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 TIME on politics Congressional Quarterly CNN/AllPolitics CNN/AllPolitics - Storypage, with TIME and Congressional Quarterly

PRC Acquisition of U.S. Technology

footnotes

PRC Acquisition Endnotes

1 In practice, it is just as accurate to say the PRC Government is made up of just two bureaucracies (since the PLA is actually the "fist" of the CCP), or even one bureaucracy (since both the PLA and the State are subservient to the CCP). The distinctions between are them largely artificial. For general information on this topic. See CRS Report, "Chinese Government Structure and Function, Policies on Military and Industrial Modernization, and Technology Acquisition," November 10, 1998; Kenneth Lieberthal, Governing China, W.W. Norton & Company, Inc., 1995.

2The Politburo currently has 22 members and two alternates.

3 See Constitution of the Peoples Republic of China, Articles 2, 3.

4 Lieberthal, Governing China, p. 212, refers to this technique as "interlocking directorates."

5PRC Constitution, Article 29.

6 Jienfangjun Bao, Beijing, July 30, 1997, as cited in the BBC Summary of World Broadcasts, August 8, 1997.

7Leading Groups are a key mechanism for policy coordination and decision-making in the PRC. They are comprised of senior Communist Party, State, and PLA officials with relevant expertise and authority for specified areas. See generally, CRS Chinese Government Structure.

8The State Science and Technology Commission was recently dissolved and replaced by the newly-formed Ministry of Science and Technology.

9Deba R. Mohanty, "Hidden Players in Policy Processes: Examining Chinas National Security Research Bureaucracy," Institute for Defense Studies and Analysis, July 1998.

10For the official report on this program, see "Decade-Long Hi-Tech Program Bears Fruit," Xinhua News Agency, September 27, 1996.

11Su Kuoshan, "Road of Hope-Reviewing the Accomplishment of the '863 Project on the 10th Anniversary of its Implementation," Jiefangjun Bao, April 5, 1996, reproduced in Foreign Broadcast Information Service, Daily Report, May 8, 1996, FBIS-CHI-96-089.

12Major Mark Stokes, "Chinas Strategic Modernization: Implications for U.S. National Security," USAF Institute for National Security Studies, July, 1998.

13Cui Ning, "Hi-Tech Projects Highlight Five Areas," China Daily, April 3, 1996; in FBIS. See also Ding Hennggao, COSTIND Director, speech delivered on March 28, 1996, "Review of the 863 Plan over the Past Ten Years"; Stokes.

14John Frankenstein and Bates Gill, "Current and Future Challenges Facing Chinese Defense Industries," China Quarterly, June 1996.

15See Frankenstein and Gill, ibid; "Future Military Capabilities and Strategy of the Peoples Republic of China, "Department of Defense Report to Congress, 1998 Report; Letter from RADM Mike Ratliff, USN to JCS (J2), 9 November 1998, transmitted to the Select Committee November, 24, 1998.

16Frankenstein and Gill.

17Testimony of Dr. Michael Pillsbury before the Senate Select Committee on Intelligence, September 18, 1997.

18BBC Summary of World Broadcasts, Far East, 11 November 1992.

19For open source discussion, see Richard Fisher, "Foreign Arms Acquisition and PLA Modernization," Heritage Foundation, June 1, 1998.

20Ibid.

21James Mulvenon, "Chinese Military Commerce and U.S. National Security," RAND, July, 1997: Greg Mastel, "A China the World Could Bank On," Washington Post, December 29, 1997.

22Wei Ke, "Army Re-Tools Commercial Production," China Daily August 17-23, 1997; in FBIS.

23 John Frankenstein and Bates Gill, "Current and Future Challenges Facing Chinese Defense Industries," China Quarterly, June 1996. See also Zalmay Khalizad, Abram Shulsky, Daniel Byman, Roger Cliff, David Orletsky, David Shlapak, Michael Swaine, and Ashley Tellis, "Chinese Military Modernization and Its Implications for the U.S. Air Force (draft)," RAND, October, 1998.

24 See Frankenstein and Gill.

25The National Peoples Congress is a putative legislature, and officially Chinas supreme body of State power. It officially elects the State Council. Recent evidence suggests the National Peoples Congress has an increasing role in policy deliberation. Kenneth Lieberthal, Governing China, W.W. Norton & Company, Inc., 1995.

26Li Peng, "Report on the Outline of the Ninth Five-Year Plan for National Economic and Social Development and Long-Range Objectives to the Year 2010," delivered to the Fourth Session of the Eighth National Peoples Congress on March 5, 1996.

27BBS Summary of World Broadcasts, April 7, 1997.

28"Chinas National Defense," Information Office, PRC State Council, July 27, 1998.

29Testimony of Nicholas Eftimiades, October 15, 1998.

30Interview of James Lilley, November 17, 1998.

31These individuals often jump many bureaucratic levels to take their positions. Tai Ming Cheung, See, e.g.,"Chinas Princelings," Kim Eng Securities, January 1995; Murray Scot Tanner and Michael Feder, "Family Politics, Elite Recruitment, and Succession in Post-Mao China," Australian Journal of Chinese Affairs, July 1993.

32 Interview of James Mulvenon, October 16, 1998.

33See Murray Scot Tanner and Michael Feder, "Family Politics, Elite Recruitment, and Succession in Post-Mao China," Australian Journal of Chinese Affairs, July 1993. Frankenstein and Gill.

34James Mulvenon, "Chinese Military Commerce and U.S. National Security," RAND, July 1997; David Jackson, "U.S. Probes Whether Beijing Gave Money to Influence Policy," Chicago Tribune, February 14, 1997.

35 Ibid.

36 Tracy Connor, "New Asiagate Figure Has Military History," New York Post, November 7, 1998.

37Interim Report of the House Government Reform and Oversight Committee ("HGROC Report") Chapter IV C.

38Deposition of Shen Jun before the Select Committtee (Dec. 8, 1998); Japanese Firms Buy Into Satellite Telephone Co., Information Access Newsbytes (July 9, 1996).

39See generally, "Lius Deals with Chung: An Intercontinental Puzzle," David Jackson and Lena H. Sun, Washington Post, May 24, 1998.

40Interim Report of the House Government Reform and Oversight Committee ("HGROC Report") Chapter IV C.

41Ibid.

42Ibid.

43Ibid.

44"Red Face Over China; Did a Chinese plot persuade Clinton to let a U.S. company give China its rocket science? No. Politics (and policy) did," Eric Pooley et. al., Time, June 1, 1998.

45Interim Report of the House Government Reform and Oversight Committee ("HGROC Report") Chapter IV C. "Lius Deals with Chung: An Intercontinental Puzzle," David Jackson and Lena H. Sun, Washington Post, May 24, 1998.

46Testimony of James Mulvenon, RAND, before the Select Committee (Oct. 15, 1998); John Frankenstein and Bates Gill, "Current and Future Challenges Facing Chinese Defense Industries," China Quarterly (June 1996).

47Bates Gill and Taeho Kim, "Chinas Arms Acquisitions from Abroad, A Quest for Superb and Secret Weapons," Stockholm International Peace Institute, Oxford University Press, 1995.

48Richard Fisher, "Foreign Arms Acquisition and PLA Modernization," Heritage Foundation, June 1, 1998. See also Bates Gill and Taeho Kim, "Chinas Arms Acquisitions from Abroad, A Quest for Superb and Secret Weapons," Stockholm International Peace Institute, Oxford University Press, 1995.

49Bates Gill and Taeho Kim, "Chinas Arms Acquisitions from Abroad, A Quest for Superb and Secret Weapons," Stockholm International Peace Institute, Oxford University Press, 1995.

50Ibid.

51"Worldwide Challenges to Naval Strike Warfare," Office of Naval Intelligence, March 1997; "Information Warfare Grips China," Damon Bristow, Janes Intelligence Review- Pointer, November 1, 1998.

52Bates Gill and Taeho Kim, "Chinas Arms Acquisitions from Abroad, A Quest for Superb and Secret Weapons," Stockholm International Peace Institute, Oxford University Press, 1995.

53Ibid.

54For a more detailed discussion of the jet engine acquisition, see Chapter 10, Manufacturing Processes; Bates Gill and Taeho Kim.

55Shawn L. Twing, "Congress Calls for Sanctions if Israeli Technology Transfer to China is Proven," The Washington Report, November/December 1996. See also Bates Gill and Taeho Kim, "Chinas Arms Acquisitions from Abroad, A Quest for Superb and Secret Weapons," Stockholm International Peace Institute, Oxford University Press, 1995; Tony Capaccio, "Israeli Arms Transfers of U.S. Technology Remain and Abrasive Issue," Defense Week, June 5, 1995.

56"The National Security Science and Technology Strategy," U.S. Office of Science and Technology Policy, 1996.

57Kathleen Walsh, "U.S. Technology Transfers to the Peoples Republic of China," DFI International, December, 1997.

58Paul Blustein, "China Plays Rough: Invest and Transfer Technology, or No Market Access," Washington Post, October 25, 1997.

59Kathleen Walsh, December, 1997.

60Walsh, December, 1997, (stating the United States is "somewhere in the middle" among countries in its willingness to transfer technology).

61Testimony of Nicholas Eftimiades, October 15, 1998.

62See "Challenges and Opportunities for U.S. Businesses in China," testimony of JayEtta Hecker, GAO, before the Committee on Banking and Financial Services, U.S. House of Representatives, July 29, 1996.

63Interview of John Foarde, September 23, 1998.

64See, e.g., Walsh, December, 1997; Letter to the Select Committee from Sandra Taylor, Vice-President, Eastman Kodak Company, November 18, 1998.

65Walsh, December 1997. See also Joseph Kahn, "McDonnells Hopes in China Never Got Off the Ground," The Wall Street Journal, May 22, 1996 (quoting McDonnells President as saying it should do "whatever it takes" to "carve out a place" in China).

66Walsh Testimony and Letter to the Select Committee from Sandra Taylor, Vice-President, Eastman Kodak Company, November 18, 1998.

67Letter to the Select Committee from Sandra Taylor, Vice-President, Eastman Kodak Company, November 18, 1998.

68See John Frankenstein, "Chinas Defense Industries: A New Course?" The Chinese concept of a "spin-on" is in marked contrast to the "spin-off" approach of the U.S. at the end of the Cold War, where the goal was to convert military technology to commercial uses.

69"News Digest," Helicopter News, March 28, 1997. "The Z-11 is a reverse-engineered copy of Eurocopters single-engined Ecureuil."

70This Ministry is now known as the Ministry of Information Industry.

71"Sale of Telecommunications Equipment to China," Karen Zuckerstein, David Trimble, and John Neumann, General Accounting Office, November 1996.

72Testimony of James Mulvenon, October 15, 1998.

73See the Manufacturing processes chapter for examples of CATICs involvement in this process.

74Interview of Tom Nangle, October 8, 1998.

75Almost all Chinese military production lines are co-located with civil/commercial production lines.

76"Commercial Activities of Chinas Peoples Liberation Army (PLA)," Hearing Before the Committee on Foreign Relations, United States Senate, November 6, 1997.

77Testimony of James Mulvenon, October 15, 1998.

78Ibid.

79Interview of Bin Wu, October 20, 1998. See also John Fialka, "War by Other Means," W.W. Norton and Co., New York (1997).

80Ibid.

81Ibid.

82"Aegis Combat System," United States Navy Fact File.

83See Chapter 2, "PRC Theft of U.S. Nuclear Weapons Design Information," for a more detailed discussion of the Peter Lee and other espionage cases.

84Ronald Ostrow, "FBI Arrests Chinese National in Spy Ring Investigation," Los Angeles Times, December 5, 1993: Bill Gertz, "Spy Sting Gets Chinese Man Deported," The Washington Times, December 22, 1993.

85Ibid.

86"DOE Needs to Improve Controls Over Foreign Visitors to Weapons Laboratories," Gary L. Jones et. al., General Accounting Office, September 1997.

87Ibid.

88"Chinese Spies Just as Active as Soviets Ever Were, FBI Says," Ruth Sinai, Associated Press, March 9, 1992. Statements in article are attributed to Patrick Watson, The FBIs Deputy Assistant Director for Intelligence.

89Testimony of Nicholas Eftimiades, October 15, 1998.

90"Chinese Intelligence Operations," Nicholas Eftimiades, Naval Institute Press, 1994.

91Ibid.

92"Chinese spy openly at weapons fair," Kenneth R. Timmerman, The Washington Times, March 24, 1997.

93 "Department of Defense Disposition of Government Surplus Items," hearing before the Senate Judiciary Subcommittee on Administrative Oversight and the Courts, July 8, 1997; "Defense Inventory: Action Needed to Avoid Inappropriate Sales of Surplus Parts," General Accounting Office, August, 1998; "On the Introduction of The Arms Surplus Reform Act of 1997," statement by Rep. Pete Stark in the U.S. House of Representatives, October 1, 1997.

94Ibid.

95Ibid.

96U.S. Customs briefing to Select Committee Staff, October 28, 1998. In response to this situation, in October 1997, Representative Pete Stark introduced H.R. 2602, the Arms Surplus Reform Act of 1997, to place a moratorium on all surplus arms sales until DOD certified to Congress that steps had been taken to correct weaknesses in the surplus sales program. The Act did not pass, but a section was added to the Defense Authorization Act for Fiscal Year 1998, Pub. L. 105-85, Sec. 1067, requiring similar steps. The DOD submitted its report to Congress in June, 1998, identifying problem areas and steps taken to address them.

97Robert Greenberger, "Lets Make a Deal: Chinese Find Bargains in Defense Equipment as Firms Unload Assets," Wall Street Journal, October 21, 1998; Dr. Stephen Bryen and Michael Ledeen, "China-Related Challenges," Heterodoxy, April/May 1997 (Submission for the record by Rep. Tillie Fowler in the U.S. House of Representatives, June 26, 1997). .

98Robert Levy, President, Norman Levy Associates, as quoted in Robert Greenberger, "Lets Make a Deal: Chinese Find Bargains in Defense Equipment as Firms Unload Assets," Wall Street Journal, October 21, 1998.

99Interview of Jerry Remick, October 8, 1998; Interview of David Duquette, October 14, 1998. In a response to written interrogatories, officials of CATIC, USA denied it was aware of the existence of the U.S. company. Letter to Daniel Silver from Barbara Van Gelder, October 22, 1998.

100A more detailed summary of the CATIC purchase of McDonnell Douglas machine tools appears at Chapter 10.

101"Message to the Congress on the China National Aero-Technology Import and Export Corporation Divestiture of MAMCO Manufacturing, Incorporated," The White House, February 1, 1990.

102Bruce Einhorn, "The China Connection," Business Week, August 5, 1996: "Sunbase Asia Acquires Specialty Bearing Company," PR Newswire, January 17, 1996.

103Briefing by U.S. Treasury Department to Select Committee staff, October 29, 1998.

104See, e.g., Stan Crock, "China and the U.S.: The Sparks May Start Flying," Business Week, November 16, 1998; Robert Little, "Controversial Carrier," The Baltimore Sun, November 8, 1998.

105See, e.g., Timothy Maier, "Long March Reaches Long Beach," Insight, September 8, 1997.

106Interview of Wu Bin, October 20, 1998.

107Bruce Smith, "Dragonair Misstep," Aviation Week and Space Technology, September 16, 1996; "Michael Mecham, "China Expands Stake in Cathay, Dragonair," Aviation Week and Space Technology, May 6, 1996.

108See, e.g., "Hong Kongs Reversion to China: Effective Monitoring Critical to Assess U.S. Nonproliferation Risks," GAO, May, 1997.

109U.S. Customs briefing to Select Committee Staff, October 28, 1998.

110Kathleen A. Walsh, "U.S. Technology Transfers to the Peoples Republic of China," 1997.

111Testimony of Loren Thompson, Clayton Mowry and Ray Williamson, November 13, 1998; deposition of C. Michael Armstrong, November 17, 1998.

112Deposition of Bernard L. Schwartz, November 21, 1998; testimony of Clayton Mowry, November 13, 1998.

113Deposition of Bernard L. Schwartz, November 21, 1998.

114Deposition of C. Michael Armstrong, December 17, 1998.

115Deposition of C. Michael Armstrong, December 17, 1998.

116Deposition of C. Michael Armstrong, December 17, 1998; letter from C. Michael Armstrong, Bernard L. Schwartz, and Daniel Tellep to the President, October 6, 1995.

117Aerospace Industries Association, "Presidential Satellite Waivers and Other Related Launch Information" (http://www.aia-aerospace.org/homepage/china_table1), October 26, 1998.

118Far Eastern Economic Review, January 23, 1997.

119Deposition of Bansang Lee, November 16, 1998. CP divested itself of its holdings in APT in late 1997. See Jonathan Sprague and Julian Gearing Bangkok, "Past Ambitions Catch Up To Charoen Pokphand," Asiaweek, May15, 1998.

120SCGA Report.

121Testimony of Karl Jackson before the SCGA, September 16, 1997; testimony of Clark Southall Wallace before the SCGA, September 16, 1997; testimony of Beth Dozoretz before the SCGA, September 16, 1997.

122"Other Approaches to Civil-Military Integration: the Chinese and Japanese Arms Industries," Office of Technology Assessment, Congress of the United States, March, 1995.

123Richard Fisher, "Foreign Arms Acquisition and PLA Modernization," Heritage Foundation, June 1, 1998.

124"News Digest," Helicopter News, March 28, 1997. "The Z-11 is a reverse-engineered copy of Eurocopters single-engined Ecureuil."

125"Briefing- Air-to-Ground Missile Programs," Janes Defense Weekly, September 8, 1998.

126The Department of Defense failed to respond to the Select Committees inquiry of September 22, 1998 in this regard.

127Letter to Chairman Christopher Cox from William Reinsch, Department of Commerce, October 22, 1998; Letter to Chairman Christopher Cox from General Counsel, Department of Commerce, October 21, 1998.

128BEA collects information concerning investment in U.S. businesses in which a foreign person holds an ownership interest of ten percent or more. Pursuant to federal law, the FDIUS data that BEA collects is confidential, and individual company data, including the names of survey respondents, cannot be released or disclosed in such a manner that the person or firm that furnished the information can be specifically identified. Use of an individual companys data for investigative purposes is prohibited, as the data can only be used for statistical and analytical purposes.

129Letter to Chairman Christopher Cox from Linda Robertson, Department of the Treasury, October 29, 1998.

130Ibid.

131Briefing by U.S. Treasury Department to Select Committee staff, October 29, 1998. See also Letter to Chairman Christopher Cox from Linda Robertson, Department of the Treasury, October 29, 1998.

132Letter to Chairman Christopher Cox from Susan Ochs, SEC, September 18, 1998; Briefing by SEC to Select Committee Staff, October 16, 1998.

Back  |  Forward


COX REPORT

Overview
pages 1 | 2 | 3 | 4

PRC Acquisition of U.S. Technology
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9

PRC Theft of U.S. Nuclear Warhead Design Information
pages 1 | 2 | 3 | 4 | 5

High Performance Computers
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10

PRC Missile and Space Forces
pages 1 | 2 | 3 | 4 5 | 6 | 7 | 8 | 9

Satellite Launches in the PRC: Hughes
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9

Satellite Launches in the PRC: Loral
pages 1 | 2 | 3 | 4 | 5 | 6

Launch Site Security in the PRC
pages 1 | 2 | 3 | 4 5 | 6

Commercial Space Insurance
pages 1 | 2 | 3 | 4

U.S. Export Policy Toward the PRC
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9

Manufacturing Processes
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10

Recommendations
pages 1 | 2 | 3

Appendices
pages introduction | A | B | C | D | E | F



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