Panel Says Rocket Deals With China Hurt U.S. Security


A special House investigative committee has found evidence that American firms have transferred significant amounts of militarily useful technology to China over the last several years--some of which have damaged U.S. national security, the panel said Wednesday.

Rep. Christopher Cox (R-Newport Beach), the panel’s chairman, said the six-month investigation determined that alleged breaches of U.S. export guidelines by Hughes Space & Communications of Los Angeles and Loral Space & Communications in 1995 had, in fact, harmed national security.

But he said the leakage “goes beyond” the incidents involving those firms to even wider transfers of technology by American companies, involving not only civilian satellite launchings but also missiles and other militarily important know-how.

Cox said that the panel also has amassed evidence that China carried on a “serious and sustained” effort to acquire militarily useful U.S. technology for at least two decades. That campaign, he asserted, “continues to the present day.”


Neither Cox nor others on the nine-member Select Committee on the Peoples Republic of China Technology Transfers would provide any specifics on their findings or recommendations for fear that they might inadvertently disclose classified information. The committee will publish an unclassified version of its report within a few weeks.

But the panel said it had made 38 separate recommendations--presumably for tightening existing restrictions on technology transfer to China--to be carried out either by executive order or through legislation to be proposed in the 106th Congress.

Although details were not available, analysts speculated that the changes could have a tangible effect on efforts by U.S. firms to do business in China. In addition, the committee’s recommendations are considered likely to anger the Chinese government, exacerbating already frayed relations.

U.S. industry is expected to mount a heavy lobbying campaign to limit any tightening of restrictions. High-technology firms have been major contributors both to presidential and congressional campaigns.

Both Cox and Rep. Norman D. Dicks (D-Wash.), the ranking Democrat on the panel, stressed the bipartisan support within the committee for the findings. Dicks called the 700-page report, which was approved unanimously, “a solid, bipartisan product.”

He said that the White House had been kept informed of the panel’s investigation and that the administration had pledged to “carefully consider implementing” the recommendations, some of which can be done by presidential order.

Campaign Funding Questions Avoided

In the climate in Washington, winning bipartisan agreement “isn’t easy to do,” Dicks told reporters at a news conference with Cox and other panel members. The committee is five Republicans and four Democrats.


The two men brushed aside questions about whether the panel had found that campaign contributions from Chinese nationals or U.S. satellite makers to Democratic campaign committees had influenced the administration’s handling of the technology transfer issue.

Cox said these matters and others, such as how much the technology transfers aided China in upgrading its missiles and other military equipment, would be addressed when the report is made public.

The issue of technology transfer to China, and the role of government policy in assisting or limiting it, has created increasing concern over the last few years--particularly since the Tiananmen Square crackdown in 1989, in which Chinese government troops shot at protesting dissidents.

The United States liberalized exports of sensitive technology to China in the late 1980s following the end of the Cold War, on grounds that much of American high-technology already was available on global markets.


Both Republicans and Democrats supported the change.

The push by American manufacturers to go to China to launch their communications satellites came after the U.S. government cut back its launching capacity in the wake of the Challenger shuttle accident of 1986. China offered them powerful rockets at a relatively low cost.

Both Hughes and Loral have been involved in such launches for years, and in 1995 apparently offered some technical assistance to Beijing after incidents in which Chinese rockets failed, resulting in the loss of the U.S.-made satellites.

Although both companies have said they have done no wrong, critics say that the U.S. manufacturers might have inadvertently helped bolster Chinese military capabilities by helping the Chinese make their rockets more reliable.


The incidents in 1995 involved a post-crash review that the firms conducted for an insurance company. Critics say a copy of the resulting report supposedly was sent to the Chinese government without first having been cleared by the State Department.

The Cox committee was established in June in part to investigate those incidents, and given until Sunday to complete its inquiry. Cox said the panel will file the classified version of its report with the House speaker and the White House on Saturday.

Cox told reporters that a thorough probe of the affair by his panel’s investigators showed that “national security harm did occur,” but he declined to provide any details until the panel has prepared a declassified version of its report.

Loral officials issued a statement saying they “remain convinced that we did not violate the law and did nothing to harm national security.” They said any material sent to China “was from open sources, readily available in standard engineering textbooks.”


Hughes Denies Any Wrongdoing

A spokesman for Hughes said the company had not seen the committee’s report but noted that the firm’s internal investigation concluded it was following applicable government regulations. Hughes found “nothing that would indicate any breach of national security,” he said.

Cox’s contention that the actions by Hughes and Loral in 1995 harmed U.S. national security marked the second time in recent weeks that such an assessment has been made or hinted at by a congressional or government investigation.

A preliminary assessment by the Defense Department earlier this month concluded that Hughes provided China with information that is potentially damaging to U.S. national security and “went well beyond what should have been allowed” by government regulatory agencies.


The Justice Department is investigating the allegations, but officials said the agency has not yet reached any conclusions. The Senate Intelligence Committee also has conducted its own hearings on the allegations.

However, Dicks told reporters that the incidents involving Hughes and Loral were “not the only problem that we have uncovered. . . . These are serious problems that must be addressed by the administration and Congress.”

One of the major changes in U.S. policy after the end of the Cold War was to shift the lion’s share of the control over export licenses to the Commerce Department and to downgrade the role of the State Department in making such decisions.

Although members provided no details, some outsiders have suggested that the panel may recommend moving jurisdiction over export licenses for some sensitive technology back to State, or giving State more power to block such sales on national security grounds.


Cox said the decisions on how much of the committee’s report could be declassified would be made jointly by the administration--presumably the CIA and the Pentagon--and the House Intelligence Committee.