- The Washington Times - Friday, January 26, 2001

China is buying U.S. weapons technology illegally through front companies in Hong Kong and Singapore, U.S. intelligence officials said.
According to sensitive intelligence reports, China last month acquired "radiation-hardened" integrated circuits from a U.S. company that were shipped to China from Singapore, said officials familiar with the reports.
The Chinese company involved in the diversion was identified as the China Aircraft and Space Technology Co.
In a second activity, a Chinese missile-manufacturing firm purchased American-made communications-test equipment from a U.S. company based in Hong Kong. The U.S. company was not identified under intelligence-collection rules.
Both sales were reported to senior U.S. officials early last month and are a sign that Beijing is continuing aggressively to acquire U.S. weapons-related goods for its military-modernization program.
All military-related goods sold from the United States to China require an export license. However, Chinese companies secretly have been purchasing embargoed technology and hardware under export rules relaxed during the Clinton administration.
The intelligence reports bolster the findings of a special congressional committee that stated in a 1999 report that the use of Hong Kong companies "is a common [Chinese] tactic for illegal transfer of technology."
In a related development, China is continuing to sell missile-related equipment to Iraq and Iran in apparent violation of its pledge last fall to curb such transfers, said officials who spoke on the condition of anonymity.
The officials provided a briefing to The Washington Times to highlight what they said were ongoing Chinese sales of weapons and missile technology to rogue states, in violation of official pledges by Beijing to curtail such transfers.
"The Chinese appear to be selling everything to everybody," said one defense official.
In November, the Clinton administration announced it would not impose sanctions on China for selling missile technology to Iran and Pakistan after Beijing promised to curb further sales. Iran and Pakistan, however, were slapped with sanctions.
A Chinese Foreign Ministry spokesman said in a statement at the time that China had no plans "to assist, in any way, any country" developing nuclear-capable ballistic missiles.
Regarding the Iraqi missile-related sales, the officials said a delegation of representatives of a Chinese company was set to travel to Iraq last month to discuss the sale of "missile-related guidance and test equipment."
The company is offering gear to be used in testing missile inertial guidance systems, which are key components of long-range missile systems.
The company was using what U.S. officials said is a "cover name" to mask the true nature of the sales trip. The company was identified as the Shandong Arts and Crafts Co.
A Pentagon report on arms proliferation made public earlier this month stated that Iraq is working on two short-range missiles that are providing a base for building long-range missiles, should U.N. sanctions on the country be lifted. The report noted that Iraq "may have ambitions for longer-range missiles, including an ICBM (Intercontinental Ballistic Missile)."
Additionally, a Chinese company has recently been shipping specialty metals and chemicals used in missile production to Iran, the officials said. The seller was identified as Norinco, the acronym for China North Industries Co., which was linked by federal investigators in 1996 to smuggling of AK-47 assault rifles in Los Angeles.
The Iranian buyer was identified as the Shahid Bakeri Industrial Group, a defense-related company involved in Iran's missile program.
The Pentagon report stated that despite "numerous pledges" not to sell weapons to rogue states, "Chinese entities have supported some nuclear, chemical and missile programs in countries of proliferation concern, driven by China's overall strategic interests in South Asia and the Middle East and by domestic economic pressures."
The report noted China's sales of missile-related goods to Iran, Libya and North Korea.
According to the officials, in addition to its own weapons-proliferation activities, China covertly is helping North Korea buy and sell missile goods.
In November, a North Korean company based in China sent specialty steel used in missiles to Egypt, the officials said, noting that the steel is controlled under the 29-nation Missile Technology Control Regime.
That same month, the U.S. administration waived sanctions on China based on promises from Beijing to tighten export controls on missile-related goods.
Also in November, a North Korean company in Japan purchased a U.S.-made high-speed video camera used in missile development from an unidentified American company.
The camera was shipped from the United States to Egypt, and then was transferred to Russia and China before finally reaching North Korea, the officials said.
CIA and White House spokesmen had no immediate comment on the proliferation activities of China and North Korea.
A Chinese Embassy spokesman could not be reached for comment.


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