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Powell: China agrees to stop helping Iraq

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No acknowledgement of wrongdoing

Alarm over defense budget

WASHINGTON (CNN) -- China has told the United States that it has ordered companies suspected by Washington of helping Iraq rebuild its air defenses to stop what they are doing.

U.S. Secretary of State Colin Powell said Thursday: "China has now said that they have told companies that were in the area doing fiber optics work to cease and desist."

"We are still examining whether or not it was a specific violation of the sanctions policy and if it was, we will call that to the attention of the sanctions committee so that they can take a firm reaction with respect to China," Powell said.

Last month, the United States and Britain carried out airstrikes on Iraqi air defense systems near Baghdad. The United States said the radar systems had recently been upgraded, allowing Baghdad to fire more accurately at planes patrolling the no-fly zones over Iraq.

Following the airstrikes, the United States said it carried out the attacks at that precise time to avoid hitting Chinese workers in the area. Later, the United States admitted it had warned the Chinese government on several occasions, dating back to January, to order the Chinese companies to stop their work.

On Tuesday, China's foreign minister said that a "serious investigation" into the allegations was completed.

U.S. Secretary of State Colin Powell  

"Chinese enterprises and corporations have not assisted Iraq in building the project of fiber optic cable for air defense," said Tang Jiaxuan.

The United States has not accused Chinese workers of building fiber optic cables specifically. Rather, Washington has alleged that Chinese companies have assisted Iraq in its telecommunications in violation of United Nations sanctions.

Privately, China has told the United States it intends to abide by U.N. sanctions and has already instructed all Chinese companies doing business in Iraq, including Huawei Technologies and ZTE Corporation, to "stop working in Iraq" in areas violating U.N. sanctions, explained one senior State Department official.

As to whether or not the Chinese government itself was directly involved in this work, officials point out that every telecommunications company in China is linked to the Ministry of Post and Communications and/or the military.

Pentagon officials have privately accused China of violating U.N. sanctions imposed against Iraq for its invasion of Kuwait, by improving communications so Baghdad can better target aircraft.

A U.S. State Department official said China's message was communicated to Ambassador Joseph Prueher at a meeting with a senior Chinese foreign ministry official in Beijing on Monday.

No acknowledgement of wrongdoing

"The concern is that Chinese companies might have been involved in activities that were not permitted under the sanctions against Iraq," said the official, who declined to be named.

"The Chinese indicated to us that they have taken steps to abide by U.N. Security Council resolutions," he added.

Powell gave no details on what China had told the companies to do and he did not suggest China acknowledged any wrongdoing.

But the reassurances were a shot in the arm to relations ahead of a visit by Chinese Vice Premier Qian Qichen, a foreign policy expert, on March 18.

Alarm over defense budget

He is bound to hear fresh criticism of China's human rights record, which President George W. Bush's administration wants to make the subject of a critical motion against China at the U.N. Commission on Human Rights in April.

The exchange comes amid suspicion in the United States and alarm in Taiwan, which Washington arms, at plans for an increase of more than 17 percent in military spending by Beijing this year, to 141 billion yuan ($17 billion). Projected defense spending in the United States for 2002 is $310.5 billion.

China's increase, announced on Tuesday, showed growing concern about U.S. arms sales to protect Taiwan. Defense analysts estimated the real budget could be up to four times that figure as China upgrades its army into a force capable of backing up a threat to invade Taiwan if the island declares independence.

In his Senate testimony on Thursday, Powell tried to soothe fears about the Chinese increase and defend a 5.5 percent boost in spending on international affairs and foreign aid for 2002.

"I don't view it as a breakout investment where suddenly China is on the march as an enemy," he said.

"But it is of course something that we have to look at carefully to make sure we keep our forces in the region up to the best possible standards ... because we really are the balance wheel of stability in that part of the world," he added.

He warned, "A 17 percent increase is probably leading to a 50 percent increase in total over the next several years."

He said the United States wanted to discuss the nature of the build-up with China, adding, "We want to encourage them to have more transparency in what they do with their defense programs, as we have transparency in ours."

Reuters contributed to this report.

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4:30pm ET, 4/16

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