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Weapons of Mass Destruction (WMD)

[CRS Issue Brief for Congress]

92056: Chinese Proliferation of Weapons of Mass Destruction: Current Policy Issues

Updated January 6, 1997

Shirley A. Kan
Foreign Affairs and National Defense Division





Recent Chinese Proliferation Issues
Nonproliferation Commitments and Compliance
Nuclear Technology Sales to Pakistan
Ring Magnets and May 11, 1996, Commitment
Congressional Action and Required Report
Furnace and Diagnostic Equipment
Missile Technology Sales to Pakistan
Sanctions and October 4, 1994, Statement
Continuing Sales?
Nuclear Technology Sales to Iran
Missile Technology Sales to Iran
C-802 Anti-Ship Missiles
Gyroscopes and Other Equipment
Chemical Sales to Iran
Competing Policy Approaches and Options
Trade and Export Controls
MFN Trade Treatment
Nonproliferation Sanctions
U.S. Import Controls
U.S. Export Controls
Nuclear Technology Exports and Cooperation
Multilateral Export Controls: Wassenaar Arrangement
Defense Policy
"Strategic Dialogue" and Summits
Missile Defense
Nonproliferation and Arms Control
Nonproliferation Regimes
Regional Security Talks
INF Treaty
Fissile Materials Production
International Lending and Japanese Aid
Congressional Engagement of China's Legislature




Policymakers in Congress have focused on issues concerning Chinese transfers of technology suspected of contributing to proliferation of weapons of mass destruction (WMD) or missiles that could deliver them. Recent issues have involved Chinese sales of chemical, nuclear, and missile technology to Pakistan and Iran.

Since 1992, Beijing has taken important steps to mollify concerns about its nonproliferation commitments. These steps include the following: February 1992 promise to abide by the Missile Technology Control Regime (MTCR); March 1992 accession to the Nuclear Nonproliferation Treaty (NPT); January 1993 signing of the Chemical Weapons Convention (CWC); October 1994 joint statements with Washington on the MTCR and fissile material production; November 1995 white paper on arms control and disarmament; May 1996 statement on making only safeguarded nuclear transfers; July 1996 announcement of a moratorium on nuclear testing; and signing of the Comprehensive Test Ban Treaty (CTBT) in September 1996.

There are reports, however, that China continues to supply missile, nuclear, and chemical technology inconsistent with nonproliferation goals -- particularly to Pakistan and Iran. Some of China's transfers have raised questions about violations of the NPT and/or contradictions of the MTCR or U.S. laws, which may require sanctions. China also has not joined some informal, but important, international nonproliferation groups, including the Zangger Committee, Nuclear Suppliers Group, and Australia Group.

Policymakers, advocates, and business leaders have differed on the most appropriate U.S. policy response to the problem of sensitive Chinese transfers. The Clinton Administration has pursued a policy of "engagement" with Beijing, seeking to improve bilateral relations. Others argue for a tougher approach to advance U.S. nonproliferation interests. Yet, U.S. policy responses are influenced by the fact that an increasing number in Congress recognize the importance of China and the need for a forward-looking, strategic approach. Such a strategic approach would augment short-term responses to violations and may consist of both positive and negative sources of leverage.

In the 1990s, Congress has annually debated whether to link non-proliferation and other conditions to normal, or most-favored-nation (MFN), trade treatment for China. In addition, policy debates concerning objectionable Chinese transfers have often centered on the question of whether to impose unilateral sanctions under various U.S. laws.

Besides sanctions and MFN conditions, other unilateral, bilateral, and multilateral policy options may be considered to curb Chinese sales inconsistent with U.S. interests and/or reduce the danger posed by the proliferation of WMD. Options concern policies on trade and export controls, defense policy, nonproliferation and arms control, international lending, and Congressional engagement of China's legislature. The costs and benefits of each must be weighed.

See also CRS Report 96-767F, Chinese Proliferation of Weapons of Mass Destruction: Background and Analysis.


On November 5, 1996, Lynn Davis, Undersecretary of State for Arms Control and International Security Affairs, said in Beijing that she is "encouraged" by the steps China has taken to establish effective export controls. She also stated that the Clinton Administration has intensified efforts toward the "early implementation" of the 1985 U.S.-China Agreement on Nuclear Cooperation. Conditions in P.L. 99-183 and P.L. 101-246 must be satisfied before the agreement can be implemented.

The Washington Times reported on November 21, 1996, that a CIA report says that China agreed in August to supply gyroscopes, accelerometers, and test equipment for missile guidance to Iran's Defense Industries Organization. The report also said that China, in the summer, delivered 400 metric tons of chemicals that could be used to produce nerve agents.


Congress has been particularly concerned with Chinese transfers suspected of contributing to the proliferation of weapons of mass destruction (WMD). This proliferation problem refers to the threat of nuclear, chemical, or biological weapons and missiles that could deliver them. The Pentagon is reportedly so concerned about the threat of WMD faced by U.S. troops that top military leaders have approved a plan to vaccinate all military personnel against anthrax, a germ warfare agent. (Washington Post, October 2, 1996)

This issue brief will discuss current policy issues and options concerning Chinese proliferation of WMD. For detailed background and analysis on nonproliferation regimes and China's support for them, China's past activities suspected of contributing to proliferation, and relevant U.S. laws, see CRS Report 96-767F, Chinese Proliferation of Weapons of Mass Destruction: Background and Analysis.

Recent Chinese Proliferation Issues

Nonproliferation Commitments and Compliance

Since 1992, Beijing -- in face of significant U.S. pressures -- has taken several steps to advance its nonproliferation commitments. China first promised to abide by the Missile Technology Control Regime (MTCR) in February 1992 and reaffirmed that commitment in a joint statement with the United States on October 4, 1994. China acceded to the Nuclear Nonproliferation Treaty (NPT) on March 9, 1992. China signed the Chemical Weapons Convention (CWC) in January 1993, but has not ratified it. In November 1995, China issued its first public defense white paper, which focused on China's support for arms control and disarmament. On May 11, 1996, the Chinese issued a statement promising to make only safeguarded nuclear transfers. China, in July 1996, announced a moratorium on nuclear testing and signed the Comprehensive Test Ban Treaty (CTBT) in September 1996.

Chinese transfers may not violate any international treaties. The MTCR is not an international agreement and has no legal authority. It is a set of voluntary guidelines which seek to control the transfer of missiles that are inherently capable of carrying at least a 500 kg payload to at least 300 km. China is not a member or "adherent" of the MTCR, for purposes of U.S. laws. The NPT does not ban peaceful nuclear projects (for example, nuclear power reactors). The CWC will not come into force until April 29, 1997, and China has not ratified it.

Nevertheless, some have argued that certain Chinese transfers have violated China's international commitments, including the NPT, and/or have contravened U.S. laws that require sanctions. The State Department's "Annual Report on the Proliferation of Missiles and Essential Components of Nuclear, Biological, and Chemical Weapons" for 1995 states that "the United States continues to oppose Chinese nuclear cooperation with countries of proliferation concern such as Iran and Pakistan. Some of China's exports have raised questions about that country's compliance with NPT obligations." Many see the transfers as posing dangers to long-term U.S. interests in world peace and stability. The following discussion summarizes some recent issues concerning Chinese proliferation agreements or transfers.

Nuclear Technology Sales to Pakistan

Ring Magnets and May 11, 1996, Commitment. In early 1996, some in Congress called for sanctions after reports said that China sold unsafeguarded ring magnets to Pakistan, apparently in violation of the NPT and U.S. laws, including the Arms Export Control Act and Export-Import Bank Act (as amended by the Nuclear Proliferation Prevention Act of 1994). On Feb. 5, 1996, the Washington Times first disclosed intelligence reports that, in 1995, the China National Nuclear Corporation, a state-owned corporation, transferred to the A.Q. Khan Research Laboratory in Kahuta, Pakistan, 5,000 ring magnets, which can be used in gas centrifuges to enrich uranium. According to the report, intelligence experts believed that the magnets provided to Pakistan are to be used in special suspension bearings at the top of a rotating cylinder in the centrifuges. The facility in Kahuta is not under IAEA safeguards.

The Clinton Administration's decision-making was apparently complicated by considerations of trade interests of U.S. corporations with business in China. Administration officials reportedly considered imposing then waiving sanctions or focusing sanctions only on the China National Nuclear Corporation, rather than largescale sanctions affecting the entire Chinese government and many U.S. companies. Westinghouse Electric Corporation (which has deals pending with China National Nuclear Corporation) and Boeing Aircraft Company told the White House that the sanctions would hurt their business in China. Meanwhile, Chinese Vice Foreign Minister Li Zhaoxing did not deny the sale but argued that it was "peaceful nuclear cooperation." (Washington Post, Feb. 8, 1996; Washington Times, Feb. 8, 1996.)

At the end of February 1996, Secretary of State Christopher instructed the Export-Import Bank to suspend financing for commercial deals in China for one month. Christopher reportedly required time to try to obtain more information to make a determination of whether sanctions would be required. Meanwhile, CIA Director John Deutch reportedly said at a White House meeting that Chinese officials at some level likely approved the sale of magnets. This view was said to have been supported by Defense Secretary Perry, but disputed by officials from the Commerce and Treasury Departments and the U.S. Trade Representative office, who cited a lack of solid proof. (Washington Post, April 1, 1996.) Observers noted that the latter departments have an interest in promoting trade with China.

On May 10, 1996, the State Department announced that China and Pakistan would not be sanctioned at all, citing a new agreement with China. Clinton Administration officials said that China promised to provide future assistance only to safeguarded nuclear facilities, reaffirmed its commitment to nuclear nonproliferation, and agreed to consultations on export control and proliferation issues. The Administration also said that Chinese leaders insisted they were not aware of the magnet transfer and that there is no evidence that the Chinese government had "willfully aided or abetted" Pakistan's nuclear weapon program through the magnet transfer. Therefore, the State Department announced that sanctions were not warranted, and Export-Import Bank considerations of loans for U.S. exporters to China were returned to normal.

On the next day, May 11, 1996, China's foreign ministry spokesman made a statement that "China will not provide assistance to unsafeguarded nuclear facilities." There was no reference to future sales of ring magnets nor sales of sensitive nuclear technology to countries with suspected nuclear weapon programs. In any case, China since 1984 has declared that it does not engage in nuclear proliferation and does ask countries receiving its transfers to accept IAEA safeguards. China formalized this policy by acceding to the NPT in 1992.

Congressional Action and Required Report. In response to the Chinese transfer and the Clinton's Administration's response, Congress passed two provisions in P.L. 104-201, the Defense Authorization Act for FY1997, which was signed into law on September 23, 1996. Section 1303 provided new language for Section 2(b)(4) of the Export-Import Bank Act. This amendment to S. 1745 was proposed by Senators Glenn and Helms. In response to the Clinton Administration's May 1996 determination that sanctions were not warranted in part because there is no evidence that the Chinese government had "willfully aided or abetted" Pakistan's nuclear weapon program through the ring magnet transfer, the new language aims to hold "persons" responsible. "Persons" are defined as "a natural person, as well as a corporation, business association, partnership, society, trust, any other nongovernmental entity, organization, or group, and any governmental entity operating as a business enterprise, and any successor of any such entity."

In addition, Section 1306 requires a presidential report, within 60 days of the enactment of the law, on China's transfers to Pakistan of technology, equipment, or materials important to the production of nuclear weapons and their means of delivery. The report shall be in both classified and unclassified forms.

Furnace and Diagnostic Equipment. The October 9, 1996, Washington Times reported on a September 14, 1996, CIA report that China sold a "special industrial furnace" and "high-tech diagnostic equipment" to unsafeguarded nuclear facilities in Pakistan. In September 1996, Chinese technicians in Pakistan reportedly prepared to install the dual-use equipment. The deal was allegedly made by the China Nuclear Energy Industry Corporation, affiliated with the same firm which sold the ring magnets. Those who suspect that the transfer was intended for Pakistan's nuclear weapons program say that high temperature furnaces are used to mold uranium or plutonium. The CIA report was said to state that "senior-level government approval probably was needed" and that Chinese officials planned to submit false documentation on the final destination of the equipment. The report said that the Chinese equipment was set to arrive in early September. The Washington Post, on October 10, 1996, reported that the equipment was apparently intended for a nuclear reactor being built by Pakistan at Khushab. This facility is not under IAEA safeguards.

On October 9, 1996, the State Department's responded that it does not conclude that China has violated its statement issued on May 11, 1996. (See above.) However, the State Department's statement did not address whether the reported transfers violated the NPT or contradicted U.S. laws (including the Arms Export Control Act and Export-Import Bank Act), which may require sanctions.

Missile Technology Sales to Pakistan

Sanctions and October 4, 1994, Statement. Transfers of Chinese M-11 short range ballistic missiles or related equipment exceed MTCR guidelines because the missile has the inherent capability to deliver a 500 kg warhead to 300 km. Chinese M-11 missile-related technology transfers to Pakistan have been the only case in which U.S. sanctions were imposed, and they were imposed twice. In June 1991, the Bush Administration first imposed sanctions on China for transferring M-11 technology to Pakistan. The Administration later waived the sanctions on March 23, 1992. On August 24, 1993, however, the Clinton Administration determined that China had again transferred M-11 equipment to Pakistan and imposed new sanctions. Later, Secretary of State Christopher and Foreign Minister Qian Qichen signed a joint statement on October 4, 1994, that Washington would waive the August 1993 sanctions and Beijing would not export surface-to-surface missiles "inherently capable" of delivering a 500 kg warhead 300 km. (Missile technology was not specifically mentioned.) According to Secretary Christopher, the two countries also agreed to hold in-depth discussions on the MTCR, including "China's MTCR membership in the near future." The Administration waived the sanctions on November 1, 1994.

The Bush and Clinton Administrations had imposed sanctions under Section 73(a) of the Arms Export Control Act and Section 11B(b)(1) of the Export Administration Act. The State Department determined that China transferred items in Category II of the MTCR Equipment and Technology Annex, or missile components, not entire missiles. One of the most important implications of the sanctions involved the export of U.S.- built satellites for launch by the China Great Wall Industry Corporation, a Chinese state-owned, defense-industrial enterprise. While the sanctions negatively affected U.S. satellite manufacturers, the sanctions may have helped U.S. launch service providers. Congress has been interested in the satellite launch industry's concern with unfair foreign competition, particularly from China.

Continuing Sales?. There are reports that China continues to sell or transfer missile technology or missiles to Pakistan despite its commitments to the MTCR. A June 1995 report said that the CIA found that China delivered "in the last three months" missile parts to Pakistan that could be used in M-11s (International Herald Tribune, June 23, 1995). Also, the U.S. intelligence community reportedly agreed in a National Intelligence Estimate that China is providing blueprints and equipment to Pakistan to build a plant for making missiles that would violate MTCR guidelines (Washington Post, August 25, 1996). There is disagreement, however, about whether the plant will manufacture some major missile components or whole copies of the M-11 missile. Construction of the plant in the city of Rawalpindi allegedly began in 1995, and it will be operational in one or two years. In response, Pakistan's foreign minister denied the report, but said that "Pakistan reserves the right to develop anything for its defense with its own resources." The Chinese foreign ministry denied the report as "entirely groundless."

In addition, an April 1996 report by the Office of the Secretary of Defense entitled Proliferation: Threat and Response stated that "China remains Pakistan's most important supplier of missile-related technologies." The report did not say whether there have been Chinese violations of its commitments to the MTCR.

Nuclear Technology Sales to Iran

On September 10, 1992, China and Iran finalized an agreement on "nuclear energy" cooperation, when Iranian President Rafsanjani visited Beijing accompanied by top-level military and atomic energy officials. China reportedly agreed to build two 300 megawatt nuclear reactors in about ten years. Western suppliers have denied components and equipment to Iran as well as denying them to Pakistan.

There are other controversial Chinese nuclear deals with Iran which have pointed to an Iranian nuclear weapon program. Chinese technicians built a calutron, or electromagnetic isotope separation system, for enriching uranium at the Karaj nuclear research facility, according to "confidential reports" submitted to President Rafsanjani by his senior aides. The Chinese system is similar to the technology used by Iraq in its undeclared uranium enrichment program. (Washington Times, September 25, 1995.) Iran's nuclear facility at Karaj is not under IAEA safeguards. The Secretary of Defense reported in April 1996 that "the Iranians have purchased an electromagnetic isotope separation unit from China," without saying where the unit is located (Proliferation: Threat and Response).

In addition, the China Nuclear Energy Industry Corporation reportedly plans to sell Iran a facility to convert uranium ore into uranium hexaflouride gas, which could be enriched to weapons-grade material. (Washington Post, April 17, 1995; June 20, 1996.) According to past intelligence reports, the deal was proceeding with Chinese nuclear experts going to Iran to build the new uranium conversion plant near Esfahan. (Washington Times, April 17, 1996.) However, some Chinese officials have indicated to the IAEA and U.S. officials that China will not transfer the uranium conversion facility, ostensibly because of Iran's inability to pay. Clinton Administration officials visiting China in Fall 1996 have reportedly requested cancellation of this deal as an "informal condition" for a presidential certification required by Congress for the implementation of the 1985 U.S.-China Nuclear Cooperation Agreement. (Washington Post, November 6, 1996; Christian Science Monitor, December 19, 1996.)

Suspecting that any nuclear technology would be used to provide a scientific and technical infrastructure for the nuclear weapon program, Washington has urged China (and Russia) not to sell any nuclear technology to Iran. However, the U.S. response is complicated by the fact that Chinese nuclear technology transfers to Iran may not violate the NPT, although they may contradict U.S. laws, including the Iran-Iraq Arms Nonproliferation Act, Arms Export Control Act, and the Export-Import Bank Act. In April 1995, in discussions with Chinese Foreign Minister Qian Qichen at the U.N., Secretary of State Christopher shared intelligence and tried to persuade the Chinese to halt the controversial nuclear sales to Iran. At a press conference on April 17, 1995, Secretary Christopher said that Iran "is simply too dangerous with its intentions and its motives and its designs to justify nuclear cooperation of an allegedly peaceful character." However, Qian Qichen publicly disagreed, saying "there is no international law or international regulation or international agreement that prohibits such cooperation on the peaceful use of nuclear energy." U.S. policy is also complicated by the fact that Westinghouse Electric Corporation and General Electric Corporation are interested in selling nuclear energy equipment to China.

Missile Technology Sales to Iran

C-802 Anti-Ship Missiles. In 1996, the media reported that China supplied C-802 anti-ship cruise missiles to Iran. While no international agreement bans transfers of anti-ship missiles, there has been concern that the transfer could affect regional stability and may have violated the Iran-Iraq Arms Nonproliferation Act. That act requires sanctions for technology transfers that contribute to Iranian or Iraqi efforts to acquire WMD or "destabilizing numbers and types of advanced conventional weapons." The Clinton Administration reportedly considered that the number and type of cruise missiles transferred were not "destabilizing" and decided not to impose sanctions. Vice Admiral John Scott Redd, Commander of the U.S. Fifth Fleet, has publicly expressed his concern about the Iranian possession of the C-802s.

Gyroscopes and Other Equipment. The November 21, 1996, Washington Times cited a CIA report which said that China agreed in August to sell to Iran's Defense Industries Organization gyroscopes, accelerometers, and test equipment, which could be used to build and test components for missile guidance. On the same day, State Department spokesman Glyn Davies did not comment on the details of the report, but said that "we believe at this stage that, in fact, the Chinese are operating within the assurances they have given us." On November 23, 1996, Iran denied the article's allegations, and the Chinese foreign minister referred to the story as "misinformation." Depending on the specifications of the equipment and whether the equipment will be delivered, China may violate its commitment to observe the MTCR guidelines and U.S. laws, including the Iran-Iraq Arms Nonproliferation Act, Arms Export Control Act, and Export Administration Act.

Chemical Sales to Iran

The CIA report also said that China, in the summer, delivered almost 400 metric tons of chemicals, including carbon sulfide, "used in" the production of nerve agents, according to the Washington Times of November 21, 1996. The United States is concerned about Chinese deals with Iran. Nevertheless, chemicals are dual-use items with civilian applications, and carbon sulfide is not on the list of chemicals controlled by the Department of Commerce in conformity to controls set by the Australia Group. It is not publicly known what other chemicals China reportedly transferred to Iran. On November 23, 1996, Iran denied the allegations of the story, and the Chinese foreign minister referred to the newspaper story as "misinformation."

Competing Policy Approaches and Options

Chinese proliferation as a policy issue concerns the priority of this issue relative to other interests (e.g., other security issues, human rights, and trade), the Administration's response, including the enforcement of nonproliferation laws, and possible legislation to reduce the danger. Congress has been concerned about the appropriate U.S. response to Chinese transfers which may have violated Chinese commitments or international agreements and/or contradicted U.S. laws. Policymakers, advocates, business leaders, and lobbyists have debated about which policy approaches and options are most effective in advancing U.S. interests.

The Clinton Administration has pursued a policy of "engagement" with China and has sought to improve relations with Beijing, especially after China raised military tensions over Taiwan in March 1996. Administration officials tend to cite Chinese nonproliferation statements and agreements as indications that the policy is advancing U.S. goals. Supporters of this approach also say that U.S. sanctions are counterproductive and are too broad. Rather, China needs to recognize nonproliferation for its national interests and develop export controls. Also, China would be more cooperative if brought in to draw up "the rules."

Others argue that Chinese sales to Iran and Pakistan have continued despite public commitments, and U.S. nonproliferation and other interests are better served with a tougher approach towards China, which may include appropriate sanctions in response to Chinese violations of commitments. These proponents tend to view the U.S. position as stronger than that of China's. They may also point out that China's suspension of its participation in the Middle East Arms Control effort ended it, and China weakened wording in the CTBT about on-site inspections.

No matter what options are pursued, many argue that they should be part of a forward-looking, consistent and coherent U.S. strategy for dealing with China's rising power and influence in world affairs. A strategic approach might underpin short-term responses to violations and use both positive and negative sources of leverage. Besides sanctions and MFN conditions, other unilateral, bilateral, and multilateral policy options may be considered. Options concern policies on trade and export controls, defense policy, nonproliferation and arms control, international lending, and engagement with China's legislature.

Trade and Export Controls

MFN Trade Treatment. In the 1990s, Congress has annually debated whether to link non-proliferation and other conditions to normal, or most-favored- nation (MFN), trade treatment for China. Because China has an increasing and significant trade surplus with the United States (second to Japan's) and the Chinese economy depends on the U.S. market, some believe that trade is a powerful policy instrument which could be effectively used to advance vital U.S. goals, such as nonproliferation.

President Clinton has separated MFN renewal from proliferation issues. The Clinton Administration has continued the decades-old policy of "engagement" with China. The Administration has argued that MFN treatment is too broad a policy tool and would affect a large number of American companies. A majority in Congress have also rejected legislation seeking to deny MFN status for China. Some have recently called for granting permanent MFN status to China.

Nonproliferation Sanctions. Policy debates concerning Chinese technology transfers have often centered on the question of whether to impose unilateral sanctions as required by various U.S. laws. While certain Chinese transfers may not violate any international treaties, U.S. sanctions may be required under U.S. laws. Congress has passed numerous laws to set U.S. nonproliferation policy and enforce nonproliferation treaties and guidelines (e.g., NPT, MTCR, Australia Group) with unilateral sanctions in response to violations. Underlying the question of whether sanctions should be used are disagreements about the most effective policy approach for curbing dangerous Chinese sales and promoting U.S. interests. While the Soviet threat dominated assessments of foreign and defense policy during the Cold War, the elimination of that threat fostered sharp debates about the primacy of security interests over business or other foreign policy interests.

Those who argue for the imposition of U.S. sanctions cite the legal obligation of the executive branch to implement and enforce U.S. laws passed by Congress. They also place a greater priority on nonproliferation as a national interest and view the strict enforcement of laws as vital to stemming proliferation. They refer to reports that China continues to transfer dangerous technology in defiance of the nonproliferation regimes and note the lack of Chinese participation in some significant international groups, such as the Nuclear Suppliers Group. This school of thought believes that Chinese transfers may pose a threat in the long-term and that a necessary military response to resulting threats against Americans or our allies would be terribly costly -- as in the 1991 Persian Gulf War. They also argue that the narrow interests of an individual firm or industry should not determine national security policy. Some who argue for a tough approach say that China has made commitments to nonproliferation after facing U.S. pressures and is more likely to restrain its proliferation activities if there are concrete and costly consequences tailored to penalize specific Chinese violators. Moreover, those urging a tough policy response assert that, not only are national security interests at stake, but U.S. credibility is diminished if the U.S. policy of opposing proliferation is not strictly carried out. They add that international nonproliferation regimes have proven to be inadequate, and until they are strengthened, U.S. laws are vital to enforcing compliance with the regimes. In this way, the United States has played the critical leadership role for a long time and should push to capitalize on decades of effort. Some are concerned that if U.S. commitment to peace and stability in Asia and the Middle East is perceived to have weakened, arms races would result when states seek to boost their defensive capabilities.

Those who argue against the imposition of unilateral sanctions, including placing conditions on MFN trade status, tend to focus on the harm to U.S. trade or business interests. Advocates for certain industries or companies lobby against policy actions deemed harmful to American businesses, especially when they benefit European or Japanese rivals. They argue that the United States needs to stay "commercially engaged" in China to influence Chinese policies, especially over the longer term. U.S. policy since the 1970s has been one of "engagement," to bring China into the world community with subsequent acceptance of the international "rules of conduct." Those arguing against the use of sanctions often say that sanctions are too broad or are not warranted, and refer to the progress China has made since 1992 in joining nonproliferation regimes. They also argue that this improvement needs to be sustained by a "strategic dialogue." They add that exchanges with China's military leaders are significant, because they have important influence over arms sales. In order to have a strategic dialogue, a normal military-to-military relationship must be cultivated. When sanctions were imposed, the dialogue tended to focus on lifting sanctions, rather than advancing China's progress in nonproliferation. This side of the debate argues that bilateral and multilateral options may be more effective and would not affect American businesses in an unequal way.

U.S. Import Controls. To avoid broad sanctions or steps that may affect U.S. companies, some have proposed controls on imports of products produced by the Chinese military or companies suspected of contributing to WMD proliferation. Import controls have been included as possible sanctions in response to missile proliferation (Section 73(a)(2)(C) of the Arms Export Control Act).

U.S. Export Controls. U.S. export controls are an important policy tool because U.S. technology provides one source of leverage over Beijing; at the same time, some in Congress are concerned about U.S. technology reaching hostile states with WMD programs through Chinese re-transfers. After the end of the Cold War, U.S. export restrictions have been reduced to focus on items that contribute significantly to the development and production of WMD.

Congress may strengthen controls over missile-related technology. A GAO report said in April 1995 that U.S. end-use controls on missile-related technology are only marginally effective, the effectiveness of sanctions is unknown, and that some missile export controls are weak. The report, "Export Controls: Some Controls Over Missile-Related Technology Exports to China are Weak," found that the U.S. government approved $530 million worth of missile-related exports to China between 1990 and 1993.

U.S. military sales to China have not been allowed since sanctions were imposed after the 1989 Tiananmen Crackdown, but there is increasing demand to export dual-use equipment and technology that could enhance China's military capabilities. China has turned to Russia as its primary source of foreign weaponry. European firms are also pushing to relax their countries' embargoes on arms sales to China. At an Asian Pacific Economic Cooperation (APEC) meeting on November 23, 1996, Secretary of State Christopher said that the United States is not ready to lift sanctions imposed after the crackdown but will review the issue.

Nuclear Technology Exports and Cooperation. American nuclear technology offers another source of leverage. China has ambitious plans to expand its nuclear power generation and needs Western technology. China is a potentially large market for reactors, equipment, and technology. U.S. companies, such as Westinghouse Electric Corporation and General Electric Corporation, are seeking approvals for export and Export-Import Bank financing.

Several policy issues are at stake. First, the Chinese customer for nuclear technology, China National Nuclear Corporation, has been involved with nuclear weapon proliferation in Pakistan and Iran. In May 1996, the Clinton Administration decided not to impose sanctions on the China National Nuclear Corporation for a sale of unsafeguarded ring magnets to Pakistan. There are concerns that any potential nuclear nonproliferation sanctions would hurt U.S. businesses involved with Chinese nuclear companies. Some are also concerned that China could re-transfer U.S. technology to rogue countries seeking nuclear technology. Others, however, say that U.S. nuclear cooperation is a positive incentive for the Chinese nuclear industry to stop sales that contribute to nuclear proliferation. Also, French, Canadian, and other companies are already selling nuclear technology to China, and U.S. businesses are at a disadvantage. Moreover, the U.S. government would have control over U.S. technology exports, but not over European or other transfers.

In any case, Congress passed P.L. 99-183 to require detailed presidential certifications before the 1985 U.S.-China Agreement for Nuclear Cooperation can be implemented. No license may be issued for exports of nuclear material, facilities, or components until the conditions of P.L. 99-183 are satisfied. Nuclear technology, however, is not mentioned. Among other stipulations, the President has to make certifications to Congress about arrangements to ensure the peaceful use of U.S. exports, Chinese nonproliferation policies, and that China is not in violation of paragraph 2 of section 129 of the Atomic Energy Act of 1954, P.L. 83-703, (on nuclear nonproliferation). The agreement would be implemented after 30 days of continuous session of Congress after the President submits the certifications. In addition, Section 902 of P.L. 101-246, the Foreign Relations Authorization Act for FYs 1990-91, imposed sanctions on China for the 1989 crackdown, including a ban on nuclear cooperation.

In the Fall of 1996, the Clinton Administration advanced discussions with China about bilateral nuclear cooperation. Such cooperation has been stalled for over a decade, because China has not met nonproliferation conditions imposed by Congress. Chinese nuclear transfers to Pakistan and Iran have been obstacles for making such presidential certifications. After her visit to Beijing, Lynn Davis, Undersecretary of State for Arms Control and International Security Affairs, said on November 5, 1996, that Washington and Beijing "have intensified" efforts towards the "early implementation" of the agreement on nuclear cooperation. In Beijing on November 20, 1996, Secretary of State Christopher said that China agreed to "formulate and adopt comprehensive, nationwide regulations on nuclear export controls." Secretary Christopher also indicated that certain "peaceful nuclear cooperation" might proceed before the implementation of the agreement. Such cooperation likely referred to U.S. exports that were approved prior to P.L. 99-183.

P.L. 104-201, the Defense Authorization Act for FY1997, prohibits the use of funds by the Department of Energy for any activity associated with the conduct of cooperative programs with China relating to nuclear weapons or nuclear weapons technology, including stockpile stewardship, safety, and use control.

Multilateral Export Controls: Wassenaar Arrangement. China might be urged to become a member of the Wassenaar Arrangement. After the end of the Cold War, the Coordinating Committee on Multilateral Export Controls (CoCom) was abolished in March 1994. It has been replaced by the Wassenaar Arrangement, which 31 countries agreed to implement on July 12, 1996. It includes NATO and former Soviet-bloc countries, refocusing export control from communist to proliferation threats.

Defense Policy

"Strategic Dialogue" and Summits. Progress in bilateral security discussions have been hampered by human rights and Taiwan issues. After the June 1989 Tiananmen crackdown, the Bush Administration suspended military exchanges and arms sales with China, among other sanctions. The Clinton Administration resumed high-level military exchanges and advocates a "strategic dialogue" with China to advance U.S. security goals, including nonproliferation. A series of high level exchanges has taken place, including Secretary of Defense Perry's visit to Beijing in October 1994. One result was China's first defense white paper in November 1995, entitled "China: Arms Control and Disarmament." Although the white paper was inadequate in addressing all foreign concerns, it was an important first step toward military transparency for China.

After his visit in Beijing in July 1996 to rebuild ties following the March 1996 military tensions in the Taiwan Strait, National Security Adviser Anthony Lake called his trip a part of the "strategic dialogue" and said that "the Chinese have a strategic interest in nonproliferation." In October 1996, Arms Control and Disarmament Agency Director John Holum went to Beijing on a long-awaited visit to continue the strategic dialogue. (In May 1995, China had canceled Holum's visit in response to the U.S. decision to grant a visa to Taiwan's president.) On October 9, 1996, Holum reported that China is increasingly a "constructive partner" in arms control.

In November 1996, Lynn Davis, Undersecretary of State for Arms Control and International Security Affairs, went to Beijing to discuss the "full range of security and nonproliferation policies." On November 5, 1996, Davis said that she is "encouraged" by the steps China has taken to establish effective export controls. She also stated that the Administration's goal is the "very early implementation" of the 1985 U.S.-China Agreement on Nuclear Cooperation. The "foundation" for moving ahead toward implementation is China's May 1996 statement that it will not provide assistance to unsafeguarded nuclear facilities. On the same day, Chinese media reported that Chinese Foreign Minister Qian Qichen met with Davis and raised China's objections to U.S. arms sales to Taiwan as violating the 1982 U.S.-China Joint Communique.

After President Clinton's meeting with Chinese President Jiang Zemin at the APEC conference in Manila, it was announced on November 24, 1996, that summits between the two will be held in 1997 and 1998. Some believe that holding summits to engage Chinese leaders would deepen their commitment to nonproliferation. In recent years, top Chinese leaders have rarely made statements on such commitments. One notable case was Premier Li Peng's announcement to visiting Japanese Prime Minister Toshiki Kaifu in August 1991 that China would reverse policy and become a party to the NPT.

In December 1996, the Chinese defense minister, General Chi Haotian, visited the United States. On the question of proliferation, Chi said that "I can tell you in a responsible manner that on this question the official position of the Chinese government has been made clear on many occasions. That is, China will do things that are conducive to peace and stability. . . The media have blown the issue out of proportion." Wen Wei Po, a Chinese-controlled newspaper in Hong Kong reported on December 23, 1996, that Chi Haotian argued that bilateral talks on global security and nonproliferation should include U.S. arms sales to Taiwan. No agreements on nonproliferation were announced during the visit.

Missile Defense. Missile defense is another possible response to the problem of missile proliferation. The Defense Department's "U.S. Security Strategy for the East Asia-Pacific Region" published in February 1995 called WMD a "major threat" to the security of the United States and its allies and friends. Regional theater missile defense systems were said to have a key role in the strategy to counter the threat. In an April 25, 1996 speech, Secretary of Defense Perry described ballistic missile defense as the "third line of defense" against the threat of missile proliferation. (The first line of defense, Perry said, is the range of arms control and nonproliferation treaties, export controls, and sanctions. The second is our military which deters the threat with conventional and nuclear forces.)

However, ballistic missile defense is an issue with China. Chinese officials have expressed concern that U.S. missile defense programs could create an arms race in space. If the United States deploys an advanced ballistic missile defense system in Asia, the effectiveness of China's missiles would be affected. Beijing is particularly concerned about Japan's and Taiwan's acquisition of missile defense systems.

Nonproliferation and Arms Control

Nonproliferation Regimes. Another policy approach is to strengthen the international nonproliferation regimes. There are two prongs in such efforts: increase their legal authority to enforce compliance and fill in the gaps in China's participation. For nuclear nonproliferation, for example, the U.N. Security Council has recognized the limits to the effectiveness of the NPT/IAEA safeguards system (as shown by Iraq's and North Korea's advanced nuclear weapons programs) and has tried to strengthen the IAEA's verification authority. In addition, the United States and others might encourage China to join the MTCR (as a member after it establishes a record of compliance and effective export controls), Zangger Committee (on nuclear trade), Nuclear Suppliers Group (NSG), Australia Group (on chemical and biological weapons), and Wassenaar Arrangement (military and dual-use export controls). One important gap in nonproliferation efforts has been China's lack of participation in the NSG, whose members require "full-scope safeguards" (i.e., IAEA inspections of all other declared nuclear materials and facilities in addition to the facility importing supplies.) Some say that engaging China in these groups would capitalize on China's desire to be treated as a "great power" and perceived as a responsible world leader. In addition, it is said that China would be more cooperative if it played a role in drawing the "rules."

Others argue that China's participation may derail arms control efforts (e.g., see below on Mideast arms control talks), weaken provisions (e.g., the CTBT), or link them to the Taiwan issue. Membership may also provide China exemption from certain sanctions and intelligence . Moreover, despite efforts to encourage greater Chinese participation, Beijing has not yet joined those groups. On September 5, 1996, the State Department transmitted to Congress the required "Annual Report on the Proliferation of Missiles and Essential Components of Nuclear, Biological, and Chemical Weapons" for 1995. The report mentioned that members of the Zangger Committee "have continued contacts with China -- the remaining major NPT nuclear supplier not a Committee member -- to discuss the work of the Zangger Committee and to encourage membership." The NSG also continued contacts with China and other countries. MTCR partners also "attempted to deepen the Regime's contacts with China. China, however, declined to receive a MTCR Quad Team visit."

Regional Security Talks. Chinese support may be sought for regional arms control groups, such as multilateral talks for South Asia. On October 3, 1996, Pakistani Prime Minister Bhutto proposed that the U.N. General Assembly convene a multilateral conference on security in South Asia. Then-President Bush's 1991 initiative for Arms Control in the Middle East (ACME), or Permanent Five, talks may be revived in some form. The ACME talks were to include bans on nuclear bomb materials and ballistic missiles in the Middle East. After Bush's decision, announced on September 2, 1992, to sell Taiwan 150 F-16 fighters, China suspended its participation in the talks. The ASEAN Regional Forum (ARF) has become an important venue for multilateral security discussions in Asia.

INF Treaty. Some, including Kenneth Adelman, the Director of the Arms Control and Disarmament Agency in the Reagan Administration, have proposed an expansion of the U.S.-Russian Intermediate Nuclear Forces (INF) Treaty into a worldwide ban on missiles with ranges between 500 and 5,000 km. Such an agreement would cover volatile regions like the Middle East and South Asia. Yet, Adelman acknowledged that there would be significant resistance from certain countries, including France and China, which would opt to keep such missiles. Indeed, there was reportedly consensus at a special MTCR meeting in the summer of 1995 against a global INF treaty.

Fissile Materials Production. The United States has sought Chinese cooperation on negotiating a global ban on the production of fissile materials for nuclear weapons and other nuclear explosive devices. On October 4, 1994, Beijing and Washington made a joint statement on an agreement to "work together to promote the earliest possible achievement of a multilateral, non-discriminatory, and effective verifiable convention" banning fissile materials production.

International Lending and Japanese Aid

Congress might restrict U.S. support for multilateral development bank (MDB) loans to China. For example, the Iran-Iraq Arms Nonproliferation Act requires U.S. opposition to MDB loans for sanctioned countries (Section 1605(b)(2)).

Since sanctions were imposed after the violent suppression at Tiananmen Square, the United States has supported only those MDB loans designed for basic human needs in China. U.S. influence is limited, however, and the World Bank and the Asian Development Bank have resumed and increased substantial lending to China. Congress may seek to deny U.S. support for funds from international financial institutions to countries that have not signed international agreements on nonproliferation of nuclear, chemical, and biological weapons, and missiles.

Coordination with Japan is important, since Japan provides the most significant bilateral aid to China and has used this aid to pressure China to stop nuclear testing. In May 1995, Tokyo suspended the small, grant portion of its aid program in China to protest Chinese nuclear testing. While China was the only country to conduct nuclear tests, Tokyo also postponed talks on untied yen loans. After Beijing's announcement on July 29, 1996 of a moratorium on nuclear testing, Tokyo considered plans to restore the suspended grant aid (reportedly worth about $63 million) and began negotiations on the fourth yen loan package to China for 1996-1998 (worth about $5.3 billion).

Congressional Engagement of China's Legislature

While various departments, including State, Defense, and Commerce, have engaged the Chinese government in encouraging further cooperation in nonproliferation, Congress may seek to engage its counterpart, the National People's Congress (NPC). Implementation of nonproliferation policies in China requires effective export controls, which would need some legal basis. The NPC plays an increasingly independent role in drafting and passing China's laws. Since the fledgling NPC in the Chinese system is currently not as influential as the U.S. Congress, such engagement would be a long-term effort.


U.S. Congress. Senate. Committee on Governmental Affairs. Nuclear Proliferation Factbook. S. Prt. 103-111. 103rd Congress. 2nd Session. by the Congressional Research Service, December 1994.


China: U.S. Economic Sanctions. CRS Report 96-272F, by Dianne E. Rennack. July 1, 1996.

China-U.S. Relations. Issue Brief 94002, by Kerry Dumbaugh. Updated regularly.

China's Rising Power: Alternative U.S. National Security Strategies -- Findings of a Seminar. CRS Report 96-518F, by Robert G. Sutter, with Peter Mitchener. June 6, 1996.

Chinese Proliferation of Weapons of Mass Destruction: Background and Analysis. CRS Report 96- 767F, by Shirley A. Kan. September 13, 1996.

Multilateral Development Bank Lending to China. CRS Report 96-369F, by Jonathan E. Sanford. July 8, 1996.

Proliferation Control Regimes: Background and Status. CRS Report 95-547F, coordinated by Theodor W. Galdi. April 27, 1995.

Space Launch Vehicles: Government Requirements and Commercial Competition. Issue Brief 93062, by David P. Radzanowski and Marcia S. Smith. Updated Regularly.

Theater Missile Defenses: Possible Chinese Reactions; U.S. Implications and Options. CRS Report 94- 154S, by Robert G. Sutter. February 23, 1994.

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