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Manufacturing Processes

page 5

Chronology of KEY Events

1992

March 28McDonnell Douglas and CATIC sign contract to co-produce 20 MD-82 and 20 MD-90 series commercial aircraft in the PRC.

 

1993

SeptemberInformants tell Defense Technology Security Administration that PRC nationals are regularly visiting McDonnell DouglasĖs Columbus, Ohio plant. Concerned that the visits may constitute illegal technology transfer, DTSA contacts U.S. Customs Service.
September 30Letter from CATIC Executive Vice President Tang Xiaoping to McDonnell Douglas Aircraft Company President Robert Hood suggesting that McDonnell DouglasĖs failure to sell machine tools to CATIC could have a "big influence" on Trunkliner Program.
October 13U.S. Customs Service agent visits Columbus, Ohio plant. Following interviews with McDonnell Douglas officials, U.S. Customs Service agent reports that no further investigative action is contemplated.
December 23CATIC and McDonnell Douglas reach agreement on sale of machine tools and other equipment from McDonnell DouglasĖs Columbus, Ohio plant, and four machine tools located at Monitor Aerospace, in Amityville, New York. Included are 15 machine tools that require individual validated licenses.

1994

January 24Memorandum of Understanding for CATIC Machining Center joint venture signed by Monitor Aerospace, CATIC, and Aviation Industries of China.
February 15CATIC officials sign purchase agreement for machine tools and other equipment at McDonnell DouglasĖs Columbus, Ohio plant.
MarchDisassembly, packing and crating of McDonnell Douglas machine tools and other equipment begins at Columbus, Ohio plant.
Spring Defense Technology Security Administration learns that manufacturing equipment at McDonnell DouglasĖs Columbus, Ohio plant has been exported to the PRC. U.S. Customs Service is informed.
May 26McDonnell Douglas applies for machine tool export licenses.
June 7McDonnell Douglas briefs Commerce, State, and Defense Department representatives on Trunkliner Program and CATIC Machining Center.
June 23McDonnell Douglas again briefs interagency meeting on Trunkliner program and CATIC Machining Center.
June 24Machine tool license applications discussed at Advisory Committee for Export Policy (ACEP) meeting. Defense Department cautions against rushing to approve licenses pending further review. No decision reached.
July 26Flight International article reports only 20 McDonnell Douglas aircraft to be built in the PRC, with the remaining 20 to be built in the United States.
July 28ACEP meeting again discusses machine tool licenses. Decision deferred until next ACEP meeting.
August 25ACEP meeting minutes indicate export licenses for the machine tools were approved prior to this ACEP meeting.
August 29State Department asks U.S. Embassy/Beijing to obtain end use assurance for machine tools from senior CATIC official.
Late AugustCommerce Secretary Ronald Brown leads trade mission to the PRC.
September 13U.S. Embassy/Beijing reports that it obtained CATIC end use assurance and advises that final location of the machining center has not been determined.
September 14Department of Commerce formally issues export licenses to McDonnell Douglas for 19 machine tools.
OctoberConstruction of machining center was reportedly to begin.
November 4CATIC and McDonnell Douglas sign amended contract reducing the number of aircraft to be built in the PRC from 40 to 20, with the remaining 20 to be built in the United States.
November 7Most of Columbus, Ohio machine tools are shipped to Decemberthe PRC.

1995

FebruaryRemaining Columbus, Ohio machine tools are shipped to the PRC. Four machine tools still remain at Monitor Aerospace in Amityville, New York.
March 24McDonnell Douglas representative inspects nine machine tools in original shipping crates at two locations in Tianjin, a port city two hours drive from Beijing. McDonnell DouglasĖs Beijing office letter to CATIC requests information on machine tools not found in Tianjin.
March 27CATIC letter to McDonnell DouglasĖs Beijing office assures that six machine tools remain packed and in storage in Nanchang.
April 4McDonnell Douglas letter to the Department of Commerce reports location of machine tools and notes that six of the machine tools are reportedly located at Nanchang Aircraft Company, four remain at Monitor Aerospace in Amityville, New York, and the remainder are stored at two locations in Tianjin.
April 20McDonnell Douglas briefs interagency meeting on locations of machine tools. Commerce Department Office of Export Enforcement representative is present at meeting, and determines that no active investigation is warranted.
Late April/In telephone call with McDonnell Douglas China program
Early Maymanager, CATIC official says no agreement could be reached with Monitor Aerospace for creation of the machining center. The Department of Commerce is informed.
May 15The Department of Commerce instructs McDonnell Douglas to arrange for the six machine tools at Nanchang to be shipped to and consolidated with the nine machine tools at Tianjin. The Department of Commerce informs McDonnell Douglas that it has revoked the export licenses for the four machine tools at Monitor Aerospace in Amityville, New York.
June 1In a letter to CATIC, McDonnell Douglas requests CATIC take immediate action to consolidate all machine tools at one location in Tianjin, and informs CATIC that the Commerce Department has cancelled the export licenses for the four machine tools in Amityville, New York.
July 15Letter from CATIC to McDonnell Douglas confirms that no agreement could be reached with Monitor Aerospace to build the machining center, and that Nanchang Aircraft Factory was interested in purchasing six machine tools. The letter asks McDonnell Douglas to obtain U.S. Government approval for that transaction.
August 1McDonnell Douglas applies for Commerce Department licenses to allow six machine tools to remain at the Nanchang Aircraft Factory.
August 23During a visit to the Nanchang Aircraft Factory, McDonnell Douglas representatives discover the hydraulic stretch press uncrated and situated in a partially completed custom building designed and built around it.
September 28Commerce Department informs McDonnell Douglas to remain at Nanchang Aircraft Factory.
OctoberMcDonnell Douglas requests amended export licenses to allow the machine tools at Tianjin and Nanchang to be moved to Shanghai Aviation Industrial Corporation for use in the Trunkliner program.
November 7Commerce DepartmentĖs Office of Export Enforcement opens investigation of the machine tool diversion.
November 28The Office of Export Enforcement Los Angeles Field Office asks the Commerce Department to issue a Temporary Denial Order against CATIC.
December 7Office of Export Enforcement denies the request for a Temporary Denial Order against CATIC.
DecemberCATIC Machining Center in Beijing was reportedly to start producing Trunkliner parts.

1996

January 31Commerce Department is informed that five of the six Nanchang machine tools have arrived at the Shanghai Aviation Industrial Corporation. The hydraulic stretch press remains at Nanchang.
February 6 Amended licenses are approved by Commerce Department to permit the machine tools to be used by the Shanghai Aviation Industrial Corporation.
Late Winter/U.S. Customs Service joins machine tool investigation.
Early Spring
April 23U.S. Embassy official visits Shanghai Aviation Industrial Corporation and examines the machine tools from Tianjin.
June 21Portions of the hydraulic stretch press from Nanchang are reported to be at Shanghai.
JulyMarc Reardon, the Commerce Department Los Angeles Field Office case agent for the machine tool investigation, resigns.
August 5The remaining parts of the hydraulic stretch press from Nanchang are reported to be at Shanghai.

 

CASE STUDIES: Garrett Engines

PRC Targeting of U.S. Jet Engines and Production Technology

The PRCĖs acquisition of aerospace and defense industrial machine tools from U.S. and foreign sources has expanded its manufacturing capacity and enhanced the quality of military and civilian commodities that the PRC can produce.78 These acquisitions will support the PRCĖs achievement of a key goal: the development of an aerospace industrial base that is capable of producing components and structural assemblies for modern manned aircraft and cruise missiles.79

To meet combat mission requirements, modern military aircraft and cruise missiles require advanced jet engine systems.80 The PRC does not have an indigenous production capability for advanced jet engines. Thus, acquiring such a capability has been a national priority for the PRC throughout the 1990s.81 Development of new commercial and military jet engines is also a priority. The PRC is also likely to be focused on production of jet engines similar to those used for both commercial aircraft and for cruise missiles.

The PRCĖs activities indicate that Beijing has a particular interest in the acquisition of jet engine production technologies and equipment from U.S. sources. Moreover, the PRC has reportedly sought to compensate for shortfalls in its indigenous capabilities by acquiring complete jet engines from U.S. sources.82

In the mid-1980s and early 1990s, the PRC apparently adopted a three-track approach to acquiring U.S. equipment and technologies in order to advance its own military jet engine capabilities:

  • The diversion of engines from commercial end uses<
  • Direct purchase
  • Joint ventures for engine production

The PRCĖs acquisition targets suggest that it planned to acquire several families of jet engines that could be adapted to various military and commercial applications.83

The PRC has been particularly interested in acquiring "hot section" technology from U.S. sources.84 The United States is the world leader in hot section technology for turbojets and turbofan engines. As a result, U.S. military aircraft can outlast and outperform foreign-built military aircraft.85 In this regard, the PRC seeks:

Technology such as materials and coatings inside the turbine that can withstand extreme heat and associated cooling systems, and could be used to increase power and durability of Chinese aero-engine designs.86

In 1983, the PRC legally acquired two General Electric CFM-56 jet engines, ostensibly to analyze the engines for a potential civil aircraft upgrade program. In the course of the export licensing process, the Defense Department insisted on restricting the PRCĖs use of the engines. Under the terms of the licensing agreement:

No technical data was to be transferred with the engines; the Chinese were not to disassemble the engines; and finally, if the Trident [civil aircraft] retrofit program had not begun within 1 year of the enginesĖ arrival, the engines were to be repurchased by the manufacturer. In addition, the Chinese offered to retrofit engines at a Shanghai commercial aircraft facility where GE personnel would be able to monitor Chinese progress.87

Defense Department officials were concerned because the CFM-56 hot sections are identical to those used in the engines that power the U.S. F-16 and B-1B military aircraft.88

The PRC later claimed that the CFM-56 engines were destroyed in a fire.89 More likely, however, is that the PRC violated the U.S. end-use conditions by reverse engineering part of the CFM-56 to develop a variant for use in combat aircraft.90

Despite the suspected reverse engineering of the two General Electric jet engines that were exported in 1983, G.E. reportedly signed a contract in March 1991 with the Shenyang Aero-Engine Corporation for the manufacture of parts for CFM-56 engines.91 According to one source, Shenyang "put in place quality and advanced manufacturing systems to meet US airworthiness standards." 92

The PRC aggressively attempted to illegally acquire General ElectricĖs F404 engine, which powers the U.S. F-18 fighter.93 The PRC likely intended to use the F404 jet engine in its F-8 fighter.94 The PRC succeeded in acquiring some F404 technology through an indirect route by purchasing the LM-2500, a commercial General Electric gas turbine containing the F404 hot section.95

In addition, G.E. has reportedly proposed a joint venture with the PRC to manufacture the so-called CFM-56-Lite. The engine could power the PRCĖs planned AE-100 transport.96

The PRC also has targeted large engines for aerospace and non-aerospace applications. The PRCĖs acquisition plans reportedly include Pratt & Whitney JT-8 series engines and technology to support its large aircraft projects, as well as marine derivatives of the G.E. LM-2500 for naval turbine propulsion projects.97 Regarding the JT-8 series:

In August 1986, CATIC licensed the technology for the U.S. Pratt and Whitney FT8 gas turbine engine, including joint development, production and international marketing rights. The FT8 is a development of the JT8D-219 aero-engine (used to power Boeing 727, Boeing 737, and MD-82 aircraft), and can produce 24,000 kW (33,000 hp), [it] represented another significant technical leap for ChinaĖs gas turbine capability . . . Chinese students were also sponsored by Pratt and Whitney for graduate level aerospace training in the United States.98

The PRCĖs efforts to acquire compact jet engines can be traced to 1965, when the Beijing Institute of Aeronautics and Astronautics launched a project to copy the U.S. Teledyne-Ryan CAE J69-T-41A.99

The Teledyne engine powered the U.S. Air Force AQM-34N Firebee reconnaissance drone, a number of which were shot down over the PRC during the Vietnam conflict.100 The PRCĖs copy of the U.S. turbojet, dubbed WP-11, began ground testing in 1971 and currently powers the PLAĖs HY-4 "Sadsack," a short-range anti-ship cruise missile.101

The PRC began work on cruise missile engines in the 1980s. The PRCĖs interest in developing long-range cruise missiles increased dramatically after the 1991 Persian Gulf War, when the performance of U.S. Tomahawk cruise missiles demonstrated the effectiveness of precision missile strikes using conventional warheads. However, technical challenges slowed BeijingĖs efforts. For this reason, the PRC has attempted to acquire foreign-built engines for technical exploitation. If the PRC succeeds in building cruise missile propulsion and guidance systems, then it would probably not have difficulty marketing cruise missiles to third world countries.102

In 1990, the PRC attempted to advance its cruise missile program by purchasing the Williams FJ44 civil jet engine.103 This compact turbofan was derived from the engine that powers the U.S. Tomahawk cruise missile.

The FJ44 engine might have been immensely valuable to the PRC for technical exploitation and even direct cruise missile applications.104 But the PRCĖs effort to acquire FJ44 engines was rebuffed.105

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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