Six months ago, the Bush administration quietly eased some restrictions on the export of sensitive technologies to China. The move was intended...
WASHINGTON — Six months ago, the Bush administration quietly eased some restrictions on the export of sensitive technologies to China.
The move was intended to help U.S. companies, including Boeing, increase sales of high-tech equipment to China despite tight curbs on sharing technology that might have military applications.
But today the administration faces questions from weapons experts about whether some equipment — newly authorized for export to Chinese companies deemed trustworthy — could instead end up helping China modernize its military.
Equally worrisome, the experts say, is the possibility China could share the technology with Iran or Syria.
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The technologies include advanced aircraft-engine parts, navigation systems, telecommunications equipment and sophisticated composites.
The questions raised are in a report being released this week by the Wisconsin Project on Nuclear Arms Control, an independent research foundation that opposes the spread of arms technologies.
The administration’s new approach is part of an overall move to require licenses for the export of an expanded list of technologies in aircraft engines, lasers, telecommunications, aircraft materials and other fields of interest to China’s military.
But while imposing license requirements for the transfer of these technologies, the administration is also validating certain Chinese companies that may import these technologies without licenses.
Five such companies were designated in October, but as many as a dozen others are in the pipeline.
Mario Mancuso, undersecretary of commerce for industry and security, said: “We believe the system we have set up ensures that we are protecting our national security consistent with our goal of promoting legitimate exports for civilian use.”
But the report, made available to The New York Times, asserts that two nonmilitary Chinese companies designated as trustworthy are in fact high-risk because of links to the Chinese government, the People’s Liberation Army and other Chinese entities accused in the past of ties to Syria and Iran.
One of the companies, BHA Aero Composites, is 40 percent owned by Boeing and 40 percent by U.S. aerospace-materials maker Hexcel. The remaining 20 percent is owned by a Chinese government-owned company, AVIC I.
“In principle, you could find companies that would be above suspicion, but in this case they haven’t done it,” said Gary Milhollin, Washington, D.C., director of the Wisconsin Project. “If you just look at the relations these companies have, rather than be above suspicion, they are highly suspicious.”
The report says both Boeing and Hexcel have been cited for past lapses in obtaining proper licenses for exports.
Spokesmen for both Boeing and Hexcel said that they are confident BHA has no ties to the Chinese military and that its use of aircraft parts and materials were strictly for commercial and civilian ends.
“Boeing is not involved in any defense activities in China,” said Douglas Kennett, a company spokesman. “All our activities in China are in compliance with U.S. export laws and regulations.”
Both companies said the past failure to get proper export licenses has led to tighter controls.
Milhollin said his staff uncovered several links with the Chinese military establishment involving both BHA and another of the five companies, Shanghai Hua Hong NEC Electronics.
AVIC I, the Chinese government entity that owns a minority share of BHA, also produces fighters, nuclear-capable bombers and aviation-weapons systems for the People’s Liberation Army, the report says.
The State Department has cited another AVIC subsidiary, the China National Aero-Technology Import & Export Corporation, for links to arms sales to Iran and Syria.
The report also says Shanghai Hua Hong NEC Electronics is majority owned “through a corporate chain” by China Electronics, which it says is a government conglomerate that produces military equipment along with consumer electronics. It has a subsidiary, that procures arms for the military, the report said.
Milhollin said the new administration policy granting companies the right to import some technologies without previous licenses was adopted quietly as “a stealth attack on export controls.”
But Mancuso noted the Commerce Department proposed it publicly in 2006 and adopted it a year later after lengthy public comment.
In addition, he said, no Chinese company can receive sensitive technologies — as part of a category known as “validated end-users” — without a vetting of its record by the State, Energy and Defense departments and by relevant intelligence agencies.
The five companies were approved without dissent by these agencies, he said.
The Commerce Department tries to make it easier for American companies to export to markets overseas, and there has been a particular emphasis on selling to China. The U.S. is expected to show a trade deficit with China of nearly $300 billion in 2007.
At the same time, Democratic and Republican congressional leaders have called on the Bush administration, and the administration of former President Clinton, to exercise more vigilance toward China as it seeks to modernize its aerospace defense network.