Protecting the national security interest simply may not be related to improving a corporation╠s "bottom line."
In cases discussed later in this Report, two U.S. satellite manufacturers, Hughes and Loral, failed to live by the requirements of U.S. law. The failure of Hughes to obtain legally required licenses, for example, reflects a deliberate decision to assist the PRC immediately, rather than risk the possibility that a license application would be delayed or rejected.
Such pressures may be great where important commercial opportunities or relationships may seem to a corporation to be at stake.
U.S. policies relying on corporate self-policing to prevent technology loss have not sufficiently accounted for the risks posed by inherent conflicts of interest, and by the lack of priority placed on dedicating resources to security in comparison to other corporate objectives.
D. The PRC requires high performance computers (HPCs) for the design, modeling, testing, and maintenance of advanced nuclear weapons based on the nuclear weapons design information stolen from the United States.
The United States relaxed restrictions on HPC sales in 1996; and the United States has no effective way to verify that HPC purchases reportedly made for commercial purposes are not diverted to military uses.
The Select Committee judges that the PRC has in fact used HPCs to perform nuclear weapons applications.
PRC research institutes with connections to PLA military industries have access to numerous U.S.-built HPCs that could be used for unlawful military applications. HPCs are important for many military applications, and essential for some.
One key concern is diversion of U.S. HPCs to the PRC╠s nuclear weapons program. If the PRC complies with the Comprehensive Test Ban Treaty, then its need for HPCs to design, weaponize, deploy, and maintain nuclear weapons will be greater than that of any other nation possessing nuclear weapons, according to the Department of Energy.
HPCs are useful for two-dimensional and critical to three-dimensional computer modeling that would be necessary for the PRC to develop, modify, and maintain its nuclear weapons in the absence of physical testing.
The utility of nuclear weapons computer modeling depends on the amount of data available from actual nuclear weapons tests, the computing capacity that is available, and programmer expertise. For this reason, in the judgment of the Select Committee, the PRC has targeted U.S. nuclear test data for espionage collection, which, if successful, would reduce its HPC performance requirements.
Complete three-dimensional models, critical to stockpile maintenance and assessment of the effect of major warhead modifications in the absence of physical testing, require HPCs of one million MTOPS (millions of theoretical operations-per-second, a measure of computer performance and speed) or more. Assessing the effects of a new warhead without testing would require three-dimensional modeling.
Although the precise utility of HPCs in the 2,000 to 10,000 MTOPS range for two-dimensional modeling is unclear, these HPCs may be powerful enough to help the PRC incorporate nuclear weapons design information that it stole from the U.S. into delivery systems without further testing.
In fact, the Select Committee judges that the PRC has been using HPCs for nuclear weapons applications. The illegal diversion of HPCs for the benefit of the PRC military is facilitated by the lack of effective post-sale verifications of the locations and purposes for which the computers are being used. HPC diversion for PRC military use is also facilitated by the steady relaxation of U.S. export controls over sales of HPCs.
Until 1998, there was no verification of the end uses of HPCs in the PRC. Modest verification procedures were announced in June 1998, but even if these are implemented fully, they will be insufficient.
Over the past several years, U.S. export controls on the sale of HPCs to the PRC have been steadily relaxed. As a result, while the PRC had virtually no HPCs in 1996, the PRC had over 600 U.S.-origin HPCs at the end of 1998.
The PRC has demonstrated the capability to assemble an HPC using U.S.-origin microprocessors. The Select Committee has concluded, however, that the PRC has virtually no indigenous high-end computer production capability. Moreover, while the PRC might attempt to perform some HPC functions by other means, these computer work-arounds remain difficult and imperfect.
Data from the Commerce Department and Defense Department indicate that HPCs from the United States have been obtained by PRC organizations involved in the research and development of:
- Military systems components
- Command and control
- Microwave and laser sensors
Given the lack of an effective verification regime, it is possible that these HPCs have been diverted for military uses, which could include the following:
- Incorporating or adapting nuclear weapons designs
- Upgrading and maintaining nuclear and chemical weapons
- Equipping mobile forces with high-technology weapons
- Building a modern fleet of combat and combat support aircraft and submarines
- Conducting anti-submarine warfare
- Developing a reliable, accurate ballistic and cruise missile force
- Equalizing a battlefield with electronic or information warfare
- Improving command, control, communications, and intelligence capabilities
Finally, the Select Committee judges that nuclear testing data and related computer codes are a target of PRC espionage, and that the PRC╠s nuclear weapons programs would benefit from the illegal acquisition of such information.
In conjunction with such data and codes, HPCs can be used to improve nuclear weapons designs, performance, modeling, and nuclear stockpile maintenance that would otherwise be extremely difficult or impossible given the restrictions imposed by the Comprehensive Test Ban Treaty.
E. The PRC has attempted to obtain U.S. machine tools and jet engine technologies through fraud and diversions from commercial end uses.
In one 1991 case studied by the Select Committee, the Department of Commerce decontrolled jet engines without consulting either the Defense Department or the State Department.
i. In 1994 and 1995 the PRC attempted to divert an export of machine tools by McDonnell Douglas to military uses.
The Select Committee╠s classified Report includes significantly more detail on this subject than this unclassified version. The Justice Department has requested that the Select Committee not disclose the details of much of its investigation into these matters to protect the Justice Department╠s prosecution of the China National Aero-Technology Import/Export Corporation (CATIC) and McDonnell Douglas.
ii. In 1991 the Commerce Department decontrolled Garrett jet engines without consulting either the Defense Department or the State Department.
This led to a PRC effort to acquire related jet engine production technology. The Commerce Department was prepared to approve this transfer, which was only thwarted when the Defense Department was alerted by the U.S. Embassy in Beijing.
See the chapters High Performance Computers, U.S. Export Policy Toward the PRC, and Manufacturing Processes for a more detailed discussion of the Select Committee╠s investigation of these matters.
4. The PRC seeks advanced U.S. military technology to achieve its long-term goals.
To acquire U.S. technology the PRC uses a variety of techniques, including espionage, controlled commercial entities, and a network of individuals and organizations that engage in a vast array of contacts with scientists, business people, and academics.
The PRC has vigorously pursued over the last two decades the acquisition of foreign military technologies. These efforts represent the official policy of the PRC and its Chinese Communist Party leadership. The PRC seeks foreign military technology as part of its efforts to place the PRC at the forefront of nations and to enable the PRC to fulfill its international agenda. The PRC╠s long-run geopolitical goals include incorporating Taiwan into the PRC and becoming the primary power in Asia.
The PRC has not ruled out using force against Taiwan, and its thefts of U.S. technology have enhanced its military capabilities for any such use of force.
The PRC has also asserted territorial claims against other Southeast Asian nations and Japan, and has used its military forces as leverage in asserting these claims.
These PRC goals conflict with current U.S. interests in Asia and the Pacific, and the possibility of a U.S.-PRC confrontation cannot be dismissed.
A. The PRC has mounted a widespread effort to obtain U.S. military technologies by any means █ legal or illegal.
These pervasive efforts pose a particularly significant threat to U.S. export control and counterintelligence efforts.
The PRC seeks military-related technology through a broad range of activities that complicate U.S. counterintelligence efforts.
Many of these efforts are less centralized than was the case with those of the Soviet Union. The number of PRC nationals who seek access to U.S. technology is much greater than the number of persons who sought similar kinds of information for the Soviet Union.
The Select Committee has determined that the Intelligence Community is insufficiently focused on the threat posed by PRC intelligence and the targeted effort to obtain militarily useful technology from the United States. Due to our sustained focus on the Soviet Union during the Cold War, intelligence collection against the PRC was not a top priority for our intelligence agencies in those years.
For the last several years, the U.S. Intelligence Community has begun to place a greater priority on the PRC. Nonetheless, the Intelligence Community lacks sufficient Chinese linguists and needs increased resources to address the challenge posed by the PRC╠s intelligence collection efforts.
The FBI has inadequate resources in light of the extensive numbers of PRC visitors, students, diplomats, business representatives, and others who may be involved in intelligence and military-related technology transfer operations in the United States.
B. Efforts to deny the PRC access to U.S. military technology are complicated by the broad range of items in which the PRC is interested, and by transfers to the PRC of Russian military and dual-use technologies, which may make the consequences of the PRC╠s thefts of U.S. technology more severe.
The PRC seeks and has acquired from the United States and elsewhere a broad range of military and related technologies.
Russia, for example, has provided the PRC with extensive military assistance and related technologies, including a number of complete military systems. The Select Committee has been advised that the sheer number of transfers of military equipment and technology to the PRC from Russia, most of which have been a product of dramatically increased PRC-Russian military cooperation since 1992, is vastly greater than the number of transfers from the United States, most of which are the result of PRC espionage.
Together, the added capabilities that the PRC has gained and continues to gain from foreign sources makes it difficult to assess how quickly the PRC will be able to make full use of any systems or technologies stolen from the United States. For example, the PRC╠s reported acquisition of solid-fuel and mobile missile launcher technologies, if successfully combined with stolen U.S. nuclear design information, will enable the PRC to field a robust road-mobile, intercontinental ballistic missile threat to the United States sooner than would otherwise have been possible.
C. The PRC uses commercial and political contacts to advance its efforts to obtain U.S. military, as well as commercial, technology.
The PRC has adopted policies in recent years aimed at increasing its influence within the United States in order to increase access to U.S. military, as well as commercial, technology.
To this end, the PRC has used access to its markets to induce U.S. business interests to provide military-related technology.
The PRC also uses access to its markets to induce U.S. businesses to lobby in behalf of common goals, such as liberalized export standards and practices.
Agents tied to the PRC╠s military industries who have illegally provided political contributions may have used these contributions to gain access to U.S. military and commercial technology.
D. The PRC has proliferated nuclear, missile, and space-related technologies to a number of countries.
The PRC is one of the leading proliferators of complete ballistic missile systems and missile components in the world.
The PRC has sold complete ballistic missile systems, for example, to Saudi Arabia and Pakistan, and missile components to a number of countries including Iran and Pakistan. The PRC has proliferated military technology to Iran, Pakistan, and North Korea.
In 1991, the PRC agreed to adhere to the April 1987 Missile Technology Control Regime (MTCR) guidelines, but the PRC has not accepted the revisions to those guidelines issued in 1993. The 1993 MTCR guidelines increase the kinds of missile systems subject to controls and call for a "strong presumption to deny" both sales of complete missile systems and components that could be used in ballistic missiles.
The PRC has provided, or is providing, assistance to the missile and space programs of a number of countries, according to the Congressional Research Service. These countries include, but are not limited to:
- Iran. The PRC has provided Iran with ballistic missile technology, including guidance components and the recent transfer of telemetry equipment. The PRC reportedly is providing Iran with solid-propellant missile technology. Additionally, the PRC provided Iran with the 95-mile range CSS-8 ballistic missile. Since the mid-1980s, the PRC has transferred C-802 anti-ship cruise missiles to Iran. The PRC has also provided assistance to Iran╠s nuclear programs.
- Pakistan. The PRC has provided Pakistan with a wide range of assistance. The PRC reportedly supplied Pakistan with CSS-X-7/M-11 mobile missile launchers and reportedly has provided Pakistan with the facilities necessary to produce M-11 missiles. The PRC provides Pakistan with assistance on uranium enrichment, ring magnets, and other technologies that could be used in Pakistan╠s nuclear weapons program.
- Saudi Arabia. The PRC provided a complete CSS-2 missile system to Saudi Arabia in 1987. The conventionally-armed missile has a range of 1,200 to 1,900 miles.
- North Korea. The Select Committee judges that the PRC has assisted weapons and military-related programs in North Korea.
The Select Committee is aware of information of further PRC proliferation of missile and space technology that the Clinton administration has determined cannot be publicly disclosed without affecting national security.
See the chapter PRC Acquisition of U.S. Technology for more detailed discussion of the Select Committee╠s investigation of these matters.
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