Hughes’ Request to Sell Satellite to China Denied

The Clinton administration has decided to reject a request by Hughes Electronics Corp. to sell a communications satellite to China, saying that the transaction poses a threat to national security because the technology could be used by the Chinese military, an official said Monday.

In the first such negative licensing decision since controversy has engulfed the issue of technology transfers to China in recent months, U.S. officials indicated that they will turn down the request of Los Angeles-based Hughes for a license to sell the high-end HS-GEM communications satellite to Asia Pacific Mobile Telecommunications, a Chinese consortium.

In interagency consultations, officials of the State Department, Pentagon and the Arms Control and Disarmament Agency opposed the sale, while the Commerce Department alone favored it.

Hughes officials had told the State Department that the potential financial loss to the company and the impact on its work force would be substantial if the license application were rejected.

For years, the administration has promoted sales of commercial satellites to China and other nations. But in recent months, it has faced criticism that the sales would aid the Chinese military and improve Chinese missile-launching capability.

The $450-million Hughes satellite is intended to help expand badly needed civilian communications capacity in China and 20 other East Asian countries. But the craft’s sophisticated 40-foot-long antenna would make it useful for military purposes.

For example, the satellite could facilitate communications between military units on the ground. It also could be used for electronic eavesdropping, according to Henry Sokolski, a former Bush administration defense official who is now with the Nonproliferation Policy Education Center here.

Hughes Electronics, the world’s No. 1 commercial satellite maker and a unit of General Motors Corp., applied last May for licenses for the sale. The company already has invested $100 million in the project.

Trade advocates in the government and industry said that if U.S satellites begin to be shut out of China, European competitors will step in to scoop up a growing market.

“If this decision goes south, quite clearly, the champagne corks will be popping in France and Germany,” Joel Johnson, vice president for international affairs for the Aerospace Industries Assn., told Bloomberg News Service on Monday.

But others contended that there has been only minimal interest by European competitors to date.

Both politics and national security concerns played a role in the decision, one official said. While military and intelligence agencies are concerned about the value of the satellite to the People’s Liberation Army, the administration also is “not eager to be bashed” by Republicans crusading on the technology transfer issue, one official said.

Republicans in Congress have challenged the administration’s decisions to license the launches of 13 U.S.-made satellites in China since 1990. They have charged that the Chinese have gained valuable technological secrets about rocketry and satellites through their access to these products.

Early next month, the Senate Intelligence Committee is expected to release a report that focuses on the loss of important technologies to China through such sales.

Last year, a House committee headed by Rep. Christopher Cox (R-Newport Beach) concluded that China has been pursuing U.S. military information aggressively for more than 20 years. The panel’s investigation, which began with an inquiry into the administration’s satellite export dealings with China, found that U.S. national security was harmed by Chinese acquisitions of American military technology over the last two decades.

The panel launched its inquiry after allegations that U.S. satellite firms had shared information that enabled the Chinese to improve their ballistic missile technology.