A SELLOUT TO CHINA -- (BY MICHAEL LEDEEN) (Extension of Remarks - March 20, 1996)

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in the House of Representatives


Mrs. FOWLER. Mr. Speaker, China's recent saber-rattling in the Taiwan Strait has raised eyebrows and anxiety levels all over the world and generated news coverage about China's defense buildup and weapons and technology sales to other nations. These are issues of extraordinary importance, and I am glad to see that they are finally getting some attention.

One area, however, which has been virtually ignored is the fact that United States Government officials have actually aided the People's Republic of China in these activities by loosening export controls and only selectively enforcing laws which are meant to prevent critical technology from falling into the wrong hands. Some of the effects of this short-sighted and dangerous trend were described last week in an article in the Wall Street Journal written by Michael Ledeen, a senior scholar at the American Enterprise Institute and an expert on foreign policy.

The article addresses some of the implications of our Nation's transfer of technology to China, including the fact that the transfers are undermining stability in the region and jeopardizing our national security. I include a copy of the article to be included in the Congressional Record following my remarks.



Those of us who believe that free trade and free markets are morally, politically and economically superior to state planning must nonetheless recognize that the government should take measures to prevent the sale of particularly dangerous technology to actual and potential enemies. Our victory in the Cold War was due in no small measure to the Reagan administration's successful program to deny the Soviet Union advanced military technology.

Yet that lesson has been forgotten in the scramble for business in the last major Communist dictatorship, the People's Republic of China. As a recent fiasco proves, the Clinton administration has encouraged American corporations to facilitate the rapid growth of Chinese military power, which is now being used to intimidate our democratic friends and allies in Taiwan and elsewhere in Asia, and may someday be directed against us.

The story involves a struggling aircraft company, McDonnell Douglas. Led to believe they could cash in on a Chinese proposal to purchase large numbers of civilian aircraft, McDonnell executives, in violation of export-control legislation, permitted the Chinese to visit a plant in Columbus, Ohio, where parts for the B-1 bomber and the C-17 strategic transport plane were manufactured. The Chinese took extensive notes, photographs and even videotapes of the machinery, involving advanced `five axis' tools used to manufacture components not only for aircraft but also for cruise missiles and nuclear warheads. Workers at the plant, already enraged by McDonnell's decision to phase out the facility, protested against the Chinese inspection tours. To avoid the workers's wrath, the McDonnell executives smuggled the Chinese in at night or on weekends. The Chinese were so keen to get their hands on the technology that they linked future cooperation with McDonnell to their ability to buy the machinery.

Even though other American companies were interested in buying the equipment. McDonnell, lured by Chinese promises to buy dozens of jointly produced MD-90 passenger planes, insisted on selling it to China at bargain basement prices (about 10 cents on the dollar). The Commerce Department approved an export license in September 1994. According to government officials, the contents of the factory filled 280 semi-trailers, which were driven to the West Coast, whence the stuff was shipped to China.

On its face the sales seemed to violate international agreements among the `Nuclear Suppliers Group.' which forbid selling five-axis machinery to any country known to be a nuclear `proliferator' (China is dubbed a `proliferation concern' by the U.S. itself). To justify this extraordinary action, the licenses stipulated that the five-axis machines would be sent exclusively to a new Chinese facility in Beijing, where they could be monitored, but U.S. officials failed to conduct any preshipment inspection of the new factory. If they had, they would have discovered that it did not exist. The Chinese had created a Potemkin factory in order to acquire the technology, which was destined for military facilities. The intelligence community expected this to happen, and it did; Six of the machines were illegally diverted to Nanchang, a major center for Chinese missile programs.

By last spring, McDonnell executives realized they'd been had. The machines had gone to a military facility, the Beijing factory was a hoax, and the Chinese had already canceled the bulk of their promised order. McDonnell informed the Commerce Department of the Chinese diversion, and asked that the license be suspended, Commerce did that, and began an investigation, but before its completion, the Chinese came up with another scheme: Why not send the machines to a factory in Shanghai that was already part of the joint venture with McDonnell? McDonnell filed a request to amend the export license, and in late January a Commerce official told the Far Eastern Economic Review's Nigel Holloway that the amended license had been approved. It is hard to imagine a more classic act of appeasement: A sale that never should have been approved in the first place turns out to have been an illegal diversion, but instead of punishing the criminals involved, the Clinton administration simply covers it up by rewriting the documents.

As if this were not enough, it turns out that McDonnell is hotly pursuing another project with the Chinese, which would expand its MD-90 airplane facility at Shenyang to manufacture parts for a smaller version, the MD-95. Some officials in the Defense Department were concerned that advanced machine tools at Shenyang were grossly underutilized, and they believe they have now found an explanation. On Feb. 5, a joint Chinese-Russian project was announced for the construction of Su-27 fighters--some of the most advanced in the world--at Shenyang. No clearer proof could be imagined of the military value of the McDonnell hardware. One would hope that our president would come down hard on a company that was contributing so mightily to Chinese military power. Instead, at a campaign-style appearance at a McDonnell plant in Long Beach, Calif., on Feb. 23, Bill Clinton announced that the government was buying another batch of McDonnell military transports.

The McDonnell case is just one example among many of the Clinton administration's determination to give China most everything it wants, national security be damned. As early as October 1993, Secretary of Defense William Perry announced in Beijing that he'd told the Chinese they could cut back on their nuclear testing by using advanced computers to simulate the explosions, adding that the U.S. was prepared to share this know-how. Within two months, Mr. Clinton announced a massive decontrol on exports of the necessary supercomputers.

While it is true that the computer simulations might reduce the need for some nuclear testing, they also permit the Chinese to conduct their nuclear program with greater secrecy, thereby making it far more difficult for the West to find out what China is up to in this delicate area. But Clinton & Co. don't seem terribly worried by anything the Chinese might care to do. The Washington Times revealed on Feb. 5 that the intelligence community had discovered that China is shipping the Pakistanis components for their nuclear weapons program. This leak, nicely timed to coincide with the Washington visit of China's foreign minister, shamed the administration into promising it would raise the issue with him.

Another leak--this time that the Chinese are providing Iran with the technology for advanced chemical weapons factories--appeared just in time for the arrival in Washington of their national security adviser. But why should the Chinese worry? This is the crowd that decontrolled the supercomputers, and pointedly refused to take punitive action when advanced technology was illegally diverted to military projects. The administration even refused to invoke sanctions when Adm. Scott Redd, commander of U.S. naval forces in the Persian Gulf, warned that missiles supplied by China to Iran threaten our ships.

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The Clinton administration's threats to `get tough' with China are only words, and the words are belied by its actions. Just before the release of the State Department's criticism of Chinese human rights practices last week, the White House announced the lifting of yet another sanction on China: American companies like Loral, Hughes and Lockheed Martin can now use Chinese rockets to put their satellites into orbit. It doesn't take a Confucian scholar to understand the meaning of Mr. Clinton's behavior: The words assuage his domestic critics, but the actions strengthen and delight the Chinese.

Mr. Clinton's policy is based on the theory that we can best influence the behavior of China by enmeshing that country in a vast network of trade. For those old enough to remember, this theory was tested in the mid-1970s on the U.S.S.R., when Richard Nixon and Henry Kissinger called it `detente.' It did not change Soviet behavior; instead it made the Soviets technologically and militarily more powerful. It will certainly do the same for the Chinese.

Let us hope that neither our Pacific friends and allies nor our own children will have to face terrible weapons of destruction, designed and manufactured by American computers and machines, foolishly and irresponsibly provided by Bill Clinton, Ron Brown, William Perry and their willing accomplices in government and business.