Chinese Firm Protests Order to Sell Aircraft Parts Operation

A Chinese company that was ordered by President Bush to sell a Seattle aircraft parts company protested the decision Monday, saying it would jeopardize Sino-U.S. relationships in the aviation industry.

The state-owned China National Aero-Technology Import and Export Corp. (or CATIC) said the divestiture order “will undoubtedly cause negative impact on future cooperation between the aviation industries of the two countries.”

Citing national security considerations, Bush ordered CATIC on Feb. 2 to sell Mamco Manufacturing Co. He acted on the recommendation of an interagency panel, which found that the Seattle company was involved in sensitive materials that could have military applications.

Bush said his action was based on one particular transaction and that his Administration continues to welcome direct investment from China and other countries.

However, the move was seen as an effort by Bush to mute criticism from Congress that he has been too quick to restore ties with the Beijing government following its harsh suppression of the pro-democracy movement last spring.

It was the first time Bush invoked a provision of a 1988 trade law giving the President power to restrict foreign investment if U.S. security is at risk.

CATIC, in a statement issued by the official Xinhua News Agency, said its 1988 purchase of Mamco was “solely a commercial activity in the area of civilian aircraft manufacture” and complied with federal and local laws in the United States.

It said Mamco makes ordinary precision machinery for general manufacturing purposes and the acquisition “does not involve any high technology leakage, nor does it impair or threaten the national security of the United States.”

CATIC was given three months to sell all its holdings in the company, but may be granted a three-month extension.