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Chinese Firms Sanctioned Charles R. Smith The Bush administration has announced new sanctions against several Chinese army owned companies. The sanctions, announced by the State Department, were imposed because of advanced arms technology transfers by China to Iran and Syria. The new sanctions against over two dozen firms from various nations include China National Electronic Import-Export Company (CEIEC), China National Aero-Technology Import and Export Company (CATIC), and Zibo Chemet Equipment Company. All three Chinese companies have been cited before for missile, chemical, biological, and nuclear weapons sales to Iran, Iraq, the Taliban-run Afghanistan, and Syria. The new sanctions prohibiting trade and licenses with these firms are to remain in place for the next two years. The reaction to the new sanctions was swift inside Washington but muted from Chinese sources. "Among the two dozen international companies that the U.S. State Department chose to officially penalize for the shipment of WMD-related materials were major Chinese military-industrial firms CATIC and CEIEC. These companies, which have been actively engaged in trade with the U.S., had been repeatedly found to engage in activities that jeopardize international security and to arm despotic anti-Western regimes," noted Al Santoli, president and founder of the Asia America Initiative, a Washington-based non-profit organization promoting democracy and security in the Asia-Pacific region. "The failure in the past to ignore these companies' activities appears to be an offshoot of U.S.-China business relations. It also reflects a habitual reluctance by U.S. officials to accept that Beijing considers the U.S. a rival to be defeated and not a partner in security building across the Asia Pacific region," stated Santoli. The Chinese embassy in Washington did not return repeated calls for comments on the new sanctions. Yet, Santoli's remarks reflect the long and checkered history of these firms.
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Taliban Air Defense For example, the first target in Taliban-controlled Afghanistan for U.S. airpower was the air defense system. B-2 bombers and F-14 Tomcats dropped precision guided weapons on surface-to-air missile sites, radars, and a Chinese made fiber optic military communications network. Although China officially denied that it installed the fiber optic air defense network inside Afghanistan, the Pentagon is certain that China sold the military system to the Taliban. Chinese Foreign Ministry spokesman Zhu Bangzao said in Beijing that China did not assist the Taliban in building a fiber optic communications network. Zhu's comments directly contradict overwhelming evidence that China provided the Taliban military an advanced air defense network. The U.S. evidence comes directly from the Taliban. In September 2000, a Chinese military delegation arrived in Kabul.
According to Kabul Radio Voice of Shari'ah in Pashto, the Taliban minister of communications, Mowlawi Yar Mohammad Rahimi, received a technical and electronics delegation from China. The September 2000 meeting was also attended by then Taliban deputy minister of communications, Aladad Tabeb. Tabeb engaged in a "detailed discussion of the preparatory work to implement a project to install a 12,000-line telephone exchange and to lay a fiber optic cable." The Chinese delegation included authorized representatives of China's export trade and electronics industry and a number of engineers who briefed the Taliban minister of communications. The Chinese officials promised they would immediately begin work the fiber optic cable system and prepare sites for the installation of newly purchased units. In December 2000, the Kabul Bakhtar News Agency announced that Chinese equipment for a fiber optic communications system had arrived under a contract with the Chinese company CEIEC. According to the official Taliban news outlet, "the Ministry of Communications signed a contract with the CEIEC to buy digital equipment for a telephone station, which can operate 12,000 lines. "The equipment arrived in Kabul today. Afghan and Chinese engineers have begun to assemble and install it." The official voice of Afghanistan also announced that the Taliban Ministry of Communications had signed a contract with the same Chinese company to deliver additional equipment for another digital telephone station capable of serving 5,400 lines to the eastern Nangarhar Province. "A fiber optic based 'phone' system can do a lot more than carry commercial traffic," noted one U.S. defense analyst who requested that he not be identified. The military command network in Afghanistan was described by Pentagon analysts as similar to the fiber optic air defense system installed in Iraq by China. Allied aircraft starting in 1998 attacked the Iraqi fiber optic network, NATO code named "Tiger Song." The system was never fully destroyed even after the destruction of Saddam's armed forces. The fiber optic network in Afghanistan had more than just a common thread with the Iraqi air defense system. The Chinese company CEIEC that built and installed the new system for the Taliban is also a known arms manufacturer owned and operated by the People's Liberation Army. According to an official Defense Intelligence Agency (DIA) document, CEIEC is the prime maker of electronics for the Chinese Army. The DIA documents state that virtually all CEIEC products are military in nature, including "cryptographic systems," "mine detection equipment," "fiber and laser optics," "communications technology," and "radars." State Owned CATIC CATIC is also well known to be a Chinese state-owned corporation, controlled by generals of the People's Liberation Army. In 1994, CATIC purchased a giant, five-axis stretch press from the U.S. for "civilian" aircraft manufacture. The Clinton administration approved the sale of the press to CATIC through the Commerce Department then under Ron Brown. The approval came just before Mr. Brown left on his whirlwind tour of China in August 1994. In Nov. 2001, the Bush administration imposed one of the largest civil penalties ever in an export-control case over the 5-axis machine sent to China. The Commerce Department fined McDonnell Douglas Corp. $2.1 million for selling CATIC equipment that wound up inside a military jet fighter manufacturing plant. U.S. spy satellite photos confirmed the machines sold to CATIC for "civilian" use were diverted to the Nanchang facility for making jet fighters and missiles. Federal investigators charged the Chinese company never had any intention of purchasing the equipment for civilian use because the facility constructed to house the giant machine was put inside the Nanchang military aircraft plant. CATIC has also been involved in smuggling missile parts on civilian airliners. According to the 1999 Cox report on the China scandal, "The PRC has used at least one commercial air carrier to assist in its technology transfer efforts. "In 1996, Hong Kong Customs officials intercepted air-to-air missile parts being shipped by CATIC aboard a commercial air carrier, Dragonair. Dragonair is owned by China International Trade and Investment Company (CITIC), the most powerful and visible PRC-controlled conglomerate, and the Civil Aviation Administration of China." Dragonair was fined for carrying the Chinese missile in the cargo bay of a L-1011 airliner full of paying passengers. According to Aviation Week & Space Technology (AW&ST), the missile was bound for Israel, enclosed in a mislabeled box, partially dismantled, and only found by accident. Both the volatile solid fuel rocket motor and the deadly explosive warhead were intact and fully operational. What the Cox report left out was that in 1996, the Chinese government then owned only 36 percent of Dragonair. The remaining 64 percent lion-share of the Hong Kong based carrier was then owned by a major Clinton fund-raising scandal figure — Indonesian billionaire Moctar Riady. The final Chinese army firm cited on the new sanctions list, the Zibo Chemical Equipment Plant, is the largest manufacturers of chemical process equipment in China and the top supplier of glass-lined equipment and other corrosion-resistant chemical equipment. Such equipment is required for the development and manufacture of nerve gas and other chemical weapons, which are highly corrosive. Zibo's primary products also include spray-dryers. Spray-dryers are critical for the manufacture of biological weapons such as anthrax and smallpox. Zibo has been sanctioned before by the Bush administration for selling advanced military technology to Iran. Iran is known to have a large arsenal of chemical weapons. However, a chilling statement by Zibo makes it clear that the Chinese army does not intend to be in 2nd place during the 21st century. "Contend for hegemony of the state," notes the Web-based slogan of the Zibo Chemical Company. "Strive for supremacy over the world."
Editor's note:
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