice Department “cautioned” that such a waiver “could
have a significant adverse impact on any prosecution that might take place” in Loral’s
Gerth, Jeff, “Aerospace Firms’ Ties with China Raise Questions,” New York Times,
April 13, 1998; Eric Schmitt, “Report Outlines Damage to National Security in
Companies’ China Dealings,” New York Times, June 27, 1998.
Pincus, Walter, “Pentagon, CIA Differ on Missile Threat,” Washington Post, June 7,
case.16 Finally, there was little public information on the export licenses issued by
the State Department or Commerce Department for Technical Assistance Agreements
(TAAs) concerning the transfer of technical assistance and data needed to mate
satellites to launch vehicles (so-called “form, fit, and function” technical data).
While Loral’s case continued to be under investigation by a federal grand jury,
two incidents occurred with some embarrassment for the Clinton Administration. On
March 16, 2000, U.S. Ambassador Joseph Prueher hosted a dinner in Beijing for
representatives of Loral, Lockheed Martin, Hughes, CASC, and ChinaSat. The
Embassy denied that the subject of an export license for ChinaSat 8 was discussed.17
On July 17, 2000, the Defense Security Service issued an award for “outstanding
security performance and practices” to Loral and 49 other companies, but then
rescinded the award for Loral after realizing it remained under investigation.18
Meanwhile, the Justice Department’s campaign finance task force reportedly
found no evidence that Loral’s chairman Bernard Schwartz corruptly influenced
President Clinton in his decision to approve Loral’s export of a satellite to China in
1998, according to the contents of an internal memo and related documents disclosed
by the press.19 At a Senate Judiciary Subcommittee hearing on May 2, 2000, Senator
Specter referred to this memo, written to Attorney General Janet Reno in the summer
of 1998 by Charles LaBella, then chief of the task force. According to Senator
Specter, Schwartz had donated $1.5 million to the Democratic National Committee.
LaBella was said to have written that Schwartz’ case “was a matter which likely did
not merit any investigation.” Nonetheless, LaBella recommended that Reno appoint
an independent prosecutor to dispose of the case, because the allegations of political
favors involved the President. LaBella reportedly also criticized Justice Department
officials for ordering the investigation of Schwartz while excluding President
Clinton. Reno denied LaBella’s recommendations for the special counsel.
In the summer of 2001, it was disclosed that the George W. Bush
Administration was negotiating with Loral and Hughes to reach civil settlements with
the State Department, rather than face the prosecution of criminal charges from the
Justice Department.20 Finally, on January 9, 2002, Loral announced that it had
reached a $20 million settlement, whereby it agreed to pay a civil fine of $14 million
to the State Department, “without admitting or denying the government’s charges,”
and to expend at least $6 million to strengthen its export control compliance program
(with $2 million already spent). Loral said that the Justice Department had ended its
criminal investigation of the company and declined to pursue the case further.
The memorandum was printed in the New York Times, May 23, 1998.
Gertz, Bill, “Envoy Hosted Satellite Firms in China,” Washington Times, April 4, 2000.
Pincus, Walter, “Defense Award Rescinded From Firm Being Probed,” Washington Post,
July 18, 2000.
Rempel, William C. and Alan C. Miller, “Internal Justice Memo Excuses Loral From
Funds Probe,” Los Angeles Times, May 23, 2000. Also see: David Johnston, “Memo Shows
Another Push For Clinton Inquiry,” New York Times, May 3, 2000.
Pasztor, Andy and David Cloud, “Loral Nears Civil Settlement With U.S. Over Sharing
Technology With China,” Wall Street Journal, August 31, 2001.
Beyond the Loral Case. Beyond the 1996 incident involving Loral and
Hughes, there were wider concerns that the policy of allowing China to launch U.S.built satellites has effectively subsidized and assisted China’s missile modernization.
Observers pointed out that the same PRC companies and engineers work in both
civilian and military programs and that much of the technology used in launching
satellites can be used in military programs on missiles, satellites, and other areas.
Future developments in China’s ICBM program have been related to the space
launch program. U.S. intelligence reportedly has gained information about
developments in China’s ICBMs from information about PRC SLVs.21 Jane’s Space
Directory 1997-98 noted that China was not known to use liquid oxygen/kerosene
engines that were used extensively in other countries, “reflecting the space variants’
parallel development alongside storable propellant long range missiles.”
There have been concerns that China may deploy ICBMs with multiple
independently targetable reentry vehicles (MIRVs) in the future. In 1999, the House
Select Committee on U.S. National Security and Military/Commercial Concerns with
the People’s Republic of China (popularly known as the “Cox Committee”) judged
that, by 2015, the PLA could deploy up to 100 ICBMs with as many as 1,000
The Director of Central Intelligence (DCI)’s unclassified damage assessment of
the PRC’s suspected acquisition of U.S. nuclear weapon secrets found that China
already has the “technical capability” to develop a MIRV system for the currently
deployed ICBM but has not deployed MIRVs. Nonetheless, the DCI warned that
“U.S. information acquired by the Chinese could help them develop a MIRV for a
future mobile missile.”22 China first decided to develop MIRVs for deployment in
1970. Development was in part stalled, however, by a lack of capability to
miniaturize warheads.23 The priority for the project on MIRVs was lowered in March
1980, but research and development on MIRVs resumed on November 10, 1983, as
part of the DF-5 modification program. Also, China reportedly planned to add a new
solid-propellant third stage (TS) to introduce a new LM-2E/TS SLV, with this third
stage having a multiple-satellite dispenser to launch up to 12 satellites. Jane’s Space
Directory 1997-1998 reported that China developed a restartable, cryogenic
(extremely low temperature) stage 3 for the LM-3 SLV.
Motorola. There were concerns that Motorola’s use of a PRC-developed
multi-satellite dispenser (called “Smart Dispenser”) on a variant of the LM-2C to
launch two Iridium satellites at a time helped the PRC to develop MIRV capability.
The Washington Times reported that a December 1996 classified study by the Air
Force’s National Air Intelligence Center (NAIC) concluded that the new PRC21
Pincus, Walter, “U.S. Gains Intelligence Data in China Launches,” Washington Post, June
CIA, “The Intelligence Community Damage Assessment On the Implications of China’s
Acquisition of U.S. Nuclear Weapons Information on the Development of Future Chinese
Weapons,” (unclassified release), April 21, 1999. See also: CRS Report RL30143, China:
Suspected Acquisition of U.S. Nuclear Weapon Data, by Shirley A. Kan.
CRS Report 97-1022.
developed “smart dispenser,” an upper-stage booster used to launch two satellites for
Iridium on one LM 2C/SD rocket, could be modified to deploy multiple re-entry
vehicles. Nevertheless, the report noted that there was no evidence that China was
using the dispenser, built in 1996, for warheads and that the PRC multiple warhead
system would be less accurate than U.S. and Russian systems.24 A Pentagon
spokesman said on July 14, 1998, that Motorola provided data to allow the PRC to
attach satellites to the dispenser that it designed without U.S. help and that releasing
multiple satellites and targeting multiple warheads require different technology.
Moreover, the Cox Committee concluded that “Motorola did not provide the PRC
with information on how to design the Smart Dispenser; but the PRC built the Smart
Dispenser indigenously to Motorola’s specifications.”25
Hughes. Some were especially concerned about PRC launches in 1995 and
1996 of three satellites built by Hughes which were not monitored by the Defense
Department. On June 18, 1998, Jan Lodal, Principal Deputy Under Secretary of
Defense for Policy, testified to a joint hearing of the House National Security and
International Relations Committees that there were three launches that were not
monitored by the Defense Department, because the satellites did not require State
Department licenses and monitoring had been tied to licenses from the State
Department for Munitions List items. The Director of DTSA, Dave Tarbell, testified
to the Senate Select Committee on Intelligence on July 15, 1998, that the three
unmonitored launches took place in January 1995 (Apstar-2), July 1996 (Apstar-1A),
and August 1996 (Chinasat-7). The Department of Defense then concluded that full
monitoring should be required for satellites licensed by the Commerce Department,
and the requirement was added after late 1996, he said. Nevertheless, Tarbell stated
that “we are not aware of any transfer of technology from these unmonitored
launches that contributed to China’s missile or military satellite capabilities.”
Hughes responded that its security measures prevented unauthorized technology
However, Air Force Lieutenant Colonel Al Coates, a former Pentagon official
who monitored launches in China until he resigned in November 1998, said that even
with monitoring, Hughes employees were more concerned about successful launches
and were often careless about discussing sensitive information with the PRC. Coates
said he did not get responses from superiors in the Pentagon to his reports of security
problems, but told Congress and the Justice Department.26
Some experts said that monitoring of technical exchanges was more crucial than
monitoring the launches. Senator Kyl said on July 16, 1998, that, in addition to the
three unmonitored launches, there was no monitoring of pre-launch technical
exchanges on the mating of satellites to the launch vehicles for three satellite
Gertz, Bill, “U.S. Technology Builds ‘Bridge’ for China Missile,” Washington Times, July
Cox Committee’s declassified report, released on May 25, 1999; see CRS Report
RL30220, China’s Technology Acquisitions: Cox Committee’s Report — Findings, Issues,
and Recommendations, June 8, 1999, by Shirley A. Kan.
“Did U.S. Companies Share Technology with China?” ABC News, 20/20 Program,
December 3, 1998.
projects: Optus B-3 (Hughes), Echostar-1 (Martin Marietta), and Chinastar-1
Congress and the Justice Department also began to investigate Hughes’ review
of the PRC launch failure on January 26, 1995 (of the Apstar-2 satellite).28 Testifying
before a joint hearing of the House National Security and International Relations
Committees on June 18, 1998, Under Secretary of Commerce for Export
Administration William Reinsch acknowledged that, in the 1995 case, his department
alone had allowed Hughes to provide launch failure analysis to China. He stated that
after the Apstar-2 launch failure in 1995,
the company involved [Hughes] conducted an analysis without the participation
of the Chinese launch service provider. The analysis was written in order to
satisfy insurance requirements. The analysis was reviewed by the Department
of Commerce, which determined that it contained only information already
authorized for export under the original Commerce license issued in February
1994. The unclassified report was provided first to a consortium of Western
insurance companies and later to the Chinese launch service provider.
At that hearing, David Tarbell, Director of the Defense Technology Security
Administration (DTSA), confirmed that the Department of Defense (DOD) did not
monitor the launch or the launch failure analysis. Reinsch acknowledged that the
Commerce Department did not consult with either the Department of State or DOD.
The decision to release the report to the PRC was made solely by a Commerce
Department licensing officer.29 Reinsch also acknowledged, however, that the
authority for an additional license to conduct launch failure analysis was later
specified to be the Department of State, not Commerce, when the licensing
jurisdiction was transferred to Commerce in 1996.
At the request of Congress, DOD’s DTSA and NAIC prepared and issued, on
December 7, 1998, an initial assessment of the documents concerning Hughes’ 1995
investigation that the Department of Commerce provided to DOD in July 1998. The
unclassified report said that Commerce did not consult with DOD or State (although
the technical assistance constituted a “defense service” under State’s export control
jurisdiction and subject to DOD’s monitoring) nor disclosed the documents until the
June 1998 congressional hearings. The report concluded that Hughes’ technical
exchanges with the PRC raised national security concerns regarding violating
standards of not improving PRC satellite or missile capabilities and “potentially
contributing to China’s missile capabilities.” While the report added that the benefits
likely did not alter the U.S.-China “strategic military balance,” the report did not look
at whether China used the information for the PLA. DOD and State further
Congressional Record, July 16, 1998; Aerospace Daily, July 21, 1998.
Anselmo, Joseph C. and James R. Asker, “U.S. Broadens Probes of China Tech Transfer”
and “Hughes Defends China Security,” Aviation Week and Space Technology, June 29 and
July 6, 1998.
Transcript of continuation of hearing on June 23, 1998.
examined whether the transferred information benefitted China’s military.30 On
December 18, 1998, the State Department’s Office of Defense Trade Controls (DTC)
completed a sensitive but unclassified report, concluding that Hughes, in reviewing
the January 1995 launch failure of Apstar-2, provided technical lessons that are
“inherently applicable” to PRC missile as well as satellite launch programs.31
DOD said that, from February to August 1995, Hughes conducted the
investigation closely and jointly with the PRC, specifically, CALT and China Great
Wall, that included “significant interaction” and meetings in China. Hughes gave
PRC aerospace engineers specific information to make their rockets more reliable.
According to DOD, Hughes provided “sufficient know-how to correct the overall
deficiencies” of “oversimplified” mathematical models used in designing launch
vehicles, modifications for launch operations, details about satellite designs, as well
as “insights” into U.S. diagnostics for improving rocket and satellite designs.
Specifically, Hughes showed China how to improve its coupled loads analysis that
was “critically important” for ensuring the integrity of the rocket during flight and
“serious flaws” in PRC modeling of aerodynamic loads on the rocket fairing (the top
part of the rocket that covers payloads). Hughes denied advancing China’s missiles
and said that its report was approved by the Commerce Department.32
A task force formed by Hughes in December 1999 to assess its export
compliance program issued its report on July 25, 2000. Former Senator Sam Nunn
and former Undersecretary of Defense Paul Wolfowitz led the task force. They
recommended 12 “best practices” for ensuring compliance with export controls.33
In January 2002, when Loral announced that it reached a civil settlement with
the State Department, Hughes began its own negotiations for a civil settlement. At
that time, the Justice Department ended its investigation of Hughes as well.34
Fulghum, David A. and Joseph C. Anselmo, “Pentagon Plans New Look At China Tech
Transfer,” Aviation Week & Space Technology, December 14, 1998.
For text of the Department of State’s memo, see the Cox Committee’s declassified May
1999 report, volume II, p. 76-84. Gerth, Jeff, “C.I.A. Ignored Report of Payments To
Chinese For Satellite Contracts,” New York Times, December 24, 1998; Warren Ferster,
“Export Plan Shrinks Role For Commerce,” Space News, January 18, 1999.
“Department of Defense Initial Assessment of Certain Documents Concerning An
Investigation by Hughes Space and Communications Company Into the Failure of the
Launch of the Apstar II on China’s Long March 2E Launch Vehicle,” December 7, 1998.
Also see: Pincus, Walter and John Mintz, “Report Faults Hughes On Data Given China,”
Washington Post, December 9, 1998; Jeff Gerth, “Pentagon Inquiry Faults Missile Maker’s
China Aid,” New York Times, December 9, 1998; David S. Cloud and Robert S.
Greenberger, “Commerce Department is Also Criticized in Pentagon Report of Hughes’
Dealings,” Wall Street Journal, December 10, 1998.
Singer, Jeremy, “Study Puts Satellite Export Law Compliance Over Sales,” Defense News,
August 7, 2000; for report, see [http://www.hughes.com].
Friedland, Jonathan and David Cloud, “Loral Will Pay $14 Million to Settle Charges Over
Its Exports to China,” Wall Street Journal, January 10, 2002.
Then on December 26, 2002, the Department of State’s Office of Defense Trade
Controls issued a letter charging the Hughes Electronics Corporation and Boeing
Satellite Systems (which acquired the Hughes Space and Communications Company
in 2000) with 123 violations of the Arms Export Control Act and International
Traffic in Arms Regulations in connection with technology transfers to China after
the failed launches of the Apstar-2 satellite in January 1995 and the Intelsat-708
satellite in February 1996, and other activities.35 The charges related to Hughes’
interactions with China covering the following satellite projects:
In charging the companies, the State Department contrasted their response with the
cooperation of Loral, saying “unlike Loral, Hughes and Boeing have both failed to
recognize the seriousness of the violations and have been unprepared to take steps
to resolve the matter or to ensure no recurrence of violations in the future.”36
The State Department also charged that Hughes, in July 1996, submitted a
munitions export license application to have a PRC national, Shen Jun, serve as
interpreter, without notifying the department that Shen was the son of PLA
Lieutenant General Shen Rongjun, a Deputy Director of the PLA’s Commission of
Science, Technology, and Industry for National Defense (COSTIND) with
responsibility for missiles and satellites. (The license was granted and later
suspended on July 2, 1998.)
On March 5, 2003, Hughes Electronics Corporation and Boeing Satellite
Systems announced that they reached a settlement with the State Department with a
civil penalty of $32 million ($4 million for past expenditures on enhancing export
programs, $8 million in future investments to strengthen export control compliance
programs, and $20 million paid over seven years). The companies also said that they
“acknowledge the nature and seriousness of the offenses charged by the Department
of State, including the harm such offenses could cause to the security and foreign
policy interests of the United States.” They further acknowledged that “assistance
to a launch operator ... could aid in the development of missile system technology
and, thus, have a negative impact on national security.” They expressed regret for not
obtaining export licenses.37
Department of State, Bureau of Political-Military Affairs, Office of Defense Trade
Controls, Charging Letter pertaining to Hughes Electronics Corporation and Boeing Satellite
Systems, December 26, 2002.
Mintz, John, “Firms Accused of Giving Space Technology to China,” Washington Post,
January 1, 2003.
Hughes Electronics Corporation, “Statement Regarding Boeing and Hughes Electronics
Consent Agreement with State Department on Export Compliance,” March 5, 2003.
Lockheed Martin. On April 4, 2000, the Department of State charged
Lockheed Martin Corporation with 30 violations of the Arms Export and Control
Act.38 The charges were civil charges and did not involve criminal law. Lockheed
Martin denied that it violated export control laws and said that Martin Marietta (later
acquired by Lockheed) had obtained a license from the Department of Commerce
before it assessed, in 1994, a PRC kick motor for the Asiasat-2 satellite. A kick
motor is fired after launching a satellite to send it into its final orbit. Asiasat-2 is
owed by the Asia Satellite Telecommunications Company, based in Hong Kong, that
is partly owned by the China International Trust and Investment Corporation
(CITIC), a PRC state-owned enterprise. Lockheed said that it had sent its 50-page
technical assessment to the Department of Defense for review and removal of
sensitive information before sending copies of the study to Asiasat and China Great
Wall Industry Corporation. China also denied the charge, claiming that it had
developed the kick motor by “entirely relying on its own efforts.”39
However, the State Department charged that Lockheed had sent the unedited
version to Asiasat, before the Defense Department blacked out all but five pages of
the report. The charges also alleged that Lockheed failed to inform the Pentagon that
it had already sent 10 unedited copies of the report to Asiasat, until the U.S. Customs
Service discovered them. The State Department also said that sharing even the
redacted version with China Great Wall violated export controls by sharing technical
assistance that might enhance the PRC’s space launch vehicles. Lockheed was also
charged with identifying flaws in PRC testing procedures, confirming the results of
PRC tests that identified faulty insulation, and identifying problems with U.S. solid
rocket motor technologies.
On June 14, 2000, the Department of State announced that it had reached a
consensual settlement with Lockheed Martin that involved total penalties of $13
million. Lockheed agreed to pay $8 million over four years and use $5 million to set
up a comprehensive computer control system to which the Departments of Defense
and State will have access over the next four years and improved oversight
procedures. The State Department said “we think that the information that was
transferred was inappropriate, and that the reports that were transferred were not
appropriate, and that there was a serious problem here that information had the
potential to be used to be applied to missile development.”40
Military Benefit. Beyond the issue of whether sensitive technology or
technical expertise in connection with satellite launches was transferred to China,
there has been disagreement on the extent to which such transfers have military
benefit in the context of China’s modernization of its nuclear-armed ballistic missiles
and space systems. China reportedly has developed new land-mobile, solid-fuel DF-
Loeb, Vernon, “Lockheed Aided China on Rocket Motor, U.S. Says,” Washington Post,
April 6, 2000.
Xinhua, April 10, 2000.
Department of State, press briefing by Richard Boucher, June 14, 2000; David E. Sanger,
“U.S. Fines Lockheed $13 Million in China Satellite Case,” New York Times, June 14, 2000.
31 ICBMs for deployment in the early part of the 21st century.41 As for satellites with
military applications, the PRC’s military newspaper reported President Jiang Zemin
as declaring in June 1991 that “in such a big country as ours, as it is neither possible
nor necessary to build separate telecommunications systems for military use and civil
use respectively, we should take such a road as building a telecommunications
system usable for both military and civil purposes, which meet both peacetime and
Some, including officials in the Clinton Administration, stressed that there were
differences between the PRC SLVs and ICBMs and there have been no authorized
missile technology transfers to China. On September 17, 1998, Principal Deputy
Assistant Secretary of Defense Franklin Miller testified only about authorized
significant technology transfers and that satellite launches have not provided any
benefits to current generation PRC ICBMs. He was not able to elaborate publicly
on potential improvements to new PRC ICBMs under development.43 Admiral
Joseph Prueher, Commander in Chief of U.S. Pacific forces, said on October 23,
1998, that any transfers of missile technology or know-how in connection with
launching U.S. satellites in China have improved PRC ICBMs “only incrementally,
not by any quantum leaps and bounds” and “accelerated solution of a technical
guidance problem for one of their missiles.”44
John Pike, Director of the Space Policy Project at the Federation of American
Scientists, argued that there are significant differences between China’s ballistic
missiles and the Long March SLVs.45 He said that the Long March SLVs were
longer than the CSS-4 ICBM, so they flexed more during ascent. They also had
bigger nose cones to hold satellites that were bigger than warheads. These
characteristics resulted in stresses on the Long March. He also argued that deploying
two satellites from one Long March (as China has done for Iridium) was very
different from launching MIRVs. Warheads, unlike satellites, were designed to
survive greater vibrations and the heat of reentering the atmosphere.
Other experts stressed the commonalities between the technology as well as
technical expertise used in rockets and missiles. A Senate subcommittee provided
a graphical comparison of the applicability of technology in SLVs and ballistic
missiles prepared by the Central Intelligence Agency (CIA).46 In general terms, the
CIA compared 11 categories of technology and equipment. Six, or more than half,
See CRS Report 97-391, China: Ballistic and Cruise Missiles, by Shirley A. Kan.
Jiefangjun Bao [Liberation Army Daily], September 27, 2000, translated by FBIS.
Hearing of the Senate Committee on Commerce, Science, and Transportation, “Transfer
of Missile Technology to China,” September 17, 1998.
Capaccio, Tony, “U.S. Firms Marginally Helped China ICBMs,” Defense Week, October
26, 1998; “China Benefitted From Tech Transfer, Adm. Prueher Says,” Aerospace Daily,
October 26, 1998.
“The China Satellite Debate,” Proliferation Brief, June 23, 1998.
Hearing of the Senate Governmental Affairs Subcommittee on International Security,
Proliferation, and Federal Services, “The Benefits of Commercial Space Launch for Foreign
ICBM and Satellite Programs,” May 21, 1998.
of the categories are the same for the SLV and ICBM; four categories are similar;
while only missiles contain warheads. (See the table below.)
Table 1. Comparison of SLVs and Missiles
Technology and equipment generally unique to ballistic missiles:
Technology and equipment that are similar in SLV and ICBM
(comparison requires case-by-case analysis):
! reentry vehicle
! payload separation
! inertial guidance and control systems
! strap-on boosters
Technology and equipment that are same in SLV and ICBM:
! staging mechanisms
! air frame, motor cases, liners, and insulation
! engines or motors
! thrust vector control systems
! exhaust nozzles
Henry Sokolski (Executive Director of the Nonproliferation Policy Education
Center and a Defense official in the Bush (I) Administration) argued that “all of our
satellite transfers have helped China perfect its military rocketry.” He also wrote that
“intangible technology” was critical to the timely, reliable, and accurate placement
of satellites into space as well as launches of warheads against targets by ballistic
missiles. Intangible technologies included: coupling load analysis, guidance data
packages, upper-stage solid rocket propellant certification, upper-stage control design
validation, lower-stage design validation, and general quality assurance. Also, multisatellite dispensers could be modified as multiple-warhead dispensers, thus assisting
China’s reported efforts to develop a capability in MIRVs for its ICBMs.47 China
used such dispensers to launch multiple satellites for Iridium.
Experts at the Monterey Institute of International Studies also pointed out that
a significant portion of the components, technology, and expertise used in the
research and development of SLVs were “virtually interchangeable” with that of
ballistic missiles. These overlaps included: launching multiple satellites from a
single SLV and delivering multiple warheads on a single missile. Similar technology
involved upper stage control systems (separation and ignition of the upper stage,
attitude control, and spin release of satellites), satellite dispensers (delivery of
multiple satellites to separate orbits), coupling load analysis (to assure launches
Sokolski, Henry, “US Satellites to China: Unseen Proliferation Concerns,” International
Defense Review, April 1994; “Selling China the Rope...,” Weekly Standard, June 1, 1998.
without damaging payloads), upper stage solid-fuel engines, and kick motors (to
deliver satellites into correct orbits).48
Nevertheless, they also argued that having the capability to launch multiple
satellites would not translate into having a military capability to deliver MIRVs.
Delivering multiple reentry vehicles into planned trajectories was more difficult than
launching multiple satellites into orbit. MIRV capability would require greater
precision. Reentry vehicles, unlike satellites, would not have their own kick motors.
A MIRV capability would require rocket motors that can stop and restart.
Finally, in charging Lockheed Martin in April 2000 with violating the Arms
Export Control Act by assessing a PRC kick motor for the Asiasat-2 satellite, the
State Department spokesman declared that “any assistance to China that enhances its
capabilities in space launch has the potential to be applied to missile development.”49
Administration and Congressional Action
Policies on Sanctions
China’s organizations, such as China Great Wall Industry Corporation, have
been affected by two categories of U.S. sanctions: those imposed for the 1989
Tiananmen crackdown and those imposed for missile proliferation.
Tiananmen Crackdown. In 1990, the United States imposed postTiananmen sanctions as required in the Foreign Relations Authorization Act for
FY1990 and FY1991 (P.L. 101-246). Sec. 902(a) have required suspensions in
programs related to: (1) Overseas Private Investment Corporation, (2) Trade and
Development Agency, (3) exports of Munitions List items, (4) exports of crime
control equipment, (5) export of satellites for launch by China, (6) nuclear
cooperation, and (7) liberalization of export controls. Suspensions (3) and (5) have
affected export of satellites to China. Sec. 902(b) have allowed Presidential waivers
of those suspensions by reporting that “it is in the national interest” to terminate a
Missile Proliferation. As for sanctions related to missile proliferation,50 on
April 30, 1991, the George H.W. Bush Administration denied licenses for the export
of U.S. parts for a PRC satellite, the Dongfanghong-3, citing “serious proliferation
concerns.” On May 27, 1991, President Bush declared sanctions on China for
transferring to Pakistan technology related to the M-11 short-range ballistic missile
(category II), but not for the transfer of complete missiles (category I). These
Lamson, James A. and Wyn Q. Bowen, “‘One Arrow, Three Stars:’ China’s MIRV
Program,” Jane’s Intelligence Review, May 1997.
Loeb, Vernon, “Lockheed Aided China on Rocket Motor, U.S. Says,” Washington Post,
April 6, 2000.
See CRS Report RL31555, China and Proliferation of Weapons of Mass Destruction and
Missiles: Policy Issues, by Shirley A. Kan.
sanctions, required by Sec. 73(a) of the Arms Export Control Act (P.L. 90-629) and
Sec. 11B(b)(1) of the Export Administration Act (P.L. 96-72), were intended to
enforce the international Missile Technology Control Regime (MTCR). These
sanctions, which took effect on June 16 and 25, 1991, denied export licenses and
waivers of sanctions for: (1) high-speed computers to China, which can be used for
missile flight testing; (2) satellites for launch by China; and (3) missile technology
or equipment. They affected two PRC aerospace corporations: China Great Wall and
China Precision Machinery Import Export Corporation. President Bush waived these
sanctions on March 23, 1992, after China agreed to abide by the MTCR guidelines.
The Clinton Administration imposed similar, category II sanctions on August
24, 1993, after China was again determined to have transferred M-11 related
equipment to Pakistan, but not complete missiles. A total of 11 PRC defense
industrial companies were sanctioned, including China Great Wall again. In 19931994, the U.S. aerospace industry and aerospace company executives, including thenCEO of Hughes, C. Michael Armstrong, lobbied against sanctions and for expansion
of satellite exports to China.51 China, on October 4, 1994, agreed not to export
“ground-to-ground missiles” inherently capable of delivering at least 500 kg to at
least 300 km — an understanding the U.S. side sought to include the M-11 missiles
under the MTCR. On November 1, 1994, the Administration waived those sanctions.
Still, questions persisted until 2000 about how to respond to persistent reports
of PRC missile proliferation and whether new U.S. sanctions should be imposed for
reported PRC missile proliferation in countries such as Pakistan and Iran, including
the suspected transfer of complete M-11 missiles to Pakistan in November 1992. In
preparing for the 1998 U.S.-PRC summit, the Clinton Administration reportedly
proposed supporting China as a partner in the MTCR, issuing a blanket waiver of
post-Tiananmen sanctions on satellites, and increasing the quota on the numbers of
satellites China is allowed to launch — in return for further cooperation in missile
nonproliferation, according to a Secret March 12, 1998, National Security Council
memo (printed in the March 23, 1998 Washington Times).
Then, on November 21, 2000, the Clinton Administration announced a U.S.PRC agreement on missile nonproliferation. On the same day, the PRC Foreign
Ministry first issued a statement that “China has no intention of assisting any country
in any way in the development of ballistic missiles that can be used to deliver nuclear
weapons (i.e., missiles which can deliver an effective payload of at least 500
kilograms a distance of at least 300 kilometers).” Additionally, the ministry stated
that “China will further improve and strengthen its export control system in keeping
with its own missile non-proliferation policies and export control practices, and this
will include issuing a comprehensive export control list for missile-related items,
including dual use items.”52 Following that statement, the State Department
announced that the United States had determined that PRC entities had contributed
to missile proliferation in Pakistan (Category I and II items) and Iran (Category II
CRS Report 96-767, Chinese Proliferation of Weapons of Mass Destruction: Background
and Analysis, by Shirley A. Kan; John Mintz, “White House Papers Trace Hughes
Executive’s Pressure for China Deals,” Washington Post, July 27, 1998.
PRC FM Spokesman on Non-Proliferation, Xinhua, November 21, 2000, in FBIS.
items), and that U.S. sanctions would be waived on PRC entities for the past
transfers, but imposed on Pakistani and Iranian ones. Furthermore, the United States
agreed to resume processing — not necessarily approving — licenses for exporting
satellites to China. Thirdly, the United States agreed to resume discussions on
extending the 1995 U.S.-China Agreement Regarding International Trade in
Commercial Launch Services (due to expire on December 31, 2001).53
After the George W. Bush Administration began, the U.S. Trade Representative
(USTR) led the U.S. team to hold consultations on the space launch agreement in
Beijing in March 2001. Then on July 28, 2001, visiting Beijing ahead of President
Bush’s travels there in October, Secretary of State Powell confirmed that there are
“outstanding issues” about China’s fulfillment of the November 2000 missile
nonproliferation agreement and reported that expert talks would be held on
nonproliferation. The expert talks were held on August 23 in Beijing, but the State
Department reported that additional work was needed to “clarify China willingness
to implement fully” that agreement, while “the results have been mixed.”
Thus, on September 1, 2001, the State Department imposed sanctions for 2
years on a PRC company, the China Metallurgical Equipment Corporation (CMEC),
for proliferation of missile technology (Category II items of the MTCR) to Pakistan.
Imposed under the Arms Export Control Act (AECA) and Export Administration
Act, the sanctions also applied to Pakistan’s National Development Complex.54 The
sanctions effectively denied licenses for the export of satellites to China for use or
launch by its aerospace entities, because the Category II sanctions deny U.S. licenses
to transfer missile equipment or technology (MTCR Annex items) to any PRC
“person,” which was defined by Section 74(8)(B) of the AECA (popularly known as
the “Helms Amendment”) as any PRC government activity related to missiles,
electronics, space systems, or military aircraft, and the State Department has
considered that satellites are covered by the MTCR Annex since satellite parts are
listed there. With persistent questions about China’s adherence to its missile
nonproliferation pledges, President Bush did not waive the sanctions. Then, on
September 19, 2003, the State Department imposed sanctions on a PRC defense
industrial entity (NORINCO) for missile proliferation, effectively banning satellite
exports to China for 2 more years. (See CRS Report RL31555, China and
Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues, by Shirley
Kan.) China has had no commercial satellite launches since 2000 (see Table 3).
Waivers for Post-Tiananmen Sanctions
After sanctions for the Tiananmen crackdown were imposed in 1989, Presidents
Bush and Clinton issued 13 waivers for 20 satellite projects (projects may involve
multiple satellites), based on “national interest,” on a case-by-case basis, to allow the
export to China of U.S.-origin satellites or components subject to export controls.
(See the table below.) Waivers have been increasingly issued for satellites used by
China — not just launched from China. Some waivers under Section 902 of P.L.
Department of State press briefing, November 21, 2000.
The State Department’s determination was printed in the Federal Register, September 11,
101-246 have specified whether sections 902(a)(3) and 902(a)(5), on Munitions List
items and satellites, applied; others simply referred to section 902 or 902(a).
The policy of allowing China to launch U.S.-built satellites has been tied to the
missile proliferation issue, partly because the same PRC aerospace organizations
have been involved in both. However, a month before the Bush Administration
issued missile proliferation sanctions on May 27, 1991, the President issued a waiver
of post-Tiananmen sanctions for Australian and Swedish satellites (while denying an
export license for U.S. parts for a PRC satellite). The Clinton Administration again
imposed missile proliferation sanctions on August 24, 1993, but President Clinton
first issued a waiver of post-Tiananmen sanctions on July 2, 1993, for the export of
Iridium and Intelsat-8 satellites to China. Then, even while sanctions were in place
on China Great Wall and other PRC companies for missile proliferation, President
Clinton issued another waiver of post-Tiananmen sanctions on July 13, 1994.
Additional Congressional Mandates
In 1998, Congress passed the Defense Authorization Act for FY1999 (P.L. 105261), with additional language on Presidential actions affecting satellite exports to
China (also discussed below under Legislation). First, Section 1511 of the Act
expressed the sense of Congress, among other views, that the President should not
issue any blanket waiver of post-Tiananmen sanctions for exports of satellites to be
launched by China. Second, Section 1512 required the President to certify to
Congress at least 15 days before exporting missile equipment or technology to China
that such export would not be detrimental to the U.S. space launch industry and
would not measurably improve PRC missile or space launch capabilities. Third,
Section 1515 required a detailed justification (covering 13 national security and
economic areas) to accompany the President’s waiver, based on “national interest,”
of post-Tiananmen sanctions for satellite exports to China.
Table 2. Presidential Waivers of Post-Tiananmen Sanctions
for Exports of Satellites or Parts to China
Satellite Project (may have
various U.S. firms
Apsat (or Apstar)
Hughes and Loral
Mabuhay (Agila 2)
Asia Pacific Mobile
a. Asia Satellite Telecommunications was a consortium based in Hong Kong and owned by China
International Trust and Investment Corporation (CITIC) of China, Cable and Wireless of
Britain, and Hutchison Telecommunications Ltd. Of Hong Kong.
b. In the first waiver, President George H.W. Bush had waived sanctions for Aussat satellites, but he
reissued a new waiver and licenses. He also denied export licenses for U.S. components for a
PRC satellite, Dongfanghong-3 (waived later).
c. Used by China Oriental Telecom Satellite Co.
d. Various PRC state-owned companies invested in the project.
e. Cooperative product between Daimler-Benz Aerospace and China Aerospace Corp.
Hearings of the 105th Congress
Since the Reagan Administration’s decision in September 1988 to allow U.S.built satellites to be launched from China, Members of Congress periodically have
expressed concerns about the implications for U.S. national security. After the press
reports in April 1998 on Loral and Hughes, the 105th Congress held a number of open
and closed hearings to examine the allegations of corporate misconduct and
weaknesses in U.S. policy, including those by the following committees.
Joint Economic Committee, April 28, 1998.
Senate Governmental Affairs Subcommittee on International Security, Proliferation,
and Federal Services, May 21, 1998.
Senate Intelligence Committee, June 4, 1998.
Senate Intelligence Committee, June 5, 1998.
Senate Intelligence Committee, June 10, 1998.
Senate Foreign Relations Committee, June 11, 1998.
House National Security/International Relations Committees, June 17, 1998.
House National Security/International Relations Committees, June 18 and 23, 1998.
Senate Foreign Relations Subcommittee on East Asian/Pacific Affairs, June 18,
Senate Governmental Affairs Subcommittee on International Security, Proliferation,
and Federal Services, June 18 and July 8, 1998.
Senate Intelligence Committee, June 24, 1998.
House Science Committee, June 25, 1998.
Senate Foreign Relations Committee, June 25, 1998.
Senate Governmental Affairs Committee, June 25, 1998.
Senate Intelligence Committee, July 8, 1998.
Senate Armed Services Committee, July 9, 1998.
Senate Intelligence Committee, July 15, 1998.
Senate Governmental Affairs Subcommittee on International Security, Proliferation,
and Federal Services, July 29, 1998.
Senate Commerce, Science, and Transportation Committee, September 17, 1998.
Cox Committee. In addition to those hearings in the 105th Congress, House
Speaker Gingrich announced on May 19, 1998, that he wanted to create a select
committee, headed by Congressman Cox, to investigate the various allegations
concerning this case. The House voted on H.Res. 463 (Solomon) (409-10) on June
18, 1998, to create the Select Committee on U.S. National Security and
Military/Commercial Concerns with the People’s Republic of China, popularly
known as the “Cox Committee.”55 The committee had nine members: five
Republicans (Representatives Cox, Goss, Hansen, Bereuter, and Weldon) and four
Democrats (Representatives Dicks, Spratt, Jr., Roybal-Allard, and Scott). The panel
held numerous closed hearings and received wide-ranging briefings. The committee
expanded its investigations to include policies before the Clinton Administration,
Also see CRS Report 98-549, Transfer of Missile and Satellite Technology to China: A
Summary of H.Res. 463 Authorizing a House Select Committee, by Stephen W. Stathis.
other dual-use technology exports, including high-performance computers and
machine tools,56 and suspected acquisitions of U.S. nuclear weapons secrets.
On December 30, 1998, Rep. Cox and Dicks, the chair and ranking Democrat,
said in a news conference that the bipartisan committee unanimously approved a 700page, classified report on its broad, six-month investigation. The committee was
extended for the first three months of the 106th Congress to work with the
Administration on a declassified version.57 Meanwhile, the White House revealed
the recommendations in its February 1, 1999 response.
There were then disagreements between the Select Committee and the White
House on how much to declassify, particularly about the cases at the nuclear weapon
labs. Representative Cox said on March 3, 1999, that the House may vote during the
week of March 22 to release an edited, unclassified version of the report, if there
were no agreement with the Administration. However, Representative Dicks
described such a move as a “dangerous precedent” to release classified information
over the President’s objections.58 The House did not vote to release the report
without the Administration’s approval, and on March 24, 1999, passed H.Res. 129
to further extend the Select Committee on China for a month, until April 30, 1999.
Meanwhile, Representatives Cox and Dicks briefed President Clinton on April 22,
1999, about the findings of the committee’s report.59 The House agreed to H.Res.
153, on April 29, 1999, to further extend the committee until May 14, 1999, and
approved H.Res. 170, on May 13, 1999, to extend the date to May 31, 1999. On May
25, 1999, the Cox Committee released the declassified version of its January 3, 1999
classified report on its investigation of U.S. technology transfers to China.60 (See
CRS Report RL30220.)
The committee concluded that, over at least the last 20 years, China has pursued
a “serious, sustained” effort to acquire advanced American technology — covering
“more serious national security problems than the Loral-Hughes cases,” and that
technology acquisition has harmed U.S. national security. The Committee’s report
agreed with intelligence assessments that Loral and Hughes helped to improve
China’s missile capabilities. The committee made 38 recommendations for
Greenberger, Robert S., “House Panel Expands Its China Satellite Probe,” Wall Street
Journal, October 7, 1998.
Congressional Record, January 6, 1999.
Pomper, Miles A. and Chuck McCutcheon, “State Department Talks Tough to Beijing As
GOP Assails ‘Failed’ Policy,” CQ Weekly, March 6, 1999; Jeff Gerth and Eric Schmitt,
“Political Battle: What to Reveal On China Arms,” New York Times, March 10, 1999;
Vernon Loeb, “CIA Probe Gets Outside Review,” Washington Post, March 16, 1999.
Risen, James, “U.S. Inquires Why Suspect At Atom Lab Kept Access,” New York Times,
April 23, 1999.
U.S. House of Representatives, Select Committee, H.Rept. 105-851, U.S. National
Security and Military/Commercial Concerns with the People’s Republic of China, classified
report issued on January 3, 1999; declassified version issued on May 25, 1999. See CRS
Report RL30220, China’s Technology Acquisitions: Cox Committee’s Report — Findings,
Issues, and Recommendations, June 8, 1999, by Shirley A. Kan.
remedies, including possible legislation, mostly to tighten export controls (e.g.,
giving the Departments of Defense and State more say) and security at the national
labs. The committee apparently did not focus on the question of PRC political
donations nor requested the Justice Department to begin new investigations. Loral
and Hughes denied having violated the law.61
Shifting attention from missile technology to nuclear weapons, the Cox
Committee reviewed the most serious concerns that the PRC had stolen information
on nuclear weapons allegedly from U.S. national laboratories of the Department of
Energy. A third incident has been made public involving the W-88 nuclear warhead
(deployed on the Trident II submarine-launched ballistic missile).62 The Federal
Bureau of Investigation (FBI) investigated that incident in which China reportedly
received data from Los Alamos National Lab in the mid-1980s, but the case was
uncovered in 1995. Two other cases involving China and U.S. labs were previously
reported.63 Representative Dicks said that the most important matter to be learned
from the committee’s report will be “that for 20 years, starting in the 1980s, we had
a major counterintelligence failure at Los Alamos and at other national labs that is
now being corrected.”64 Allegations of the PRC’s acquisition of nuclear weapon
secrets were publicly confirmed by U.S. intelligence on April 21, 1999.65 In 2000,
U.S. intelligence reportedly concluded from additional translations of PRC
documents obtained in 1995 that PRC espionage has gathered classified information
on U.S. ballistic missiles and reentry vehicles, in addition to that on nuclear
According to the Cox Committee, “the PRC has stolen or otherwise illegally
obtained U.S. missile and space technology that improves the PRC’s military and
intelligence capabilities.” After three failed satellite launches in 1992, 1995, and
Press conference of Representatives Cox and Dicks, December 30, 1998; Gerth, Jeff and
Eric Schmitt, “House Panel Says Chinese Obtained U.S. Arms Secrets,” New York Times,
December 31, 1998; John Mintz, “China Aid Hurt U.S. Security, Panel Says,” Washington
Post, December 31, 1998; Robert S. Greenberger, “Hughes, Loral Sales Hurt U.S., Panel
Says,” Wall Street Journal, December 31, 1998.
See CRS Report RL30143, China: Suspected Acquisition of U.S. Nuclear Weapon Data,
by Shirley A. Kan.
Mintz, John, “Atomic Labs Criticized For Security Conditions,” Washington Post, January
1, 1999; Carla Anne Robbins, “China Received Secret Data On Advanced U.S. Warhead,”
Wall Street Journal, January 7, 1999; James Risen and Jeff Gerth, “China Stole Nuclear
Secrets From Los Alamos, U.S. Officials Say,” New York Times, March 6, 1999. On
whether China may have passed nuclear weapon design information to Pakistan, see CRS
Report 96-767, Chinese Proliferation of Weapons of Mass Destruction: Background and
Analysis, by Shirley A. Kan.
Interview on NBC’s “Meet the Press,” March 14, 1999.
CIA, “The Intelligence Community Damage Assessment On The Implications Of China’s
Acquisition of U.S. Nuclear Weapons Information On the Development of Future Chinese
Weapons,” unclassified release, April 21, 1999.
Pincus, Walter and Vernon Loeb, “China Spy Probe Shifts to Missiles,” Washington Post,
October 19, 2000.
1996, U.S. satellite makers (Hughes and Loral) transferred missile design information
and know-how to China without required export licenses from the Department of
State “in violation of the International Traffic in Arms Regulations.” The U.S. firms
gave technical information that has improved the “reliability” of PRC rockets used
to launch satellites with civilian and military purposes. The information was also
useful for the design and improved reliability of “future PRC ballistic missiles.”
Specifically, the committee found that in 1993 and 1995, Hughes “illegally”
recommended to the PRC improvements to the fairing (nose cone that protects the
payload), and in 1996, Loral and Hughes helped the PRC improve the guidance of
a failed rocket, and in so doing, “deliberately acted without the legally required
license and violated U.S. export control laws.”
Regarding Hughes, the committee’s report printed an unclassified assessment
completed on December 18, 1998, by the State Department’s Office of Defense
Trade Controls. That office concluded that, in reviewing the PRC launch failure of
January 1995 that involved a LM-2E space launch vehicle (SLV) and the Apstar-2
satellite, Hughes engaged in technical discussions with the PRC, without U.S.
government monitors, that resulted in “significant improvement to the PRC spacelift
program and contributed to China’s goal of assured access to space.” Moreover, “the
lessons learned by the Chinese are inherently applicable to their missile programs as
well, since SLVs and ICBMs share many common technologies.”
As for Loral and Hughes’ activities in 1996, the committee reported that a 1998
interagency review determined that the “technical issue of greatest concern was the
exposure of the PRC to Western diagnostic processes, which could lead to
improvements in reliability for all PRC missile and rocket programs.” The
improvements to China’s missile program could come from “increased production
efficiency, and improved reliability through adoption of improved quality control and
reliability-enhancing measures in design and manufacturing that were introduced
after the accident investigation, including some that the [Loral-led] Independent
Review Committee advocated.” The committee judged that the guidance system of
the Long March 3B rocket, reviewed by Loral and Hughes in 1996, was “among the
systems capable of being adapted for use in the PRC’s planned road-mobile
intercontinental ballistic missiles” (i.e., the DF-31).
There were previous concerns that after the explosion that destroyed the Loralbuilt Intelsat-708 satellite in 1996, classified U.S. encryption boards were lost to
China. The committee reported that while the two FAC-3R encryption boards were
not recovered from the crash site by Loral, they “most likely were destroyed in the
explosion.” While it is not known whether the PRC recovered the boards, even if
they did, “it would be difficult for the PRC to determine the cryptographic algorithm
that was imprinted on them,” and “reverse-engineering of a damaged board would
be even more difficult.” Thus, “the National Security Agency remains convinced that
there is no risk to other satellite systems, now or in the future, resulting from having
not recovering the FAC-3R boards from the PRC.”
Contrary to earlier allegations of U.S. assistance for China’s development of
multiple satellite dispensers and MIRVs, the committee determined that “Motorola
did not provide the PRC with information on how to design the Smart Dispenser;
rather, the PRC built the Smart Dispenser indigenously to Motorola’s specifications.”
The Cox report agreed with earlier public assessments of the Administration
that, in the 1990s, the PRC has deployed a total of approximately 20 CSS-4 ICBMs
in silos, but contrary to the White House’s June 1998 announcement of a detargeting
agreement with China, “most” of those ICBMs remain targeted on the United States.
Nonetheless, the report noted previous statements by U.S. intelligence that the “CSS4s are deployed in their silos without warheads and without propellants during dayto-day operations.” The committee judged that “within 15 years,” China’s missile
modernization program could result in the deployment of up to 100 ICBMs.
Moreover, if China aggressively developed MIRVs, it could deploy “upwards of
1,000 thermonuclear warheads on ICBMs by 2015.” Confirming suspicions of
problems in China’s SLBM force, the committee reported that while China
developed a JL-1 SLBM to be launched from the PLA’s Xia-class nuclear-powered
submarine, the PRC has not yet deployed the JL-1 SLBM.
In June 1999, Loral Space and Communications published a full-page response
to the Cox report. Loral said that its employees “acted in good faith and did nothing
to violate export control regulations or the law or to harm national security.”
Nonetheless, Loral’s statement acknowledged that “mistakes were made.” Loral also
referred to sensitive information that could have been conveyed at the meetings,
saying that “unfortunately, the [Review] Committee secretary, a Loral engineer, had
already faxed a copy of the report [reviewing the launch failure] to the Chinese in the
process of sending it to the Committee members. However, prior to doing so, the
secretary took measures to delete all sensitive material from the report.”67
In its recommendations related to satellite exports, the Cox Committee:
Expected that the executive branch will aggressively implement the
Satellite Export Control provisions of the Strom Thurmond National
Defense Authorization Act for FY1999.
Stated that the congressional judgment that the Department of State
is the appropriate agency for licensing both exports of satellites and
any satellite launch failure investigations must be faithfully and fully
Stated that the Department of State must ensure, consistent with
national security, that satellite export licenses and notices to
Congress are acted on in a timely fashion and that exporters are
informed about the progress of their applications and have access to
appropriate dispute resolution procedures. The executive branch and
Congress should ensure that the Department of State has adequate
personnel and resources devoted to processing export license
Recommended that congressional committees report legislation to
ensure that satellite manufacturers are not disadvantaged in collateral
areas such as tax credits by the transfer of licensing responsibility to
the Department of State.
Washington Post, June 15, 1999, p. A27; Space News, June 28, 1999.
Stated that DOD must give high priority to obligations under the
Strom Thurmond National Defense Authorization Act, including
requirements for monitoring launches and technology control plans.
Recommended that congressional committees report legislation
providing that, in connection with foreign launches of U.S. satellites,
DOD shall contract for security personnel who have undergone
background checks to verify their loyalty and reliability. The
number of guards shall be sufficient to maintain 24-hour security of
the satellites and all related missile and other sensitive technology.
The satellite export licensee shall be required to reimburse DOD for
all associated costs of such security.
Recommended that DOD shall ensure sufficient training for space
launch campaign monitors and the assignment of adequate numbers
of monitors to space launch campaigns.
Recommended that DOD monitors shall maintain logs of all
information authorized for transmission to the PRC, and such
information shall be transmitted to DOD, State, Commerce, and the
Recommended that relevant departments and agencies ensure that
the laws and regulations on export controls are applied in full to
communications among satellite manufacturers, purchasers, and the
insurance industry, including communications after launch failures.
Recommended that, in light of the impact on U.S. national security
of insufficient domestic, commercial space launch capacity and
competition, congressional committees report legislation to
encourage and stimulate further the expansion of such capacity and
Clinton Administration’s Response. The Clinton Administration
expressed concerns about implications of the Cox Committee’s recommendations for
U.S. exports. Under Secretary of Commerce William Reinsch said in a speech on
export controls to high-tech companies that there were those in Congress who “do
not understand” the “political and economic transformations” in recent years and
“respond to them by trying to return to the simpler era of the Cold War and a single
bipolar adversary. Only this time, it is China. A good example of this is the Cox
Committee. . .”68
On February 1, 1999, the National Security Council (NSC) of the White House
issued a 32-page unclassified version of its response to the House Select Committee’s
38 recommendations,69 even before the committee’s report was declassified. Those
issues pertained to several broad areas:
security on nuclear weapons at national labs;
multilateral export control and weapon nonproliferation efforts;
Speech to the Silicon Valley Forum, Commonwealth Club, California, January 14, 1999.
NSC, response to recommendations, (unclassified), February 1, 1999; John Mintz,
“Clinton: Panel’s Export Rules May Delay Deals,” Washington Post, February 2, 1999.
export controls; and
The White House said it agreed with some of the recommendations or has
already addressed those concerns.
The NSC, however, opposed other
recommendations, including the following objections:
assessments at the Departments of State, Defense, Energy, and
Justice, and the CIA on security risks in U.S.-PRC lab-to-lab
exchanges should be conducted by intelligence experts, not inspector
the United States should not deny exports of high-performance
computers if China does not permit effective end-use verification,
including surprise on-site inspections, by an “arbitrary deadline” of
September 30, 1999;
export control procedures do not need longer review periods where
an agency’s mid-level officials may “stop the clock” on national
security grounds with “indefinite” and “unjustified” delays;
export control procedures requiring consensus of reviewing agencies
would “hinder the deliberative process;”
new legislation, beyond the Hong Kong Policy Act of 1992, was not
needed to require examination of: trade flows to China through
Hong Kong, U.S. export control policy of treating Hong Kong
differently from China, and unmonitored border crossings by PRC
legislation that would amend the Defense Production Act of 1950 to
require mandatory notifications to the Committee on Foreign
Investment in the United States (CFIUS) by any U.S. national
security-related business of any planned mergers, acquisition, or
takeovers by a foreign or foreign-controlled entity could “chill
legitimate foreign investment” that is strongly in U.S. interests;
the Department of Justice deemed it “unnecessary” to have
legislation directing it to promptly share national security
information with other agencies through the establishment of an
Senate Task Force. In the Senate, Majority Leader Lott announced, on May
20, 1998, the creation of a Task Force, with Senators Shelby, Helms, Thurmond,
Thompson, Cochran, Kyl, and Hutchinson. The task force, which first met on June
2, 1998, oversaw the four investigations of the Committees on Intelligence, Foreign
Relations, Armed Services, and Governmental Affairs.70 On May 29, 1998, Senate
Democratic Leader Daschle approved a Democratic Task Force, with Senators
Kerrey, Biden, Sarbanes, Glenn, Leahy, Levin, Kerry, and Feinstein.
Gugliotta, Guy and Juliet Eilperin, “Lott Says China Probes Won’t Be Political Tool,”
Washington Post, June 3, 1998.
On July 14, 1998, Senator Lott made a floor statement on interim findings that
sensitive U.S. technology relating to satellite exports has been transferred to China
and that those transfers provided military benefits. He reported five “major interim
the Clinton Administration’s export controls on satellites were
sensitive technology related to satellite exports was transferred to
China received military benefit from U.S. satellite exports;
the Administration ignored overwhelming information regarding
PRC proliferation and has embarked on a de facto policy designed
to protect China and U.S. satellite companies from sanctions under
U.S. proliferation laws;
new information came to light about China’s efforts to influence the
U.S. political process.
Senator Shelby stated on July 14, 1998, that “some of the tendencies of the
evidence tend to support” Senator Lott’s statement, but that “the Intelligence
Committee has not reached any preliminary judgment.” The Pentagon’s spokesman,
Kenneth Bacon, responded to Senator Lott by saying that the Administration
submitted requested documents to Congress and had inherited safeguards from
previous Administrations that prevent inappropriate technology transfers to China.
The Senate Intelligence Committee’s investigations covered two categories:
U.S. export control policies, since 1988, on PRC launches of U.S.built satellites and implications for U.S. national security;
any secret PRC program to contribute political donations and
influence the U.S. political process in 1996.71
On May 7, 1999, the Senate Committee on Intelligence released its 45-page,
unclassified report that it had approved two days before in a bipartisan 16-1 vote.72
The office of Senator Graham, who dissented, explained he was concerned that the
process did not allow sufficient time for the members to review the report before the
vote. As urged by Senator Levin, the sections on possible missile technology
transfers and PRC efforts to influence U.S. policies were kept separate, because no
evidence of a link between the two issues was found.73 The report included a number
of findings and recommendations.
Senate Select Committee on Intelligence, “Investigation of Impacts to U.S. National
Security From Advanced Satellite Technology Exports to China and Chinese Efforts to
Influence U.S. Policy: Terms of Reference,” June 2, 1998.
Senate Select Committee on Intelligence, “Report On Impacts To U.S. National Security
Of Advanced Satellite Technology Exports to the People’s Republic of China (PRC), and
Report on the PRC’s Efforts to Influence U.S. Policy,” May 1999.
Schmitt, Eric, “Panel Finds Harm in China Launchings,” New York Times, May 7, 1999.
On security implications of any U.S. technology transfers for China’s military
and missile programs, the committee found no evidence that U.S. technology had
been incorporated into the currently deployed PRC ICBM force, while noting that
such integration may not be apparent for several years if at all. The report also stated
that “extensive assistance from non-U.S. foreign sources probably is more important”
than technology transfers associated with satellite launches. Nonetheless, the
committee concluded that “the technical information transferred during certain
satellite launch campaigns enables the PRC to improve its present and future ICBM
force that threatens the United States,” as well as short-range and intermediate-range
ballistic missiles that threaten U.S. military forces and allies in Asia. Further, U.S.
national security may be harmed, according to the report, if China proliferated missile
systems improved by U.S. technology. The committee also found that improvements
to China’s space launch capability also enhanced its use of space for military
reconnaissance, communications, and meteorology, posing challenges to U.S.
national security. The committee found, that despite assurances of government
monitoring and security safeguards, there were security violations and “significant
weaknesses” in the implementation of the satellite export policy since the Reagan
Administration. U.S. satellite exports to China, the committee concluded, have
“created a tension between U.S. national security interests and U.S. commercial
interests,” and “this tension and conflict of interests have been problematic
throughout the U.S.-PRC satellite launch relationship.”
The Committee made 10 recommendations related to strengthening controls
over satellite exports. These included:
authority for monitors from the Defense Threat Reduction Agency
(DTRA) to suspend launch-related activities;
strengthening DTRA to monitor satellite launches overseas;
annual reports from DTRA to Congress on implementation of
adherence by the Department of State to strict timetables in
reviewing license applications;
intelligence review in the licensing process;
intelligence assessments of foreign efforts to acquire U.S.
consideration of investigations for export control violations
associated with satellite exports;
call for the Administration to use all available means to obtain PRC
compliance with the MTCR;
efforts by the Administration and Congress to encourage expansion
of the U.S. commercial launch industry; and
reappraisal of the policy to export satellites to China, including
whether it should be phased out.
Clinton Administration’s Response. The White House issued a response
to the Senate Intelligence Committee’s report on May 7, 1999.74 The Administration
White House, “Statement by the Press Secretary: Administration Response to Report on
acknowledged that it shared the Committee’s concern that “unauthorized assistance
and transfers of technology relevant to space launch vehicles and ballistic missiles
may have occurred during certain space launch failure analyses.” The statement also
noted the Department of Justice’s investigations into those allegations. The White
House agreed and confirmed that U.S. concerns did not center on China’s “currently
deployed ICBM force,” but that “unauthorized assistance and transfers of space
launch vehicle and satellite technology could assist China in the development of
future ballistic missiles.” While concurring with most of the committee’s
recommendations, the Administration disagreed with the last one, saying that “the
longstanding policy of permitting the launch of U.S. commercial satellites by China,
with strong technology controls, serves our overall national interest.” However, this
statement did not cover China’s increasing use (not just launch) of such satellites.
Export Controls and Intelligence.
In addition, congressional
investigations expanded to include concerns about alleged politicization of export
control and intelligence in the Clinton Administration. Export control specialists
skeptical of liberalizing controls on dual-use technology transfers to China
complained that decision-makers, in approving exports, ignored evidence of U.S.
firms helping China’s military. One manager in DTSA, Michael Maloof, reportedly
kept a diary of export control cases critical of the Commerce Department and his
superiors at DTSA, including David Tarbell. Maloof’s information was shared with
the House Select Committee in August 1998 and also with the Department of Justice
and Customs Service. His criticisms reportedly covered alleged close ties between
Tarbell and Hughes. Tarbell denied showing favoritism to Hughes. The Pentagon’s
spokesman dismissed Maloof’s charges as “ideological differences” about U.S.
policy toward China, while Peter Leitner, another DTSA employee who briefed
Congress, criticized “long-time ideological opponents” of export controls.75
Meanwhile, at the request of the Senate Intelligence Committee, the Justice
Department began an unusual criminal investigation in 1998 into whether the CIA
obstructed justice when it allegedly warned Hughes about the committee’s interest
in some of its employees. CIA officials agreed to testify before a federal grand jury
in Washington in December 1998. In April 1996, a CIA analyst, Ronald Pandolfi,
had reportedly prepared a National Intelligence Estimate (NIE) on how Hughes may
have helped to improve China’s missile capabilities, but the CIA reportedly did not
approve the NIE. In September 1998, Pandolfi briefed the committee on what he
found in 1995 (after Hughes reviewed the explosion of a Long March rocket in
January 1995). The CIA then told Hughes about Pandolfi’s briefing for the
committee. Administration officials said that the CIA advised Hughes about
providing names of its executives to the committee in order to urge Hughes to
cooperate and denied that the CIA tried to hinder the committee’s investigation.
Nonetheless, the committee questioned whether the Clinton Administration’s policy
China Satellite Launch,” May 7, 1999.
Cloud, David S., “Beijing Export Battle: Case Study of One Hard-Liner,” Wall Street
Journal, November 27, 1998.
of engagement with China influenced intelligence assessments about China.76
Confirming that he and Senator Bob Kerrey, the vice chairman, had found out about
the CIA’s contact with Hughes in an internal CIA cable dated September 23, 1998,
and then asked Attorney General Janet Reno for the criminal investigation, Senator
Shelby said in September 2000 that the Justice Department decided not to charge an
unnamed CIA official with obstructing a Senate investigation.77
In another case, the Cox Committee asked the CIA to provide a classified cable
written in March 1996 on Hughes and Loral that had not been provided to the Justice
Department until these congressional investigations began. The CIA’s inspector
general began investigating the alleged failure to pass the cable to Justice, which the
CIA characterized as an oversight. The message was said to have reported on an
American consultant, Bansang Lee, who worked for Hughes from 1989 to 1995,
when Loral hired him to work on sales of satellites, including Chinasat-8. In helping
to sell satellites to China and to export them for launch from there, Lee allegedly
made illegal payments to and received payments from PRC aerospace executives.
Lee’s lawyer stated that Lee “has never made any unlawful or improper payments of
any kind to any Chinese official,” and spokesmen for Hughes and Loral also denied
Senator Specter’s Investigation. In October 1999, Senator Specter, under
the jurisdiction of the Senate Judiciary Subcommittee on Administrative Oversight
and the Courts, began holding hearings in his investigation into the Justice
Department’s handling of the PRC’s suspected acquisition of missile technology and
nuclear weapon secrets, campaign finance, Waco, and other issues.
105th Congress. In the 105th Congress, the House-passed National Defense
Authorization Act for FY1999 (H.R. 3616) included amendments (sections 12061209) passed on May 20, 1998, that sought to express the sense of Congress that the
United States should not enter into new agreements with China involving space or
missile-related technology (Spence, agreed 417-4); prohibit U.S. participation in
investigations of PRC launch failures (Bereuter, agreed 414-7); prohibit transfers of
missile equipment or technology to China (Hefley, agreed 412-6); and prohibit the
export or re-export of U.S. satellites to China (Hunter, agreed 364-54). Also, section
1212 sought to return control over licensing export of satellites from the Commerce
Department to the State Department (under the Munitions List controlled under the
Arms Export Control Act).
Loeb, Vernon and John Mintz, “CIA Faces Criminal Probe in China Case,” Washington
Post, December 5, 1998; Jeff Gerth, “Old Concerns Over Data Transfer to China Get New
Attention,” New York Times, December 7, 1998; Robert S. Greenberger and David S. Cloud,
“Justice Department Examines CIA Role in Probe Into Hughes’ China Dealings,” Wall
Street Journal, December 7, 1998.
Gertz, Bill, “CIA Official Spared Justice Prosecution,” Washington Times, September 22,
Gerth, Jeff, “C.I.A. Ignored Report of Payments to Chinese For Satellite Contracts,” New
York Times, December 24, 1998.
On June 4, 1998, Senator Hutchinson submitted an amendment to the Senatepassed Defense Authorization Act for FY1999 (S. 2057), which was ordered to lie
on the table. It sought to amend the language authorizing Presidential waivers of
post-Tiananmen sanctions by substituting a narrower basis (“in the vital national
security interest”) for the current language (“in the national interest”), and add a
requirement for the President to submit a detailed justification for each waiver.
On July 22, 1998, Senator Hutchinson filed but did not offer Amendment 3250
to the Senate-passed Defense Appropriations Act for FY1999 (S. 2132/H.R. 4103)
to transfer the export control of satellites back to the State Department and require
a detailed justification for Presidential waivers of post-Tiananmen sanctions for
exports of satellites or defense articles. On July 30, 1998, Senator Kyl proposed
Amendment 3398 to this bill to limit the use of funds pending the establishment of
the position of Deputy Under Secretary of Defense for Technology Security Policy
who would also serve as the director of DTSA.
Although the Senate’s version of the Defense Authorization Act for FY1999
(S. 2057) did not include the restrictions on satellite exports, the Senate Task Force
led by Majority Leader Lott, as proposed by Senator Helms of the Foreign Relations
Committee, was in favor of transferring the licensing authority over satellites back
to the State Department.79 At a conference committee meeting on September 17,
1998, House and Senate conferees agreed to transfer the licensing authority over
commercial satellites back to the State Department in an effort to strengthen export
controls.80 They did not agree to ban further satellite exports to China, as some
advocated in calling for a reassessment of the policy of allowing China to launch
U.S.-origin satellites.81 U.S. policy might have also distinguished between exports
of satellites for PRC launch only and satellites for PRC use. Some said it would be
difficult to prevent the PLA from using commercial satellites owned by China.
Others said that it was up to Congress to assess the state of U.S. dual-use export
controls by passing a law to replace the Export Administration Act that expired in
Section 1511 of the Act (P.L. 105-261) expressed the sense of Congress, among
other views, that the President should not issue any blanket waiver of postTiananmen sanctions (in P.L. 101-246) for satellite exports to China. Section 1512
required the President to certify to Congress before exporting missile technology to
China that such export will not be detrimental to the U.S. space launch industry and
will not measurably improve PRC missile or space launch capabilities. Section 1513
Pomper, Miles A., “Hill’s Probes of Dealings with China Unlikely to Alter Basic
Relationship,” CQ Weekly, June 20, 1998; and interview with Senate Foreign Relations
Schmitt, Eric, “Congress Moves to Reverse Clinton’s Satellite-Export Procedure,” New
York Times, September 18, 1998.
Sokolski, Henry, “Protecting High Tech,” Washington Times, September 30, 1998.
“Export Act Inertia” (Commentary), Defense News, November 2-8, 1998; “Reinsch Says
Congress Needs to Revise EAA,” Export Practitioner, November 1998; and Henry Sokolski,
“What Now For China Policy?” Wall Street Journal, March 15, 1999.
transferred satellites controlled under the Commerce Department’s Commerce
Control List back to the State Department’s Munitions List, effective March 15,
1999. That section also required a report from the Secretary of State on
implementation, improvement to the timeliness and transparency of the license
review process, adequacy of resources, and recommendations for amending the Arms
Export Control Act. Section 1514 mandated additional requirements to strengthen
national security controls over satellite exports, including mandatory licenses for
launch failure investigations, mandatory intelligence review of license applications
and TAAs considered by the Departments of Commerce and State for foreign
launches of satellites, and notification to Congress of export licenses issued for
satellite launches; with the exception of satellites exported for launch by members
of the North Atlantic Treaty Organization (NATO) or a major non-NATO ally.
Section 1515 required a detailed justification to accompany the President’s waiver
of post-Tiananmen sanctions for satellite exports to China. Section 1521 required the
establishment of a Deputy Under Secretary of Defense for Technology Security
Policy to serve as the director of DTSA.
There had been concerns in Congress about how the Administration would
implement the requirement to shift licensing authority back to State. Despite signing
the Act on October 17, 1998, President Clinton said he “strongly opposed” the
transfer of authority. He also warned that he would “take action to minimize the
potential damage to U.S. interests” and order appropriate agencies to implement the
change “in a manner consistent with current dual-use export license processing.”83
National Security Adviser Samuel Berger reportedly urged a veto and included the
strong language.84 In coordination with the U.S. satellite industry which has
preferred speedier and more predictable licensing procedures,85 the White House’s
National Security Council reportedly drafted an executive order for the President to
issue to accord the Commerce Department a continuing role in licensing satellite
exports, perhaps the authority to appeal the decisions of the State Department on
Munitions List items, including satellites.86 In response, the chairmen of six House
and Senate committees (National Security, Armed Services, International Relations,
Foreign Relations, Intelligence) wrote a letter on December 9, 1998, warning the
President against “direct contravention” of the legislation.
As required by section 1513, the Secretary of State submitted to Congress on
January 21, 1999, the plan on regaining licensing authority over commercial satellites
as Munitions List items on March 15, 1999. It included a goal (but not a limit) of
President William J. Clinton’s statement on the FY1999 Defense Authorization Act.
Lelyveld, Michael S., “Clinton Ripped On Satellites To China,” Journal of Commerce,
December 14, 1998.
“Conferees’ Decision Draws Ire of Satellite Industry,” Aerospace Daily, September 21,
1998; Interview with John Douglass, President/General Manager, Aerospace Industries
Association, Defense News, November 2-8, 1998; Interview with Clayton Mowry, Director,
U.S. Satellite Industry Association, Space News, November 9-15, 1998; “A License to Do
Mischief (commentary),” Space News, February 1, 1999.
Opall-Rome, Barbara, “White House Plots To Skirt Congress On Exports,” Defense News,
December 7-13, 1998.
timely review of licenses within 90 working days; procedures for Commerce to
comment, but not veto, licensing reviews; and veto authority for the Defense
Department (that would not be subject to appeal by the Commerce Department). It
stated that “no new Executive Order is needed,” and decisions on defense exports are
made exclusively by the Departments of State and Defense and “solely on the basis
of national security and foreign policy.”87 The Defense Department’s new Space
Launch Monitoring Division of the Defense Threat Reduction Agency reportedly was
hiring 39 engineers and other staff to review licenses for satellite exports and monitor
foreign launches. U.S. firms were to reimburse the costs of monitoring.88
Congress also passed omnibus legislation (P.L. 105-277, Sec. 101(b))
appropriating funds for the Department of Commerce in FY1999 that required
notification to Congress before expending funds to process licenses for satellite
exports to China.
106th Congress. In the 106th Congress, Rep. Sweeney introduced H.R. 281
on January 6, 1999, to prohibit the export to China of satellites and related
equipment. On May 19, 1999, he sponsored an amendment to the NASA
authorization bill (H.R. 1654) to require NASA to certify, before any cooperative
agreement with the PRC, that the technology transfer will not improve PRC ballistic
missile or space launch capabilities. The House agreed to the amendment. The
NASA Authorization Act for FYs 2000, 2001, and 2002 (P.L. 106-391, signed into
law on October 30, 2000) included the requirement for certification to Congress, at
least 15 days before such an agreement, that it would not be detrimental to the U.S.
space launch industry and would not improve the PRC’s ballistic missile or space
launch capabilities (Section 126(a)(2)).
During the mark-up of the Foreign Relations Authorization Act for FY2000,
H.R. 1211, by the Committee on International Relations on April 14, 1999,
Representative Rohrabacher introduced an amendment to give preferential treatment
in licensing for export of satellites and related items to NATO allies, major nonNATO allies, and other friendly countries; but not for China, countries that
potentially pose a security threat to the United States, or countries likely to proliferate
satellite technology to countries of security concern. (The FY1999 National Defense
Authorization Act already exempted NATO and non-NATO allies from the more
stringent export controls.) As amended by Representative Gejdenson, however, the
approved section 210 of H.R. 1211 (H.Rept. 106-122) did not have references to
China and other countries not subject to preferential treatment. Rohrabacher’s
amendment also directed the Secretary of State to obligate $2 million to the Office
of Defense Trade Controls to expedite the review of satellite export licenses.89
“Report by The Secretary of State Pursuant to Section 1513(d) of the NDAA for
FY1999,” January 21, 1999; Robert S. Greenberger and David S. Cloud, “State Department
Seeks to Allay Fears With 90-Day Satellite-License Reviews,” Wall Street Journal, January
29, 1999; NSC unclassified response to the Cox Committee’s recommendations, February
Ferster, Warren, “Pentagon Hires Staff For Review Office,” Space News, April 26, 1999.
H.Rept. 106-122; “$2 Million Pushed For State Tech Transfer Office; Attempt to Add
On May 27, 1999, the Senate agreed by voice vote to Senator Lott’s amendment
to the National Defense Authorization Act for FY2000 (S. 1059). The amendment
sought to improve the monitoring of satellite exports and strengthen safeguards,
security, and counterintelligence at DOE facilities.90 On June 9, 1999, Representative
Cox introduced an amendment91 to the House’s version (H.R. 1401). The
amendment consisted of 27 sections, with 25 sections requiring reports or other
actions, or amending the law; a section simply providing a short title; and a section
providing a definition of “national laboratory.” The sections or subsections of the
Cox amendment addressed fully or partially 21 of the 38 recommendations of the
Cox Committee. The House agreed to the Cox amendment by 428-0 on that day and
passed H.R. 1401 on June 10, 1999. In September 1999, Congress approved the
conference report (H.Rept. 106-301) on S. 1059. The act, signed into law (P.L. 10665) on October 5, 1999, includes sections 1401-1412 that addressed export controls
as they related to missile technology, satellites, high-performance computers,
multilateral export controls, monitoring of foreign satellite launches, State
Department licensing, improved intelligence consultation, and notification to
Congress of investigations into possible export control violations by satellite makers.
In addition, section 1612(b) expressed the sense of Congress that the policy of
exporting satellites to the PRC for launch should be reexamined, with a review of
whether to phase out that policy. Congress did not require a report on this review.
On May 10, 2000, Representative Gejdenson introduced H.R. 4417 to transfer
export controls over satellites back to the Secretary of Commerce and provide for
certain procedures for satellite exports to the PRC.
107th Congress and 108th Congress. In February 2001 briefings for
Representatives Cox and Rohrabacher, the Satellite Industry Association (SIA)
argued that California’s satellite industry lost $1.2 billion in potential revenues and
over 1,000 new jobs in the face of greater European competition, because the State
Department’s export controls over satellites negatively affected U.S. firms after
March 1999. SIA also contended that the U.S. share (vs. European share) of orders
of Geostationary Earth Orbit (GEO) commercial satellites dropped from a high of 76
percent (19 orders) in 1997 to 45 percent (13 orders) in 2000.92 Released by
Representatives Berman and Tauscher in April 2002, a report by the Center for
Strategic and International Studies (CSIS) also argued that legislation “to return
Controls on China is Stymied,” Spacebusiness Today, April 20, 1999; Warren Ferster,
“Pentagon Establishes Office To Review Satellite Export Requests,” Defense News, May
For language of amendment, see Congressional Record, May 26, 1999, p. S6073-6074.
Congressional Record, June 8, 1999, p. H3862-3866.
Satellite Industry Association, “Satellite Export Licensing: the Impact of Federal Export
Control Laws on the California Space Industry,” study for the California Trade and
Commerce Agency, released February 6, 2001; Evelyn Iritani and Peter Pae, “U.S. Satellite
Industry Reeling Under New Export Controls,” Los Angeles Times, December 11, 2000.
jurisdiction to Commerce for communications satellites, which includes extensive
technology safeguards, would go far to repair damage.”93
However, others reported difficulties for U.S. satellite-makers due to lower
demand in the worldwide market for satellites after 2000.94 Worldwide, there were
35 commercial satellite launches in 2000, 16 in 2001, and 24 in 2002. (See Table
3.) Boeing Launch and Satellite Systems reported a significant reduction in demand
with the resulting over-capacity in the launch and satellite industry by 2002.95 The
table also shows that satellite launch companies of the United States and other
countries (Russia, European countries, Japan, India, Brazil, and Israel) continued to
sell services, with no commercial launch business going to China since 2000.
Table 3. Satellite Launches: 1998-2002
Source: Aerospace Daily, July 2, 2003.
Some argued for keeping satellite export controls under the State Department
but with expeditious and fair processing of license applications. In March 2001, the
conservative Heritage Foundation said that “though the satellite industry lobbied to
get license authority transferred back to the Commerce Department, given the
sensitive nature of the technology involved in the engineering and launch of
CSIS, “Preserving America’s Strength in Satellite Technology,” April 2002.
de Selding, Peter B., “Satellite Builders Faced with Crowded Market,” Space News, June
Boeing, “Embracing, Managing, and Excelling in a Changing Market,” insert in Space
News, February 24, 2003.
satellites, the State Department’s licensing authority combined with the Defense
Department’s approval of a technology transfer control plan and close monitoring of
all launches is prudent to make sure that commercial interests have been weighed
against security risks posed by each transaction.”96 Supporters of keeping satellites
as Munitions List items cited a June 2001 report by GAO that found similar export
licensing times at the Departments of State and Commerce.97 Also, some in
Congress have been mindful that satellites licensed by the State Department are
subject to congressional review, particularly by the Foreign Relations Committee.
On May 3, 2001, Representative Howard Berman introduced H.R. 1707 (the
Satellite Trade and Security Act of 2001), with Representative Dana Rohrabacher as
the co-sponsor. The bill sought to shift the jurisdiction over satellite exports back to
the Department of Commerce. On August 1, 2001, Representative Berman added the
legislation as an amendment (co-sponsored by Representative Rohrabacher) to the
House version of a new Export Administration Act (EAA), H.R. 2581. While
Representatives Bereuter and Hyde opposed the amendment, the House International
Relations Committee approved it on a voice vote. However, the language sought to
exempt satellites going to China for launch, which would remain under the oversight
of the State Department.98 As the Committee on International Relations reported on
November 16, 2001 (H.Rept. 107-297, Part 1), Section 704 would keep satellite
exports for PRC launch as subject to the Arms Export Control Act and require that,
in issuing certifications to Congress for such exports under Section 36(c) of that Act,
the President do so without regard to the values of the proposed contracts. However,
the House Armed Services Committee disagreed with the proposal to return
jurisdiction of satellite exports to the Commerce Department and, on March 8, 2002,
reported the bill with the language struck out (H.Rept. 107-297, Part 2). The House
did not vote on H.R. 2581.
In addition, Congress passed appropriations legislation for fiscal years 2002 and
2003 (P.L. 107-77 and P.L. 108-7) to require that the Department of State notify the
Committees on Appropriations at least 15 days in advance of obligating or expending
funds for processing licenses to export U.S.-origin satellites (including commercial
satellites and satellite components) to China. Legislation for State Department
appropriations in FY 2004 (H.R. 2799 and S. 1585) would continue the requirement.
Denied and Pending Satellite Exports
Congressional Oversight and Bush Policy Reviews. In addition to the
FY1999 Defense Authorization Act, Congress also passed omnibus legislation (P.L.
105-277, Sec. 101(b)) appropriating funds for the Department of Commerce in
Wortzel, Larry M., “Proceed with Caution in Approving Satellite Exports to China,”
Heritage Foundation Executive Memorandum, March 2, 2001.
General Accounting Office, “Export Controls: State and Commerce Department License
Review Times are Similar,” GAO-01-528, June 2001.
According to HIRC staff; Michael Steel, “Panel Oks Heavily Amended Export
Administration Act,” National Journal, August 1, 2001; and Amy Svitak, “Bill Would Shift
Oversight of U.S. Satellite Exports,” Space News, August 13, 2001, and “House, Senate
Bills Differ on Dual-Use Exports,” Defense News, August 6-12, 2001.
FY1999 that required notification to Congress before expending funds to process
licenses for satellite exports to China. On November 20, 1998, the Commerce
Department reported processing of two export license applications. Commerce again
notified Congress on February 1, 1999, that it was processing three additional
applications to export satellites to China. Those five satellite projects considered by
Commerce were: Chinasat-8R, Asia Pacific Mobile Telecommunications (APMT),
Asiasat-3sb/4, Command and Control Software for Satellites, and Iridium.
As exports of Munitions List items licensed by the State Department, satellite
exports have been subject to congressional review, particularly by the Senate Foreign
Relations Committee. Under Section 36(c) of the Arms Export Control Act (AECA),
P.L. 90-629, the Department of State is required to notify Congress of any proposed
licenses for the export of any major defense equipment sold commercially under a
contract worth $14 million or more or for the export of defense articles or services
sold commercially under a contract worth $50 million or more. Such a license may
not be issued for an export to China until at least 30 calendar days after Congress
receives the certification and shall not be issued if Congress, during the review
period, enacts a joint resolution to prohibit the proposed export. In the case of
exports to the PRC, approvals for export licenses are also contingent upon a
presidential waiver of post-Tiananmen sanctions.
On July 2, 2001, Senators Helms, Shelby, Thompson, and Kyl signed a letter
to President George W. Bush, urging him to deny waivers for proposed satellite
exports to China based on weapons nonproliferation and human rights reasons.99
They expressed their concern that “China has continued to transfer missile equipment
and technology” in contravention of both the Missile Technology Control Regime
and its November 2000 pledge on missile nonproliferation. They urged the President
not to present the Congress (particularly, the Senate Foreign Relations Committee)
with proposed licenses for satellite exports to China, under review at the State
On July 20, 2001, Senator Helms, ranking member of the Foreign Relations
Committee, issued a letter to other Senators urging them to call for a re-evaluation
of policy toward the PRC and to support President Bush should he decide to deny
China the opportunity to “launch United States satellites for profit,” focusing on
those satellites that might be exported for launch from China. Senator Helms also
issued a chart describing China’s nonproliferation pledges and violations of them,
including the assurance of November 2000. He wrote that “none of these pledges has
On March 27, 2002, the NASA Administrator said that he and Deputy Secretary
of State Richard Armitage were spending “a lot of time” reviewing whether U.S.
policy should allow China to cooperate with the United States in space, although
Senators Helms, Shelby, Thompson, and Kyl, letter to the President, July 2, 2001.
Senator Jesse Helms, “Dear Colleague” letter and chart, “Two Decades of Broken
Promises: Chinese Proliferation Words and Deeds,” July 20, 2001.
China’s military runs the manned space program.101 In October 2002, Armitage
announced that the Bush Administration decided to review its policy on defense trade
controls. The comprehensive review of arms export controls, including the
Munitions List, would cover policy, processes, technology, and organizational
structure, he said. The next month, the White House said the policy review would
be completed in six months.102 In testimony to the Senate Foreign Relations
Subcommittee on East Asia and the Pacific in March 2003, Deputy Assistant
Secretary of State Randall Schriver assured Senator Brownback that the Department
of State has exercised strict controls over exports to China’s space programs and has
tried to ensure that any cooperation with China would not benefit its military.103
APMT and China’s Military. At least one pending export to China, the
APMT satellite project, encountered controversy about military applications. On July
2, 1998, the State Department suspended a license issued in 1996 to Hughes that
permitted Shen Jun, son of a PLA lieutenant general, to work on the $450 million
deal for the APMT consortium. Shen Jun’s father, Lt. Gen. Shen Rongjun, was a
Deputy Director of the Commission on Science, Technology, and Industry for
National Defense (COSTIND)104 from 1985 to 1998, with special responsibility for
missiles and satellites in the aerospace sector. Also, the Administration re-examined
the APMT project, in part because the PRC governmental investors included those
with ties to the military: COSTIND, China Launch and Tracking Control, CASC,
Ministry of Information Industry, and China Telecommunications Broadcasting
Satellite Corp. (Chinasat). (In April 1998, COSTIND was reorganized as a civilian
organization under the State Council, while the PLA retained control over satellite
launches under the new General Equipment Department.) Some were concerned that
the APMT satellite (with powerful spot beams) could be used by the PLA to improve
command and control and that the satellite contained sensitive technologies,
including a huge 40-ft.-wide antenna and on-board digital processor, also used in
Hughes’ classified, communications satellites used by the U.S. military. There were
also concerns about Hughes’ past record of interaction with PRC aerospace
engineers, including the review of the January 1995 launch failure.105
Aviation Week & Space Technology, April 1, 2002.
Department of State, Deputy Secretary of State Richard Armitage’s Remarks at the
Defense Security Cooperation Agency Conference, October 17, 2002; White House, “Fact
Sheet: Bush Administration Review of Defense Trade Export Policy and National Security,”
November 21, 2002.
Senate Foreign Relations Subcommittee on East Asia and the Pacific, Hearing on the
Effects and Consequences of an Emerging China, March 19, 2003.
See CRS Report 96-889, China: Commission of Science, Technology, and Industry for
National Defense (COSTIND) and Defense Industries, by Shirley A. Kan.
Bruce Dorminey and Michael Mecham, “China-led Asian Team Buys Hughes Geomobile
Satellites,” Aviation Week & Space Technology, May 18, 1998; Jeff Gerth, “Administration
Rethinking $650 Million China Satellite Deal,” New York Times, June 18, 1998; John Mintz,
“Hughes Corp. Pressing White House to Clear New Deal with China,” Washington Post,
Aug. 9, 1998; Steven D. Dorfman, Vice Chairman of Hughes, July 13, 1998, letter to the
On February 23, 1999, the Clinton Administration announced that it decided
to deny approval to Hughes for the export of the APMT satellite, after the
Departments of Defense and State objected to the export, while the Commerce
Department favored it.106 The Administration cited concerns that the end-user would
be the PLA. Hughes responded on March 15, 1999, asking the Administration for
a detailed justification for the denial. But on April 14, 1999, Hughes said that the
APMT consortium dropped Hughes as the satellite supplier.107
As for the PLA’s possible use of ostensibly civilian communication satellites,
a DTSA official, Michael Maloof, wrote a July 1998 memo about his concerns that
the PRC military has used U.S.-made satellites to improve its encrypted command,
control, communications, and intelligence (C4I), using the Asiasat and Apstar
satellites built by Hughes.108 In an unclassified report submitted as required by
FY1999 appropriations legislation, the Secretary of Defense reported on February 1,
1999, that China’s military and civilian leaders were paying “specific attention” to
the C4I infrastructure. The report further said that “the military’s lack of
communications satellites could force the PLA to rely on foreign satellite services to
meet military needs in wartime or a crisis” and that, in a crisis, “the military would
preempt the domestic satellite systems for combat operations.”109
Concerning military satellites, a report said that the indigenous satellite
(Chinasat-22) launched by China on January 26, 2000, was also called the Feng Huo1, representing the first of China’s military communications satellites for a new battle
management system, called the Qu Dian C4I system. The news story cited a
classified report by the Defense Intelligence Agency, reportedly describing the Qu
Dian system, when fully deployed in several years, as intended to be similar to the
U.S. Joint Tactical Information Distribution System (JTIDS), a secure data link
network used by U.S. and allied forces.110 China has planned to deploy three major
satellite systems for remote-sensing, navigation and positioning, and
communications.111 China’s first Ziyuan-2 satellite, launched on September 1, 2000,
was reportedly used by the PLA as a reconnaissance satellite and secretly designated
Cloud, David S., “Hughes’ Sale of a Satellite to China is Imperiled by Concerns at
Pentagon,” Wall Street Journal, February 22, 1999; Jeff Gerth and David E. Sanger, “Citing
Security, U.S. Spurns China On Satellite Deal,” New York Times, February 23, 1999.
“Singapore Customer Drops Hughes After Export License Delay,” Aerospace Daily,
April 15, 1999.
Capaccio, Tony, “China Military Benefitted from U.S. Technology, U.S. Aide Says,”
Bloomberg News, February 16, 1999.
Secretary of Defense, “Report to Congress Pursuant to the FY99 Appropriations Bill,”
February 1, 1999.
Gertz, Bill, “China’s Military Links Forces to Boost Power,” Washington Times, March
Wen Wei Po [PRC-owned newspaper in Hong Kong], October 31, 2000, translated by
FBIS (“China Raises Satellite Positioning, Tracking Capability with Latest Launch”).
as Jianbing-3.112 In April 2003, a newspaper of China’s space industry reported that
the military used satellites, including the Fengyun meteorological satellites to gather
intelligence on the U.S. war in Iraq, such as pictures of damage to runways.113
Chinasat-8. Meanwhile, Loral encountered delay in obtaining approval from
the Department of State for the export to China of the Chinasat-8 satellite, the subject
of the Presidential waiver in February 1998 that raised controversy.114 In a full-page
ad in the May 6, 1998 Washington Post, Loral boasted that Chinasat-8 was the “most
powerful satellite China has ever purchased.” Originally, Chinasat-8 had been
scheduled for launch in May 1999. The PRC government entity buying the satellite
was named as the China Telecommunications Broadcast Satellite Corporation,
subordinate to the Ministry of Information Industry (MII).115 The MII represents a
PRC defense industrial sector that was formed in March 1998 in a reorganization that
merged the Ministry of Electronics Industry and the Ministry of Posts and
Telecommunications.116 Loral’s chairman, Bernard Schwartz, argued that the
government’s delay in granting a technical assistance agreement (TAA) for Chinasat8 risked the “commercial viability” of the whole U.S. satellite manufacturing industry
in Asia.117 The trade publication, Space News, alleged in September 1999 that “the
State Department is delaying approval of the Chinasat-8 TAA to punish Loral for the
still unproven allegation that the company broke the law while participating with
Hughes in an independent review of a Chinese launch accident investigation.” It also
protested that “the export licensing process should not be used as a substitute for the
judicial system.”118 The Department of State reportedly returned the license without
action in January 2001.119
Other Satellite Projects. Other satellite projects subject to U.S. export
controls, Presidential waivers, and congressional review have included the following.
On May 10, 1999, as required by section 1512 of the FY1999 National Defense
Authorization Act (P.L. 105-261), President Clinton issued a certification for the
export of satellite fuels and separation systems for the Iridium satellite project
(owned by Motorola). He certified that the export would not be detrimental to the
U.S. space launch industry and that the material and equipment, including any
Gertz, Bill, “Chinese ‘Civilian’ Satellite a Spy Tool,” Washington Times, August 1, 2001.
China Space News, April 9, 2003.
Space News, April 12 and 26, 1999.
Lawrence, Susan, “Clipping Their Wings,” Far Eastern Economic Review, April 8, 1999.
Defense Intelligence Agency, “China’s International Defense-Industrial Organizations,”
Defense Intelligence Reference Document DI-1921-60A-98, June 1998.
Silverstein, Sam, “Loral: Chinasat Delay Threatens U.S. Suppliers’ Credibility in Asia,”
Space News, August 23, 1999.
“Free Chinasat 8,” (commentary), Space News, September 6, 1999.
Space News, January 22, 2001.
indirect technical benefit that could be derived from such export, would not
measurably improve PRC missile or space launch capabilities.120
In September 2000, AsiaSat, the Hong Kong-based company partly owned by
the PRC’s China International Trust and Investment Corporation (CITIC) and Societe
Europeenne des Satellites (SES), announced that it ordered AsiaSat-4 from Hughes
Space and Communications (later acquired by Boeing). AsiaSat-4 originally was
scheduled for launch in the first half of 2002 from Cape Canaveral on an Atlas 3
rocket owned by U.S.-based International Launch Services — not on a PRC rocket.121
Under section 36(c) of the AECA, the State Department, on October 11, 2000,
notified Congress of a proposed export license for AsiaSat-4, and on May 25, 2001,
notified Congress of a proposed export license for technical data and assistance to
support the launch of the satellite.122 An Atlas 3B rocket launched AsiaSat-4 from
Cape Canaveral, FL, on April 11, 2003.123
In January 2001, Hong Kong-based APT Satellite Co. (partly owned by China
Aerospace Science and Technology Corporation) ordered the Apstar-5
communications satellite from Loral.124 APT had planned to launch the satellite from
China on a Long March 3B rocket in 2003.125 In November 2001, the State
Department granted Loral a TAA to discuss the satellite.126 Then, in September
2002, Loral purchased 50 percent ownership of Apstar-5 for $115 million from APT
Satellite Company.127 Loral and APT Satellite then arranged a launch of the satellite
by Sea Launch (Long Beach, CA) in 2003, presumably because of the lack of a U.S.
license to launch the satellite from China.128 With Loral’s partial or perhaps full
ownership of Apstar-5, and subsequent lease of the use of the satellite to APT
Satellite (depending on which company controls the satellite), Loral may not need to
obtain an export license and a Presidential waiver of post-Tiananmen sanctions.
In February 2001, Intelsat concluded an agreement to order the APR-3 satellite
from Astrium SAS of France, which would be used by the PRC’s Sinosat company
Jefferson, William J., “Certification Regarding Export of Satellite Fuels to China,”
Congressional Record, May 11, 1999, p. H2955; S5029.
AsiaSat press releases, September 7 and 19, 2000, through BBC Monitoring Media.
Announcements were published in the Federal Register, January 4 and June 11, 2001.
Banke, Jim, “AsiaSat 4 Lofted into Orbit by Perfect Atlas 3B Rocket,” Space.com, April
11, 2003; Boeing.
Loral, “Space Systems/Loral to Build Apstar-V Communications Satellite for APT
Satellite,” January 8, 2001.
Silverstein, Sam, “Space Systems/Loral’s China Deal to Test Export Controls,” Space
News, January 15, 2001.
Silverstein, Sam, “Awaiting U.S. Export Approval, APT Plans Backup,” Space News,
December 3, 2001.
Loral, “Loral and APT Satellite Agree to Joint Ownership of Apstar-V Satellite,”
September 23, 2002.
Loral, “APT Satellite Announces 2002 Annual Results,” April 7, 2003.
after launch by China Great Wall Industry Corporation in the spring of 2002. The
satellite reportedly would include U.S. components.129 However, the project later
appeared defunct. In 2002, Sinosat (owned by CASC, People’s Bank of China, and
the Shanghai Development Bank) announced plans to add Sinosat-2 (built by China
Academy of Space Technology using a new Dongfanghong (DFH)-4 satellite, with
imported components, and scheduled for launch in 2005).130 DFH-4 was reported as
part of the cooperation between China Aerospace Corporation and Alcatel Space of
France, with a memorandum of understanding signed on October 23, 2001, by which
Alcatel would provide parts (possibly with U.S. components) for the DFH-4 satellite
that will be designed with a life span of 15 years.131
Intelsat, press release, February 8, 2001; Sam Silverstein and Peter de Selding, “Intelsat
Deal Gives China Great Wall 2nd Win in Month,” Space News, February 12, 2001.
Sinosat’s company information.
De Selding, Peter, “Chinese Aerospace Firm Signs Accord with Alcatel,” Space News,
October 29, 2001; China Daily, January 18, 2002.
Chronology of Major Events Since 1988
The Reagan Administration notified Congress that it will approve the
first export licenses for the use of PRC space launch services (for one
Asiasat and two Aussat satellites), subject to conditions.
The United States and China signed agreements to establish technology
safeguards on launching satellites from China and on insurance
liability; and initialed an agreement on international commercial launch
The United States and China signed an agreement for six years under
which China agreed to charge prices for commercial launch services
“on a par” with Western competitors and to allow China to launch nine
U.S.-built satellites through 1994.
Crackdown on peaceful, political demonstrators in Beijing.
President Bush waived sanctions for export of Aussat-1, Aussat-2, and
Asiasat-1 (built by Hughes) communications satellites for launch from
China, under Sec. 610 of the Department of Commerce, Justice, and
State, the Judiciary, and Related Agencies Appropriations act 1990
P.L. 101-246 enacted to require post-Tiananmen sanctions, including
suspensions in approving exports to China of Munitions List items and
China Great Wall Industry Corporation, using a LM-3 rocket, launched
a foreign satellite, Asiasat (built by Hughes), for the first time.
President Bush waived sanctions under Sec. 902(b) of P.L. 101-246 to
allow exports of Aussat-1 and -2 (built by Hughes) and Freja satellites
for launch from China in part because China was not the end-user.
President Bush denied a license to export U.S. satellite components for
a PRC satellite, Dongfanghong-3, citing “serious proliferation
concerns.” In addition, Space News (May 6-12, 1991) reported that
President Bush’s denial was to punish China for attempting to obtain
classified missile-related technology. The license to export parts for
Dongfanghong-3 was requested by a German firm, but the U.S.
components were produced by M/A-COM, Inc. (Burlington, MA).
The Bush Administration announced sanctions to be imposed on China
for transferring missile related technology to Pakistan. The sanctions
affected high technology trade with China, covering (1) high
performance computers, (2) satellites for launch from China (except for
the Freja and Aussat satellites), and (3) sanctions for missile
proliferation as required by the Arms Export Control Act and Export
Administration Act (imposed on China Great Wall Industry Corp. and
China Precision Machinery Import/Export Corp.). The U.S. sanctions
were intended to enforce the MTCR.
The sanctions on the two PRC state-owned companies for missile
proliferation in Pakistan took effect.
After Secretary of State James Baker visited Beijing, the PRC foreign
ministry issued a vague statement that China “intends to abide” by the
According to the Bush Administration, the PRC foreign minister sent
a secret letter to the U.S. Secretary of State promising to abide by the
The PRC foreign ministry issued a statement saying that “China will act
in accordance with the guidelines and parameters of the existing missile
and missile technology control regime in its export of missiles and
missile technology,” after the United States effectively lifts the June
Aborted launch of Aussat (Optus-B1) satellite from China after LM-2E
rocket malfunctioned and the rocket stalled on the launch pad. Beijing
Review (Nov. 2-8, 1992) reported that the rocket’s malfunction was
caused by a fault in the ignition system which triggered an emergency
The Bush Administration effectively waived the sanctions imposed in
June 1991 on China for missile proliferation.
China successfully launched the Optus-B1 satellite (built by Hughes).
President Bush waived sanctions under P.L. 101-246 to allow exports
of five satellites (Asiasat-2, Apsat, Intelsat-7A, Starsat, and AfriStar)
for launch from China and parts for China’s Dongfanghong-3.
A PRC LM-2C rocket launched the Swedish Freja satellite from the
Jiuquan Satellite Launch Center.
Under the Bush Administration, the State Department issued a rule to
amend Section 38 of the Arms Export Control Act. The rule transferred
commercial communications satellites that do not have certain sensitive
characteristics (under nine categories) to the export licensing control of
the Commerce Department. Military satellites and communications
satellites with any of the nine categories of sensitive characteristics
remained on the State Department’s Munitions List.
China may have supplied M-11 short-range ballistic missiles or related
technology to Pakistan, according to President Clinton’s report to
Congress submitted in May 1993. This transfer may have been taken
in retaliation for President Bush’s decision in September 1992 to sell
F-16 fighters to Taiwan.
A PRC LM-2E launch vehicle exploded and destroyed the Australian
Optus-B2 satellite (built by Hughes) it was carrying. After the
explosion, PRC officials denied that PRC rockets were responsible,
blaming the satellite built by Hughes. Aviation Week and Space
Technology (Jan. 30, 1995) reported that Hughes and China Great Wall
Industry Corp. agreed to declare the cause of that failure to be
undetermined. Some experts, however, reportedly identified the
premature opening of the launch vehicle’s payload fairing as causing
After renegotiating security procedures, the United States and China
signed a new agreement on satellite technology safeguards, superseding
the agreement of 12/17/88.
President Clinton decided to extend most-favored-nation trade status to
China with conditions on human rights, but no linkage to weapons
proliferation. Nonetheless, after persistent reports that China was
continuing to transfer missile components to Pakistan — if not
complete M-11 short-range ballistic missiles, the President also
reported to Congress that “at present, the greatest concern involves
reports that China in November 1992 transferred MTCR-class M-11
missiles or related equipment to Pakistan.”
President Clinton waived sanctions under P.L. 101-246 to allow
Lockheed Martin to export the Iridium and Intelsat-8 satellites for
launch from China.
Hughes and CGWIC issued a joint statement after seven months of
“vigorous and cooperative investigation” into the cause of the explosion
on 12/21/92. The statement did not identify a cause, with each side
The Clinton Administration determined that China had shipped M-11
related equipment (not complete missiles) to Pakistan and imposed
sanctions required by the Arms Export Control Act and Export
Administration Act. The sanctions were imposed on Pakistan’s
Ministry of Defense and 11 PRC defense industrial aerospace entities,
including China Great Wall Industry Corp. The Category II sanction
denied U.S. government contracts and export licenses for missile
equipment or technology (items in the MTCR annex) for two years.
The Department of State argued that the sanction banned all licenses for
satellite exports, but the Department of Commerce argued that the
sanction did not cover satellites.
The U.S. aerospace industry lobby, including the Aerospace Industries
Association, called on the Clinton Administration to weaken the missile
One week after imposing sanctions, Assistant Secretary of State
Winston Lord said that “we’re ready at any time to sit down with the
Chinese, both to try to find a way to lift the sanctions if they cooperate
but also to explain more fully the MTCR and its revised guidelines.”
National Security Adviser Anthony Lake told the PRC ambassador that
the Clinton Administration was willing to negotiate a waiver of the
sanctions, but a more formal and binding PRC commitment than the
one made in November 1991 was needed.
A PRC LM-2C rocket launched a recoverable “scientific” satellite from
the Jiuquan Satellite Launch Center.
The Washington Post reported that top executives of U.S. satellite
manufacturers, Martin Marietta Corp. and Hughes Aircraft Co., were
lobbying intensively for the Clinton Administration to waive the export
ban for satellites. Reportedly due to these objections from private
industry (which were supported by the Commerce Department), the
National Security Council (NSC) reviewed the decision to implement
the sanctions. In September 1993, Norman R. Augustine, chairman of
Martin Marietta, wrote a letter to Vice President Al Gore, arguing that
the sanctions “present U.S. companies as an unreliable supplier.” Some
Members of Congress supported the export of satellites for launch from
The CEO of Hughes Aircraft Company, C. Michael Armstrong,
delivered a speech in which he objected to the inclusion in the sanctions
of commercial communications satellites. He also said that he “asked
the President of the United States to review the situation.”
National Security Adviser Anthony Lake wrote a memo to President
Clinton proposing the NSC’s interpretation of the sanctions imposed in
August to allow the export of two satellites controlled by the
Commerce Department, but not the five controlled by the State
Department. State had argued that all satellite licenses were suspended
under the sanctions, but Commerce argued that sanctions did not cover
any licenses. The President approved the NSC’s recommendation.
President Clinton met with PRC President Jiang Zemin at the Asian
Pacific Economic Cooperation (APEC) meeting in Seattle. On the eve
of the meeting, press reports said that the Administration had formally
proposed waiving the sanctions in return for another PRC promise, in
more detail and with more authority, not to export MTCR-class
“Statement by Don Fuqua, President of the Aerospace Industries Association, on the
Imposition of U.S. Economic Sanctions on China,” August 26, 1993; Steven Greenhouse,
“Aerospace Industry Seeks Weaker Sanctions on China,” New York Times, August 28, 1993.
The Clinton Administration announced a new policy exempting
commercial communication satellites from sanctions for missile
proliferation imposed on 8/24/93, facilitating export licenses for one
Hughes and two Martin Marietta satellites.
A PRC weather satellite exploded in a plant.
President Clinton waived sanctions under P.L. 101-246 for the Echostar
satellite to be exported by Martin Marietta for launch from China.
A PRC LM-3 rocket launched the Apstar-1 satellite (built by Hughes).
A PRC LM-2E rocket launched Australia’s Optus-B3 satellite (built by
Sept. 1994 Secretary of Commerce Ron Brown led trade delegation to China,
including Bernard Schwartz, Loral’s chairman.
Secretary of State Warren Christopher and Foreign Minister Qian
Qichen issued a joint statement in which the United States agreed to
waive the August 1993 sanctions (for missile proliferation) and China
agreed not to export “ground-to-ground missiles” that are “inherently
capable” of delivering at least 500 kg to at least 300 km (an important
understanding meant in part to include the M-11 missiles under the
The Administration’s waiver of the sanctions for missile proliferation
China launched its Dongfanghong-3 satellite, but failed to launch it into
the correct position due to a fuel leak.
President Clinton selected Armstrong of Hughes to head the Export
A PRC LM-2E launch vehicle exploded after liftoff, destroying the
Apstar-2 satellite (built by Hughes) it was carrying. Hughes and China
Great Wall Industry Corporation were reported as planning to
determine the cause of the explosion.
The Wall Street Journal reported that PRC aerospace industry officials
contradicted an official PRC newspaper’s account that blamed Hughes
for the explosion on January 26, 1995. Instead of blaming Hughes, as
Ta Kung Pao (in Hong Kong) did, officials from China Great Wall
Industries Corp. and the China National Space Administration said that
the article did not reflect China’s official view and that the investigation
had not concluded. A spokesman for Hughes said that a thorough
investigation into the cause of the explosion would take months to
The United States and China signed a new bilateral space launch
agreement to allow China to launch up to 11 new satellites to
geostationary orbit at prices not less than 15 percent below that charged
by Western competitors.
7/21-28/95 The PLA’s Second Artillery test-fired M-9 short-range ballistic missiles
toward Taiwan, after its president visited Cornell University in June.
Hughes and CGWIC issued a joint statement on separate findings of
six-month investigations into the cause of the explosion on 1/26/95.
CGWIC blamed strong winds for shaking Hughes’ satellite apart, while
Hughes said that severe winds caused the PRC rocket’s fairing to
Hughes provided to the Department of Commerce the final report on
the investigation of the launch failure of Apstar-2. The report included
a summary of information conveyed to China Great Wall during several
meetings that took place from February to June 1995.
Secretary of State Warren Christopher initialed a classified
memorandum to retain the State Department’s licensing authority over
commercial communications satellites (cited in New York Times, May
A PRC LM-2E rocket launched the Asiasat-2 satellite (built by Martin
Marietta), but the bumpy launch knocked the satellite’s antenna-feed
horns out of alignment, resulting in a loss of signal power. Asiasat
company claimed $58 million in insurance for the damage. (Flight
International, Oct. 2-8, 1996).
President Clinton issued Executive Order 12981 giving the
Departments of State, Defense, and Energy, and the Arms Control and
Disarmament Agency authority to separately review export license
applications submitted to the Department of Commerce under the
Export Administration Act and relevant regulations.
A PRC LM-2E rocket launched the Echostar-1 satellite (built by Martin
President Clinton waived sanctions under P.L. 101-246 for the
Chinasat-7 satellite to be exported by Hughes for launch from China.
President Clinton waived sanctions under P.L. 101-246 for 2 Cosat
(later called Chinastar) satellites to be exported by Lockheed Martin for
launch from China.
President Clinton waived sanctions under P.L. 101-246 for the
Mabuhay satellite to be exported by Loral for launch from China.
A LM-3B rocket exploded after liftoff, destroyed the Intelsat-708
satellite (built by Loral), and smashed into a village. The death toll was
probably higher than the official report of six deaths and 57 injured.
Despite the dramatic explosion of a PRC rocket one month before, the
PLA’s Second Artillery again test-fired M-9 short-range ballistic
missiles toward targets close to Taiwan’s ports, on the eve of Taiwan’s
first presidential election.
3/10-11/96 In further deterioration of U.S.-China relations, the United States
deployed two carrier battle groups to waters off Taiwan, calling China’s
live-fire exercises “reckless” and “risky.”
President Clinton approved a memo written by then deputy national
security adviser Samuel R. Berger to reverse Secretary Christopher’s
decision of October 1995 and transfer export control authority over
commercial satellites from the State Department to the Commerce
Department (New York Times, July 18, 1998).
The Clinton Administration announced a decision to move commercial
communications satellites from the Munitions List to the Commerce
Control List of dual-use items, so that the export license jurisdiction
was moved from the Department of State to the Department of
Commerce (implemented in November 1996).
March 1996 The CIA had a classified cable on an American consultant, Bansang
Lee, who worked for Hughes and later Loral, and possible payments
exchanged between him and PRC aerospace executives, but the CIA
did not pass the cable to the Justice Department until 1998 (New York
Times, December 24, 1998).
April 1996 A CIA analyst, Ronald Pandolfi, had reportedly prepared a National
Intelligence Estimate (NIE) on how Hughes may have helped improve
China’s missile capabilities in reviewing the explosion of a Long March
rocket in January 1995, but the CIA did not approve the NIE (New York
Times, December 7, 1998).
April 1996 At China’s request, Wah L. Lim, then a senior vice president and
engineer at Loral, chaired an “Independent Review Committee” to
study China’s technical evaluation of the cause of the accident on
February 15, 1996. Loral said China had identified the problem as
residing in the inertial measurement unit (IMU) of the guidance system
of the rocket. Loral believed that it did not have to request U.S.
government licensing and monitoring. Hughes participated in the
review. The first meeting was held in Palo Alto, CA, but the second
meeting took place in Beijing, China. PRC aerospace engineers
participated in the two meetings.
A draft preliminary report of Loral’s “Independent Review Committee”
was sent to all participants of the meetings (including PRC officials).
The report confirmed that the cause of the accident was an electrical
flaw in the electronic flight control system. The report allegedly
discussed weaknesses in the PRC rocket’s guidance and control
systems (New York Times, April 13, 1998).
Loral’s executive in charge of export controls told Dr. Wah Lim not to
send the report to China.
Loral’s executives provided the report to the Departments of State and
The Customs Service began an investigation of whether Space Systems/
Loral transferred missile technology to China.
Loral provided a voluntary disclosure to the Department of State,
concerning all communications with China. The company argued that
its policy of consultation with the Department of State was not
implemented, but it did not violate U.S. laws.
President Clinton waived sanctions under P.L. 101-246 for the Asia
Pacific Mobile Telecommunications (APMT) satellite to be exported
by Hughes for launch and use by China.
China launched the Apstar-1A satellite (built by Hughes) on a LM-3
President Clinton waived sanctions under P.L. 101-246 for a Globalstar
satellite to be exported by Loral for launch from China.133
Hughes submitted a munitions export license application to have a PRC
national, Shen Jun, serve as interpreter, without notifying the State
Department that Shen was the son of PLA Lieutenant General Shen
Rongjun, a Deputy Director of the PLA’s Commission of Science,
Technology, and Industry for National Defense (COSTIND) with
responsibility for missiles and satellites.
China failed to launch its Chinasat-7 satellite (built by Hughes) into the
correct orbit, after the third stage of the LM-3 rocket shut down early,
reported the Far Eastern Economic Review (Aug. 29, 1996).
President Clinton issued an Amendment to Executive Order 12981
(issued on 12/6/95) concerning export licensing procedures for
commercial communications satellites and hot-section technologies for
commercial aircraft engines that are transferred from the State
Department’s Munitions List to the Commerce Department’s
Commerce Control List (of dual-use items).
China successfully launched a satellite for “scientific exploration and
technological experiment” on a Long March 2D rocket.
The Bureau of Export Administration of the Department of Commerce
issued regulations to implement the transfer of commercial satellites
from control under the Munitions List to the Commerce Control List.
China Telecom planned to invest $37.5 million to become a full partner in Globalstar,
according to Aviation Week & Space Technology, October 5, 1998.
The Department of State issued regulations to implement the transfer
of commercial satellites from control under the Munitions List to the
Commerce Control List, even if the satellites include individual
components or technologies on the Munitions List.134
President Clinton waived sanctions under P.L. 101-246 for U.S. parts
for China’s Fengyun-1 (FY-1) meteorological satellite. The waiver
cited suspensions under sections 902(a)(3) and 902(a)(5), indicating
that technologies controlled under the Munitions List were involved.
President Clinton waived sanctions under P.L. 101-246 for the Sinosat
satellite to be exported for launch from China. The waiver cited
suspensions under sections 902(a)(3) and 902(a)(5), indicating that
technologies controlled under the Munitions List were involved.
March 1997 The Air Force’s National Air Intelligence Center (NAIC) reportedly
concluded in a classified report that Loral and Hughes provided
expertise that helped China to improve the guidance systems on its
ballistic missiles and that U.S. national security was damaged
(Washington Post, June 7, 1998). NAIC’s report was sent to DTSA, the
State Department, and the Justice Department.
China launched its Dongfanghong-3 communications satellite, built by
China Aerospace Corp. on a LM-3A rocket, prompting personal
congratulations from top government and military leaders.
A classified report at DTSA concluded that Loral and Hughes had
transferred expertise to China that significantly enhanced the reliability
of its nuclear ballistic missiles and “United States national security has
been harmed” (New York Times, April 13, 1998 and June 27, 1998).
The U.S. Trade Representative (USTR) reported that China had
violated the pricing provisions of a bilateral agreement on the Mabuhay
China launched its Fengyun-2, a second-generation
meteorological satellite, on a LM-3 rocket.
China launched the Agila 2 (formerly called Mabuhay) satellite (built
China launched two test satellites for Iridium to demonstrate the
technical viability of the new Long March variant, LM-2C/SD.
Also see GAO report GAO/NSIAD-97-24, Export Controls: Change in Export Licensing
Jurisdiction for Two Sensitive Dual-Use Items, January 1997.
The Washington Times, citing Israeli and U.S. intelligence sources,
reported that China Great Wall Industry Corporation was supplying key
telemetry equipment (for sending and collecting guidance data during
flight tests) to Iran for its development of the Shahab-3 and Shahab-4
medium-range ballistic missiles.
Likely prompted by DTSA’s report, the Department of Justice began its
criminal investigation into allegations that Loral and Hughes illegally
passed technical assistance to China.
China launched Asia Pacific Telecommunications Satellite (ApStar-2R)
(built by Loral) on LM-3B rocket.
The USTR announced that the United States and China agreed on new
provisions for the Bilateral Agreement on Space Launch Services
(signed in 1995). The new provisions set clear terms for PRC pricing
of launch services to low earth orbit.
After a summit in Washington, PRC President Jiang Zemin toured a
Hughes satellite plant in Los Angeles, California.
China launched two satellites for Iridium (built by Motorola) on one
Long March 2C/SD rocket to low earth orbit. The rocket had two
stages and a “smart dispenser” on top that deployed the two satellites.
National Security Adviser Samuel Berger wrote a memorandum for
President Clinton on whether to waive post-Tiananmen sanctions for
the export of the Loral-built Chinasat-8 satellite. Berger said that the
Department of State, with the concurrence of the Department of
Defense and the Arms Control and Disarmament Agency,
recommended the waiver. However, the memo noted that “the
Criminal Division of the Justice Department has cautioned that a
national-interest waiver in this case could have a significant adverse
impact on any prosecution that might take place, based on a pending
investigation of export violations” by Loral. (printed in the New York
Times, May 23, 1998)
President Clinton waived sanctions under P.L. 101-246 for the
Chinasat-8 satellite to be exported by Loral to China. Loral said that
it was the most powerful satellite that China ever bought.
Gary Samore, Special Assistant to the President and Senior Director for
Nonproliferation and Export Controls in the National Security Council,
wrote a Secret memo proposing to support PRC membership in the
MTCR, issue a “blanket waiver” of the post-Tiananmen sanctions to
cover all future satellite launches, and increase the number of space
launches from China — in return for PRC cooperation in missile
nonproliferation (printed in the March 23, 1998 Washington Times).
Loral Space and Communications signed an agreement with China
Great Wall Industry Corp. to launch five of Loral’s communication
satellites between March 1998 and March 2002 using Long March-3B
China Aerospace Corp. kicked off a Quality Promotion Plan to help
ensure success in its commercial launch business in research,
production, and testing.
China launched two Iridium satellites, built by Motorola, on a LM2C/SD rocket. (According to China, this launch was China’s 15th
“successful” commercial launch for foreign customers since 1990.)
John Holum, Acting Under Secretary of State for Arms Control and
International Security Affairs, concluded his visit to China and
confirmed that he discussed increasing the quota on the number of
satellite launches from China.
A Hong Kong newspaper owned by the PRC government reported that
China Aerospace Corporation found in its investigations into past failed
launches of satellites that all the failures were caused by problems in
production and management related to quality control. A previous
explosion of an LM-3B rocket (on 2/15/96) was found to have been
caused by a defect in a power pack nodal point which caused a short
circuit when the rocket ignited, resulting in a malfunction in the inertial
China’s official news agency quoted Zhang Haiming, general-manager
of a division of Lockheed Martin, as saying that the company is
“consulting with the PRC on satellite manufacturing.”
The New York Times reported that a federal grand jury was
investigating whether Loral Space and Communications of New York
and Hughes Electronics of Los Angeles provided expertise to China
that “significantly advanced” the guidance systems of its ballistic
missiles in studying the accidental destruction in February 1996 of a
satellite built by Loral. Administration officials reportedly said that the
Department of Justice, fearing that its criminal investigation would be
undermined, opposed the President’s February 1998 waiver and
approval for export of similar technology to China (for Chinasat-8).
Loral’s chief executive was reported as the largest personal donor to the
Democratic National Committee for the 1996 election.
John Holum, Acting Undersecretary of State for Arms Control and
International Security Affairs, stressed that exports of satellites to China
for launch occur with an export license and strict security measures to
“preclude assistance to the design, development, operation,
maintenance, modification or repair of any launch facility or rocket in
China, and we monitor that very carefully.” He also confirmed that
after the accident in February 1996, the Department of State “became
aware that there may have been a violation.” The case was referred to
the Department of Justice for investigation. He said that there are
“strong legal remedies” for violations of export control laws, including
a denial of future licenses.
The New York Times again reported on the criminal investigation of
Loral and Hughes, adding that a highly classified Pentagon report
concluded in May 1997 that the companies had transferred expertise to
China that “significantly improved” the reliability of China’s nuclear
Loral’s president and chief operating officer, Gregory Clark, stated that
Loral “did not divulge any information that was inappropriate.”
A PRC Foreign Ministry spokesman stated that “the exchange of
technical information about satellite launchings between U.S.
companies and the PRC aerospace department was a normal activity
and fell under international rules.” He also said that the companies “did
not provide technical information about missile technology.”
Loral’s chairman and CEO, Bernard Schwartz, said that “we have done
our own internal investigation, and I’m satisfied that our people acted
well — good behavior and in compliance [with U.S. export controls].”
Under Secretary of Commerce for Export Administration William
Reinsch testified to the Joint Economic Committee that satellite exports
to China have shown how effective dual-use export controls allow U.S.
exporters to compete and “win without risk to our national security.”
He said that controls on satellite exports to China were extensive and
included measures to “reduce the risk” of illicit technology transfers.
After November 1996 (when the licensing jurisdiction was transferred
from the Department of State to Commerce), Commerce issued three
export licenses for satellites to be launched from China — “with the
concurrence of all agencies.”
A spokesman at the State Department, James Foley, denied a
Washington Times report that the Administration presented China with
a draft agreement for space cooperation. He admitted, however, that
officials considered scientific space cooperation as one way to
encourage PRC cooperation in missile non-proliferation. He also
stressed that “there still is not any U.S. plan or proposal to offer China
access to missile technology.”
A PRC Long March 2C/SD rocket launched two Iridium satellites
(built by Motorola) to low earth orbit.
The Justice Department began a preliminary inquiry into whether
political donations influenced President Clinton’s approval of satellite
exports to China.
The New York Times reported that fund-raiser Johnny Chung told the
Justice Department that part of his donations to the Democratic Party
in the summer of 1996 came from the PLA through Liu Chaoying, a
PLA lieutenant colonel and a senior manager and vice president for
China Aerospace International Holdings, Ltd. (a subsidiary of China
Aerospace Corporation in Hong Kong). She is also a daughter of
retired General Liu Huaqing, formerly a vice chairman of the PLA’s
command, the Central Military Commission, and formerly a member
of the Standing Committee of the Politburo.
Loral issued a statement saying that allegations that it provided missile
guidance technology to China were false. The company states that “the
Chinese alone conducted an independent investigation of the launch
failure [in February 1996] and they determined that the problem was a
defective solder joint in the wiring — a ‘low-tech’ matter.” Loral
denied that it and Hughes conducted an independent investigation to
determine the cause of that launch failure. It was at the insistence of
insurance companies, which required non-PRC confirmation of
resolutions of problems with Long March rockets, that Loral formed a
committee of several satellite companies, including Hughes, to review
the PRC investigation. However, Loral admitted that, contrary to its
policies, “the committee provided a report to the Chinese before
consulting with State Department export licensing authorities.” Loral
added that it was in full cooperation with the Justice Department in its
investigation and with congressional committees. Loral concluded that
based upon its own review, it “does not believe that any of its
employees dealing with China acted illegally or damaged U.S. national
security.” In addition, the statement said that Loral’s chairman,
Bernard Schwartz, was not personally involved in any aspect of this
matter. “No political favors or benefits of any kind were requested or
extended, directly or indirectly, by any means whatever.” Loral also
denied any connection between the launch failure in February 1996 and
the Presidential waiver for another Loral-built satellite in February
1998. The export license for the latest launch (for Chinasat-8) “applied
the strictest prohibitions on technology transfer and specified that any
new launch failure investigation would require a separate license.”
Loral stressed that it complied strictly with export control laws and
China launched its Chinastar-1 (Zhongwei-1) (built by Lockheed
Martin) on a LM-3B rocket.
The Justice Department expanded its investigation to examine whether
Hughes violated export control laws in transmitting a report to China
on the failure on January 26, 1995 that destroyed the Apstar-2 satellite.
The Commerce Department had approved Hughes’ report.
The House voted on H.Res. 463 to create the Select Committee on U.S.
National Security and Military/Commercial Concerns with the People’s
Republic of China (chaired by Rep. Cox). Popularly known as the
“Cox Committee,” it was comprised of five Republicans and four
President Clinton held a summit in Beijing with President Jiang Zemin,
at which the PRC refused to join the MTCR but said it was “actively
studying” whether to join.
The State Department suspended the license issued in 1996 to Hughes
that permitted Shen Jun, son of a PLA lieutenant general, to work on a
$450 million satellite deal for the APMT consortium.
A DTSA official, Michael Maloof, wrote a memo about his concerns
that the PRC military used U.S.-made satellites to improve its encrypted
command, control, communications, and intelligence (C4I), using the
Asiasat and Apstar satellites built by Hughes.
China launched its Sinosat-1 (built by French companies, Alcatel and
Aerospatiale) on a LM-3B rocket.
A PRC Long March 2C/SD rocket launched two replenishment
satellites for Iridium (owned by Motorola).
An internal memo of the Justice Department’s campaign finance task
force reportedly found no evidence that Loral’s chairman Bernard
Schwartz corruptly influenced President Clinton in his decision to
approve Loral’s export of a satellite to China in 1998, but the memo
recommended to Attorney General Janet Reno that she appoint an
independent prosecutor. Reno denied the recommendation.
Conferees on the National Defense Authorization Act for FY1999
(H.R. 3616) agreed to transfer the export licensing authority over
commercial satellites back to the State Department, among other
provisions, but they did not agree to ban satellite exports to China.
Sept. 1998 A CIA analyst, Ronald Pandolfi, briefed the Senate Intelligence
Committee on what he had found in 1995 about Hughes’ review of the
explosion of a Long March rocket in January 1995. The CIA then
allegedly alerted Hughes about Pandolfi’s briefing, reportedly
according to an internal CIA cable dated September 23, 1998. The
committee then asked Attorney General Janet Reno for a criminal
investigation into whether the CIA improperly obstructed a Senate
President Clinton signed the National Defense Authorization Act for
FY1999 (P.L. 105-261), but said he “strongly opposed” the provisions
on shifting controls over satellite exports back to the Department of
China Great Wall Industry Corp. failed to receive bids and information
from any U.S. satellite manufacturers for a PRC proposal to set up a
joint satellite production facility, in part because of Congressional
concerns over sensitive technology transfers (Space News, November
The Department of Commerce notified Congress, as required in
FY1999 appropriations legislation (P.L. 105-277), that it was
processing two applications for licenses to export satellites to China.
CIA officials agreed to testify before a federal grand jury in Washington
in the Justice Department’s unusual criminal investigation into whether
the CIA obstructed justice when it allegedly warned Hughes about the
Senate Intelligence Committee’s interest in some of its employees. The
investigation began at the request of that committee (Washington Post,
December 5, 1998).
Aviation Week & Space Technology reported that the Department of
Commerce granted permission for the launch of the APMT satellite to
DOD issued an initial assessment of documents provided by the
Department of Commerce in July 1998 on Hughes’ review the January
1995 launch failure (for Apstar-2). The report prepared by DTSA and
NAIC concluded that Hughes provided information to China that
potentially helped its missile program and violated standards of not
improving PRC satellite and missile capabilities.
The Departments of Defense and State began a study after the
December 7, 1998 Pentagon report on Hughes’ technical exchanges
with China in 1995. The follow-up study would assess any military
benefit to China of the technical exchanges.
The chairmen of six House and Senate Committees (National Security,
Armed Services, International Relations, Foreign Relations, and
Intelligence) wrote a letter to President Clinton, warning against “direct
contravention” of legislation passed by Congress to have the State
Department regain control over the export of satellites.
The New York Times reported that the Department of Justice’s
investigation of China’s role in the political campaigns of 1996 found
new evidence that the PRC goal was acquisition of U.S. high
technology, especially that with military uses.
The State Department’s Office of Defense Trade Controls (DTC)
completed a sensitive but unclassified report, concluding that Hughes,
in reviewing the January 1995 launch failure of Apstar-2, provided
technical lessons that are “inherently applicable” to PRC missile as well
as satellite launch programs. (Printed in the Cox Committee’s report,
volume II, p. 76-84)
A PRC Long March 2C/SD rocket launched two replenishment
satellites for Iridium (owned by Motorola).
The “Cox Committee” unanimously approved a classified report on its
six-month investigation. According to Rep. Cox and Dicks, the chair
and ranking Democrat, PRC technology acquisitions, not only those
associated with satellite launches, harmed U.S. national security.
The House extended the “Cox Committee” for three months in the 106th
Congress to work on the declassification of its report.
Under Secretary of Commerce William Reinsch said in a speech that
the Cox Committee was a good example of those in Congress who “do
not understand” the “political and economic transformations” in recent
years and “respond to them by trying to return to the simpler era of the
Cold War and a single bipolar adversary. Only this time, it is China.”
The Secretary of State submitted her plan to Congress on regaining
licensing authority over satellites on March 15, 1999, as required in
section 1513(d) of the National Defense Authorization Act for FY1999.
The NSC issued a 32-page, unclassified response to the “Cox
Committee’s” recommendations, before release of its declassified
As required in FY1999 appropriations legislation (P.L. 105-277),
Commerce again notified Congress (after the Nov. 20, 1998 notice) that
it was processing three additional applications to export satellites to
China. The total of five satellite projects under consideration were:
Chinasat-8R, APMT, Asiasat-3sb/4, Command and Control Software
for Satellites, and Iridium.
The Defense Secretary reported that China’s military and civilian
leaders were paying “specific attention” to the C4I infrastructure and
that “the military’s lack of communications satellites could force the
PLA to rely on foreign satellite services to meet military needs in
wartime or a crisis.”
The Clinton Administration announced that it decided to deny approval
to Hughes for the export of the APMT satellite, after the Departments
of Defense and State voted against the Commerce Department’s
support for the export. The administration cited concerns that the enduser of the satellite would be the PLA.
The Department of State regained authority over the licensing of
satellite exports, pursuant to the National Defense Authorization Act
for FY1999 (P.L. 105-261).
Hughes responded to the Administration’s decision to deny an export
license for the APMT satellite by asking for a detailed justification.
The Department of Commerce published a rule in the Federal Register
on removing commercial communication satellites and related items
from the Commerce Control List.
The Department of State published a rule in the Federal Register on
reinstating commercial communication satellites on the Munitions List
on March 15, 1999.
The House passed H.Res. 129 (Cox) to extend the “Cox Committee”
until April 30, 1999.
The Los Angeles Times reported that Democratic fund-raiser Johnny
Chung told federal investigators that Liu Chaoying, executive of China
Aerospace International Holdings, Ltd., helped to funnel $300,000 from
General Ji Shengde, head of the PLA’s intelligence department, to
Chung for President Clinton’s re-election campaign in 1996, but most
of that money did not go to the Democratic Party.
Hughes reported that the APMT consortium dropped Hughes as the
satellite supplier, after it failed to obtain the export licenses.
The Director of Central Intelligence publicly reported on the
Intelligence Community’s damage assessment on PRC acquisitions of
information on U.S. nuclear weapons and ballistic missiles.
Representatives Cox and Dicks briefed President Clinton on the
findings of the “Cox Committee’s” report.
The House agreed to H.Res. 153 (Cox) to extend the “Cox Committee”
until May 14, 1999.
The Senate Select Committee on Intelligence released its report on
security implications of U.S. satellite exports to China and on PRC
political donations to U.S. political campaigns. The committee had
approved the report on May 5, 1999, in a 16-1 vote, with Senate
Graham dissenting. There are 10 recommendations related to the policy
of satellite exports to China.
As required by section 1512 of the FY1999 National Defense
Authorization Act (P.L. 105-261), President Clinton issued
certifications (for the Iridium satellite project) that the export of satellite
fuels and separation systems would not be detrimental to the U.S. space
launch industry and that the material and equipment, including any
indirect technical benefit that could be derived from such export, would
not measurably improve PRC missile or space launch capabilities.
China launched two PRC satellites (Fengyun-1 weather satellite and
Shijian-5 unspecified scientific satellite) using a LM-4B rocket for the
The House approved H.Res. 170, on May 13, 1999, to extend the “Cox
Committee” until May 31, 1999.
The “Cox Committee” released the declassified version of its January
3, 1999 report on its investigation of PRC technology acquisitions.
A LM-2C rocket launched two Iridium satellites (owned by Motorola).
The President signed into law (P.L. 106-65) the FY2000 National
Defense Authorization Act in which Congress addressed export
controls relating to missile technology, satellites, and other issues.
A LM-4B rocket launched the China-Brazil Earth Resources Satellite
(CBERS-1), or Ziyuan-1.
A Long March 2F rocket launched the Shenzhou spacecraft in the
PRC’s first successful unmanned flight test of a manned spacecraft.
Four experts at Stanford University’s Center for International Security
and Cooperation issued a critique of the “Cox Committee’s” report
(Alastair Iain Johnston, W. K. H. Panofsky, Marco Di Capua, and
Lewis R. Franklin, edited by M. M. May, “The Cox Committee Report:
An Assessment,” December 1999).
A Long March 3A rocket launched a PRC Zhongxing-22 (Chinasat-22)
communications satellite. (The Washington Times reported that it is
also called Feng Huo-1, the first of China’s military communications
satellites for a new battle management system.)
The State Department suspended the processing of licenses to export
satellites to China.
U.S. Ambassador to the PRC Joseph Prueher hosted a dinner in Beijing
for representatives of Loral, Lockheed Martin, Hughes, CASC, and
The Department of State charged Lockheed Martin Corporation with
violating the Arms Export and Control Act by assessing a PRC kick
motor for the Asiasat-2 satellite.
The Department of State announced a settlement with Lockheed
Martin, involving $13 million in total penalties.
A Long March 3 rocket launched the PRC’s Fengyun 2 weather
The Defense Security Service issued an award for security performance
to Loral but then rescinded it.
A Long March 4B rocket launched the PRC’s first China Resources-2
(Zhongguo Ziyuan-2) remote sensing satellite to collect imagery.
Sept. 2000 According to Senator Shelby, the Justice Department decided not to
charge an unnamed CIA official with obstructing a Senate
investigation. (The Senate Intelligence Committee had found out about
the CIA’s contact with Hughes in September 1998 and then asked
Attorney General Janet Reno for a criminal investigation.)
President Clinton signed the NASA Authorization Act for FYs 2000,
2001, and 2002 (P.L. 106-391) that included a requirement for
certification to Congress, at least 15 days before a U.S.-PRC
cooperative agreement, that it would not be detrimental to the U.S.
space launch industry and would not improve the PRC’s ballistic
missile or space launch capabilities (Section 126(a)(2)).
A Long March 3A rocket launched the PRC’s Beidou navigational
satellite, the first for a planned system to provide all-weather, roundthe-clock navigational information for use on land and at sea.
The State Department announced a new U.S.-PRC agreement on
missile nonproliferation, in which the United States decided to waive
sanctions on PRC entities for past missile proliferation transfers to
Pakistan and Iran, resume processing of satellite export licences, and
hold discussions on extending the 1995 bilateral agreement on
commercial launch services, in return for a PRC pledge on missile
nonproliferation that includes setting up comprehensive export controls.
The PRC issued a White Paper on Space Activities, saying that it
attaches great importance to the significant role of space activities for
national interests in economic development, national security, scientific
and technological advancement, and social progress. It also planned to
develop satellites for observation from space, telecommunications,
navigation and positioning, remote-sensing, etc.
A Long March 3A rocket launched the second Beidou navigational
satellite from the Xichang Satellite Launch Center.
A Long March 2F rocket launched the Shenzhou-2 unmanned vehicle
into space from Jiuquan Launch Center, in the PRC’s second test of an
Loral and Hughes reportedly negotiated possible civil settlements with
the State Department, rather than face criminal charges from the Justice
Department, in resolving government investigations.
The State Department imposed sanctions on a PRC company, the China
Metallurgical Equipment Corporation, for proliferation of missile
technology to Pakistan, which denied licenses for the export of
satellites to China.
U.S.-China Agreement Regarding International Trade in Commercial
Launch Services expired.
Loral announced a $20 million civil settlement, by which it will pay a
fine of $14 million to the State Department and expend $6 million in
strengthening its export control compliance program.
The Justice Department ended its investigation (begun in 1997) of Loral
and Hughes, and declined to pursue charges.
China used a Long March 2F rocket to launch the Shenzhou-3
spacecraft, in the third unmanned flight test of the manned spacecraft.
In its claimed 25th consecutive successful launch since October 1996,
China used a Long March 4B rocket to launch two satellites (Fengyun1D weather satellite and Haiyang-1 ocean-survey satellite).
China used a Long March 4B rocket to launch the second Ziyuan-2
imaging satellite. It is the secret military Jianbing-3 satellite used for
photo-reconnaissance, reported Jane’s Defence Weekly (November 6).
The Department of State’s Office of Defense Trade Controls issued a
letter charging the Hughes Electronics Corporation and Boeing Satellite
Systems (which acquired the Hughes Space and Communications
Company in 2000) with 123 violations of the Arms Export Control Act
and International Traffic in Arms Regulations in connection with
technology transfers to China after the failed launches of the Apstar-2
satellite in January 1995 and the Intelsat-708 satellite in February 1996,
and other activities.
China used a Long March 2F rocket to launch the Shenzhou-4
spacecraft, in the fourth unmanned flight test of the manned spacecraft.
PRC President and Chairman of the Central Military Commission Jiang
Zemin congratulated the PLA’s General Equipment Department and the
Manned Spaceflight Project Headquarters. China boasted that this was
its 27th consecutive successful space launch since October 1996.
Hughes Electronics Corporation and Boeing Satellite Systems
announced a $32 million civil penalty in a settlement with the State
Department over charges issued in a letter on December 26, 2002.
China used a Long March 3A rocket to launch the third Beidou
navigation and positioning satellite from Xichang Satellite Launch
Center. China reported this satellite as completing a system to provide
all-weather navigation and positioning data. It also marked China’s 28th
consecutive, successful space launch since October 1996.
The State Department imposed missile proliferation sanctions on a PRC
defense industrial corporation (NORINCO), effectively banning
licenses for satellite exports to China for 2 years.