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CHAPTER 1
PRC Acquisition of U.S. Technology

CHAPTER 1 SUMMARY

THE STRUCTURE OF THE PRC GOVERNMENT

COSTIND: The CCP's Use of Corporations for Military Aims

CCP Supremacy Over the State, the PLA, and the Economy

DEVELOPMENT OF THE CCP'S TECHNOLOGY POLICIES

The 863 and Super-863 Programs:
Importing Technologies for Military Use

Biological Warfare

Space Technology

Military Information Technology

Laser Weapons

Automation Technology

Nuclear Weapons

Exotic Materials

The 16-Character Policy: 'Give Priority to Military Products'

The PRC's Use of Intelligence Services to Acquire U.S. Military Technology

METHODS USED BY THE PRC TO ACQUIRE ADVANCED
U.S. MILITARY TECHNOLOGY

The 'Princelings'

Acquisition of Military Technology from Other Governments

Russia

Israel

The United States

Joint Ventures with U.S. Companies

Acquisition and Exploitation of Dual-Use Technologies

Front Companies

Direct Collection of Technology by
Non-Intelligence Agencies and Individuals

Illegal Export of Military Technology
Purchased in the United States

PRC Purchase of Interests in U.S. Companies

Methods Used by the PRC to Export
Military Technology from the United States

PRC Incentives for U.S. Companies to
Advocate Relaxation of Export Controls

THE PRC'S EFFORTS TO ASSIMILATE
ADVANCED U.S. MILITARY TECHNOLOGY

U.S. GOVERNMENT MONITORING OF PRC TECHNOLOGY
ACQUISITION EFFORTS IN THE UNITED STATES

CHAPTER 1 NOTES

 

CHAPTER 2
PRC Theft of U.S.
Thermonuclear Warhead Design Information

CHAPTER 2 SUMMARY

PRC THEFT OF U.S. THERMONUCLEAR WARHEAD
DESIGN INFORMATION

THE PRC'S NEXT GENERATION NUCLEAR WARHEADS

THE IMPACT OF THE PRC'S THEFT OF U.S. THERMONUCLEAR
WARHEAD DESIGN INFORMATION

Mobile and Submarine-Launched Missiles

Acceleration of PRC Weapons Development

Effect on PRC Nuclear Doctrine

Multiple Warhead Development

Proliferation

Russian Assistance to the PRC's Nuclear Weapons Program

HOW THE PRC ACQUIRED THERMONUCLEAR WARHEAD
DESIGN INFORMATION FROM THE UNITED STATES:
PRC ESPIONAGE AND OTHER PRC TECHNIQUES

HOW THE U.S. GOVERNMENT LEARNED OF THE PRC'S
THEFT OF OUR MOST ADVANCED THERMONUCLEAR
WARHEAD DESIGN INFORMATION

The "Walk-In"

THE PRC'S FUTURE THERMONUCLEAR WARHEAD
REQUIREMENTS: THE PRC'S NEED FOR NUCLEAR
TEST DATA AND HIGH PERFORMANCE COMPUTERS

U.S. GOVERNMENT INVESTIGATIONS OF NUCLEAR
WEAPONS DESIGN INFORMATION LOSSES

Investigation of Theft of Design Information
for the Neutron Bomb

Investigation of Thefts of Information Related to the Detection of Submarines and of Laser Testing of Miniature Nuclear Weapons Explosions

Investigation of Theft of Design Information
for the W-88 Trident D-5 Thermonuclear Warhead

Investigation of Additional Incidents

THE DEPARTMENT OF ENERGY'S COUNTERINTELLIGENCE
PROGRAM AT THE U.S. NATIONAL WEAPONS LABORATORIES

NOTIFICATION OF THE PRESIDENT AND SENIOR U.S. OFFICIALS

CHAPTER 2 NOTES

 

CHAPTER 3
High Performance Computers

CHAPTER 3 SUMMARY

HIGH PERFORMANCE COMPUTERS

MILITARY OBJECTIVES CONTRIBUTE TO THE PRC'S
INTEREST IN HIGH PERFORMANCE COMPUTERS

U.S. HIGH PERFORMANCE COMPUTERS HAVE
THE GREATEST POTENTIAL IMPACT ON THE PRC'S
NUCLEAR WEAPONS CAPABILITIES

Existing PRC Nuclear Weapons

New PRC Nuclear Weapons

Nuclear Weapons Stockpile Stewardship

TRANSFER OF HPS TECHNOLOGY CAN BENEFIT
PRC INTELLIGENCE CAPABILITIES

Sensors for Surveillance, Target Detection,
and Target Recognition

Sensor Platforms for Aerial and Space-Based Reconnaissance

Cryptology

TRANSFER OF HIGH PERFORMANCE COMPUTER TECHNOLOGY
TO THE PRC COULD CONTRIBUTE TO THE MANUFACTURE
OF WEAPONS OF MASS DESTRUCTION, MISSILES,
AND OTHER WEAPONS

Missiles

Chemical and Biological Weapons

Information Warfare

TRANSFER OF HIGH PERFORMANCE COMPUTER
TECHNOLOGY TO THE PRC COULD SUPPORT ATTAINMENT
OF OTHER PRC MILITARY OBJECTIVES

Command, Control, and Communications

Meteorology for Military Operations

Cartography for Military Operations

Military Training Systems

NATIONAL SECURITY IMPLICATIONS OF HIGH PERFORMANCE
COMPUTER USE BY THE PRC MILITARY

U.S. EXPORT POLICY HAS GRADUALLY RELAXED CONTROLS
ON HIGH PERFORMANCE COMPUTERS

Some Reviews That Contributed to High Performance Computer Policy Changes in 1996 Have Been Criticized

The Stanford Study

Defense Department Review of
Military Applications for HPCs

Institute for Defense Analyses Technical Assessment

Defense Department Proliferation Criteria

Details of the 1996 High Performance Computer Export Control Policy Changes

Export Administration Act Provisions and Export Administration Regulations Currently Applicable to
High Performance Computers

The Second Stanford Study

Arms Export Control Act Provisions and International Traffic in Arms Regulations Currently Applicable to Computers

CONCERNS OVER HIGH PERFORMANCE COMPUTER
EXPORTERS' ABILITY TO REVIEW END-USERS IN THE PRC
PROMPTED THE REQUIREMENT FOR PRIOR NOTIFICATION

The U.S. Government Has Conducted Only One End-Use Check for High Performance Computers in the PRC

Some U.S. High Performance Computer Exports to the PRC Have Violated U.S. Restrictions

New World Transtechnology

Compaq Computer Corporation

Digital Creations

Lansing Technologies Corporation

HIGH PERFORMANCE COMPUTERS AT U.S. NATIONAL WEAPONS LABORATORIES ARE TARGETS FOR PRC ESPIONAGE

U.S. National Weapons Laboratories Have Failed to Obtain Required Export Licenses for Foreign High Performance Computer Use

PRC Students Have U.S. Citizen-Like Access to High Performance Computers at the National Weapons Laboratories

MANY TYPES OF COMPUTER TECHNOLOGY HAVE
BEEN MADE AVAILABLE TOTHE PRC THAT
COULD FACILITATE RUNNING PROGRAMS OF
NATIONAL SECURITY IMPORTANCE

THE PRC HAS A LIMITED CAPABILITY TO PRODUCE
HIGH PERFORMANCE COMPUTERS

U.S. HIGH PERFORMANCE COMPUTER EXPORTS
TO THE PRC ARE INCREASING DRAMATICALLY

THE PRC IS OBTAINING SOFTWARE FROM
U.S. AND DOMESTIC SOURCES

POTENTIAL METHODS OF IMPROVING END-USE VERIFICATION

Tagging

Technical Safeguards

Other Possibilities

TECHNICAL AFTERWORD: Changing High Performance Computer Technology Is Making Export Control More Difficult

CHAPTER 3 NOTES

 

CHAPTER 4
PRC Missile and Space Forces

CHAPTER 4 SUMMARY

INTRODUCTION

THE PLA'S BALLISTIC MISSILE FORCES

Development of the PLA's Ballistic Missile Forces

The Soviet Union's Contribution to the PLA's Ballistic Missile Force

The Role of Qian Xuesen in the Development of the PRC's Ballisitc Missile and Space Programs

Development of the PLA's Intermediate- and Short-Range Ballistic Missiles

The PLA's Current 'East Wind' Intercontinental
Ballistic Missiles

The PLA's Future 'East Wind' Intercontinental
Ballistic Missiles

The PRC's Medium- and Short-Range Ballistic Missiles

Stolen U.S. Technology Used on PRC Ballistic Missiles

The PRC's Strategic Forces Doctrine

The PRC's Opposition to U.S. Missile Defenses

The PRC's Acquisition of Foreign Ballistic Missile Technology

The PRC's Indigenous Ballistic Missile Design Capabilities

PRC Missile Proliferation

Iran

Pakistan

Saudi Arabia

THE PRC'S MILITARY AND CIVIL SPACE PROGRAM

The PRC's Commercial Space Launch Program

The PRC's Future Space Launch Capabilities

PRC Space Weapons

The PRC's Manned Space Program

The PRC's Communications Satellite Programs

The PRC's Use of Foreign Components on
Communications Satellites

The PRC's Reliance on Western Communications Satellites

PRC Use of Very Small Aperture Terminals (VSATs)

The PLA's Reconnaissance Satellite Program

The PRC's Other Military Satellite Programs

The Asia-Pacific Mobile Telecommunications
(APMT) Satellite

The Role of PLA General Shen Rongjun
and His Son in APMT

SIMILARITIES BETWEEN THE PRC'S
BALLISTIC MISSILE AND ROCKET TECHNOLOGY

Background

Propulsion Systems

Airframes

Ballistic Missile and Rocket Stages

Guidance Systems

Ground Support

Systems Integration

Payload

Conclusion

CHAPTER 4 NOTES

 

CHAPTER 5
Satellite Launches in the PRC: Hughes

CHAPTER 5 SUMMARY

OPTUS B2, APSTAR 2 LAUNCH FAILURES: PRC GAINS
SENSITIVE KNOWLEDGE FROM HUGHES INVESTIGATIONS

THE PROHIBITION AGAINST TECHNOLOGY TRANSFER
IN FOREIGN LAUNCHES

International Traffic in Arms Regulations
and the U.S. Munitions List

Department of Defense Monitoring Role

OPTUS B2

The Optus B2 Licenses

The Optus B2 Fails To Achieve Orbit

Failure Investigation Teams

Failure Investigation Begins

Hughes' Export Administrators Deal
with the Licensing Question

A 'Political' Business Solution

The Optus B3: Hughes' Efforts to Improve
the Long March Continue

APSTAR 2

The Apstar 2 License

The Apstar 2 Failure

Failure Investigation Teams

Failure Investigation Schedule

The Need for a License

Commerce Department Conference

Same Fairing Failure Identified by Hughes

A 'Political' Business Solution, Again?

The Commerce Department Approves Data Release to the PRC

Hughes Tries to Get the PRC to Accept Its Findings

CIA Analyst Visits Hughes

A 'Consolidated Solution'

Final Failure Investigation Report Released
to the PRC by the Commerce Department

Implementing the 'Consolidated Solution'

U.S. Government Actions Following
the Apstar 2 Launch Failure

Defense Department Assessments
of Damage to National Security

Damage to National Security from
the Apstar 2 Failure Investigation

Damage to National Security from the Sharing
of Coupled Loads Analysis

Damage to National Security from Providing the PRC
with Information Concerning Deficiencies in the Fairing,
and Resultant Improvements to PRC Rockets
and Ballistic Missiles

Other Information Learned by the PRC,
and Defense Department Reaction

State Department Assessments of Damage to National Secuirty

Damage to National Security Identified
by the Select Committee's Technical Consultant

CHARLIE TRIE, THE PRC, AND HUGHES ELECTRONICS

FURTHER INVESTIGATION WARRANTED

TECHNICAL AFTERWORD: Nose Fairings on Rockets
and Ballistic Missiles

CHAPTER 5 NOTES

 

CHAPTER 6
Satellite Launches in the PRC: Loral

CHAPTER 6 SUMMARY

INTELSAT 708 LAUNCH FAILURE: LORAL INVESTIGATION PROVIDES PRC WITH SENSITIVE INFORMATION: OVERVIEW OF EVENTS

The PRC's Launch Failure Investigation

The Asia Pacific Telecommunications Insurance Meeting

The PRC's Creation of an 'Independent Review Committee'

The Independent Review Committee's Meetings

The Independent Review Committee's Report

Substance of the Preliminary Report

The Report Goes to the PRC

Defense Department Analyst Discovers the Activities of the Independent Review Committee

Loral and Hughes Investigate the Matter

The Aftermath: China Great Wall Industry Corporation Revises Its Findings on the Cause of the Accident

U.S. Government Assessments of the Independent Review Committee's Report, and Referral to the Department of Justice

DETAILS OF THE FAILED LONG MARCH 3B-INTELSAT 708 LAUNCH AND INDEPENDENT REVIEW COMMITTEE ACTIVITIES

Background on Intelsat and Loral

Intelsat

Loral Space and Communications

Space Systems/Loral

Intelsat 708 Launch Program

The Intelsat 708 Launch Failure

Events Leading Up to the Creation of the Independent Review Committee

The Government Security Committee Meeting at Loral

The Apstar 1A Insurance Meeting

The April 1996 Independent Review Committee Meetings in Palo Alto

Meeting on April 22, 1996

Meeting on April 23, 1996

Meeting on April 24, 1996

United States Trade Representative Meeting on April 23, 1996

The April and May 1996 Independent Review Committee Meetings in Beijing

Meeting on April 30, 1996

Members' Caucus at the China World Hotel

Meeting on May 1, 1996

The Independent Review Committee Preliminary Report

Writing the Report

Loral Sends the Draft Report to the PRC

The Contents of the Draft Report

Notification to Loral Officials That a Report Had Been Prepared

Loral Review and Analysis of the Independent Review Committee Report

The Final Preliminary Report is Sent to the PRC

Another Copy of the Report is Sent to Beijing

Loral Management Actions After Delivery of the Report
to the PRC

Defense Department Official Discovers the Activities of the Independent Review Committee

Meeting with the Defense Technology Security Administration

Meeting with the State Department

Reynard's Telephone Call to Loral

Loral Management Discovers the Independent Review Committee Report Has Been Sent to the PRC

Loral's 'Voluntary' Disclosure

Investigation by Loral's Outside Counsel

Loral Submits Its 'Voluntary' Disclosure to the State Department

The PRC Gives Its Final Failure Investigation Report

Assessments By U.S. Government Agencies and Referral to the Department of Justice

Defense Department 1996 Assessment

Central Intelligence Agency Assessment

Department of State Assessment

Defense Technology Security Administration 1997 Assessment

Interagency Review Team Assessment

Outline of What Was Transferred to the PRC

Independent Review Committee Meeting Minutes

Independent Review Committee Preliminary Report

Loral's Inaccurate Instructions on Releasing Public Domain Information to Foreigners

Instructions to the Independent Review Committee Regarding Public Domain Information

State Department Views on Public Domain Information

The Defense Department Concludes That the Independent Review Committee's Work Is Likely to Lead to the Improved Reliability of PRC Ballistic Missiles

The Cross-Fertilization of the PRC's Rocket
and Missile Design Programs

The Independent Review Committee Aided the PRC in Identifying the Cause of the Long March 3B Failure

The PRC Implemented All of the Independent Review Committee's Recommendations

The Independent Review Committee Helped the PRC Improve the Reliability of Its Long March Rockets

AFTERWORD: U.S. Companies' Motivations to Launch SATELLITES in the PRC

CHRONOLOGY OF KEY EVENTS

TECHNICAL AFTERWORD: Technical Aspects of Technology Transfer During the Loral Failure Investigation: Background

CHAPTER 6 NOTES

 

CHAPTER 7
Protecting Sensitive Information
at PRC Launch Sites

CHAPTER 7 SUMMARY

PROTECTING SENSITIVE INFORMATION
AT PRC LAUNCH SITES: BACKGROUND

U.S.-PRC Bilateral Agreement

Export Licenses for PRC Launching of U.S. Satellites

Defense Department Monitors

UNAUTHORIZED ACCESS ALLOWS OPPORTUNITIES TO GAIN INFORMATION CONCERNING U.S. SATELLITES AND OTHER CONTROLLED TECHNOLOGY

INADEQUACY OF CURRENT SAFEGUARDS

SAFEGUARDING U.S.-BUILT SATELLITES AND U.S. ROCKET TECHNOLOGY AT PRC LAUNCHES

Country-to-Country Agreements

Export Licenses

THE DEFENSE DEPARTMENT'S RESPONSIBILITIES FOR SAFEGUARDING U.S. TECHNOLOGY AT LAUNCHES

DEFICIENCIES OBSERVED IN THE CURRENT SYSTEM

U.S.-PRC Technical Discussions Occur Prior to the Issuance of Export Licenses

Technology Transfer Control Plans and Security Plans Vary Throughout the Space Industry

Temporary Assignments of Defense Department Monitors Disrupt Continuity of Launch Site Security

An Inadequate Number of Defense Department Monitors Is Assigned to PRC Launches

Uneven Prior Technical Experience of
the Defense Department Monitors

Inadequate Headquarters Review of Monitor Reports

Lack of Headquarters' Support

Lack of Intermediate Sanction Authority

Conflicting Industry Priorities

Satellite Manufacturers, Not the Defense Department, Supervise Site Security Personnel

Reliance on Private Contractor Security Is Inadequate

Insufficient Numbers of Security Guards at PRC Launche Sites

CORRECTING SECURITY DEFICIENCIES

The 1999 Defense Authorization Act

EXCERPTS FROM DEFENSE DEPARTMENT MONITORS' REPORTS OF SECURITY LAUNCHES OF U.S. SATELLITES

CHAPTER 7 NOTES

 

CHAPTER 8
The Role of Commercial Space Insurance in Technology Transfer to the PRC

CHAPTER 8 SUMMARY

THE ROLE OF COMMERCIAL SPACE INSURANCE IN TECHNOLOGY TRANSFER TO THE PRC

Insurance Aspects of
the Long March 3B-Loral-Intelsat 708 Failure

The Formation of the Independent Review Committee

The April 15-16, 1996 Insurance Meeting in Beijing

The Space Insurance Industry's Involvement in the Release of the Independent Review Committee's Interim Report

CHRONOLOGY OF KEY EVENTS

TECHNICAL AFTERWORD: The Commercial Space Insurance Industry

CHAPTER 8 NOTES

 

CHAPTER 9
Statutory and Regulatory Controls: The Export of Our Militarily Sensitive Technology

CHAPTER 9 SUMMARY

STATUTORY AND REGULATORY CONTROLS:
THE EXPORT OF OUR MILITARY SENSITIVE TECHNOLOGY

Export Administration Act

National Security Controls

Foreign Policy Controls

Short Supply Controls

CONTROLS MAINTAINED IN COOPERATION
WITH OTHER NATIONS

COCOM (Coordinating Committee on
Multilateral Export Controls)

Wassenaar Arrangement

Australia Group

Missile Technology Control Regime

Nuclear Suppliers Group

ENHANCED PROLIFERATION CONTROL INITIATIVE

EXPORT ADMIISTRATION REGULATIONS

ARMS EXPORT CONTROL ACT

INTERNATIONAL TRAFFIC IN ARMS REGULATIONS

OMNIBUS TRADE AND COMPETITIVENESS ACT OF 1988

ECONOMIC ESPIONAGE ACT OF 1996

EXPORT LICENSES FOR MILITARILY SENSITIVE TECHNOLOGY:
DEPARTMENT OF COMMERCE

Export License Processing Until December 1995

License Processing Since Executive Order 12981
in December 1995

Pre-License Checks and Post-Shipment Verifications

Roles of Other Departments and Agencies
in Commerce's Export Licensing Policy

Department of State

Department of Defense

Central Intelligence Agency

Enforcement

Voluntary Disclosures

Penalties for Violation of
the Export Administration Regulations

Penalties Under the 1979 Act (Expired Since 1994)

Administrative Sanctions

Penalties Under the International Emergency
Economic Powers Act

Customs Enforcement

Commodity Classification Requests Under
the Commerce Control List

EXPORT LICENSES FOR MILITARILY SENSITIVE TECHNOLOGY: DEPARTMENT OF STATE

Procedures for Referral to Other Departments and Agencies of Requests to Export U.S. Munitions List Items

Commodity Jurisdiction Process

Registration of Exports

Congressional Oversight and Required Reports

Foreign-Origin Items with U.S. Content

Enforcement

Penalties for Violations of
the Arms Export Control Act and ITAR

Voluntary Disclosures

BLUE LANTERN Checks

EXPORT CONTROL POLICY TOWARD THE PRC

Background

Launch of Satellites on PRC Rockets

Satellite Launches in the PRC Following Tiananmen Square

Missile Proliferation Sanctions on the PRC

U.S. Munitions List Changes Regarding Satellites

Relaxation of Satellite Export Rules

The Trade Promotion Coordinating Committee Recommends Moving Satellites to Commerce Department Jurisdiction

The 1996 Transfer of Jurisdiction Over Commercial Satellites to Commerce

The 1999 Return of Jurisdiction Over Commercial Satellites to the State Department

High Performance Computers

Machine Tools

Treatment of Hong Kong

John Huang, Classified U.S. Intelligence, and the PRC

CHAPTER 9 NOTES

 

CHAPTER 10
Manufacturing Proceses: PRC Efforts to Acquire Machine Tool and Jet Engine Technologies

CHAPTER 10 SUMMARY

MANUFACTURING PROCESSES: PRC EFFORTS TO ACQUIRE MACHINE TOOL AND JET ENGINE TECHNOLOGIES

PRC TARGETING OF ADVANCED MACHINE TOOLS

Export Controls on Machine Tools

Export Administration Regulations

The PRC's Machine Tool Capabilities and Foreign Acquisitions

CASE STUDY: McDONNELL DOUGLAS MACHINE TOOLS

Findings of the U.S. General Accounting Office

The U.S. Government's Actions in Approving the Export Licenses

Intelligence Community Assessments

Changes to the Trunkliner Program

Discussions in the Advisory Committee for Export Policy

The License is Issued

McDonnell Douglas's Plans

McDonnell Douglas's Limited Role at the Machining Center

Trunkliner Program

Commerce Department Delays Investigating Machine Tool Diversion for Six Months

The Commerce Department's Actions in April 1995

The Commerce Department's Actions in October 1995

Allegation that the Commerce Department Discouraged the Los Angeles Field Office's Investigation

The Office of Export Enforcement's Los Angeles Field Office's Request for a Temporary Denial Order Against CATIC

PRC Diversion of Machine Tools

CATIC Letter Suggests Trunkliner Program at Risk

CATIC's Efforts to Create the Beijing Machining Centerwith Monitor Aerospace

Diversion of the Machine Tools to Nanchang Aircraft Company

Nanchang Accepts Responsibility

CHRONOLOGY OF KEY EVENTS

PRC TARGETING OF U.S. JET ENGINES
AND PRODUCTION TECHNOLOGY

CASE STUDY: GARRETT ENGINES

PRC Targeting of Garrett Engines

U.S. Government Approval of
the Initial Garrett Engine Exports

Commerce Department Decontrol of the Garrett Jet Engines

The Interagency Review of the Proposed Export
of Garrett Jet Engines

Consideration of Enhanced
Proliferation Control Initiative Regulations

Consideration of COCOM
and Export Administration Regulations

Resolution of the Garrett Engine Controversy

THE PRC CONTINUES TO ACQUIRE
JET ENGINE PRODUCTION PROCESSES

TECHNICAL AFTERWORD: The PRC's Acquisition of Machine Tools, Composite Materials, and Computers for Aircraft and Missile Manufacturing

CHAPTER 10 NOTES

 

CHAPTER 11
Recommendations

 

APPENDICES

THE INVESTIGATION

MEMBERS AND STAFF

H. RES. 463

HEARINGS AND MEETINGS

INTERVIEWS, DEPOSITIONS, AND DOCUMENT REQUESTS

GLOSSARIES

 

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