U.S. to Sanction Chinese Firm

The Bush administration has decided to impose economic sanctions on a major Chinese arms producer it says sold missile parts and technology to Pakistan, U.S. officials said Friday.

Such trade is a violation of a U.S.-China accord that calls for Beijing to halt all missile exports, which for two decades has been one of the most troublesome issues between the two countries.

The decision came just seven weeks before President Bush is scheduled to make his first official visit to China.

The administration feels compelled to act because, according to a senior U.S. official, “substantial amounts” of missile parts, technology and know-how have been sold to Pakistan since the pact was signed in November.

The sanctions mean that U.S. companies will not be issued licenses to launch satellites on Chinese rockets, as had been arranged under the agreement. And it will become illegal to provide U.S. technology to China’s growing satellite industry.

Both moves will be a major blow to China’s commercial industry and, to a much lesser extent, its technological capabilities, according to U.S. officials.

The arms producer, China Metallurgical Equipment Corp., is technically a private firm but is a virtual front for the Beijing government and does nothing without its approval, U.S. officials say.

The decision on sanctions will be formalized by John R. Bolton, undersecretary of State for arms control and international security affairs, as early as today. It follows months of intensive but failed U.S. diplomacy with the Chinese government. During a visit to Beijing in July, Secretary of State Colin L. Powell warned China that it would face a new round of sanctions if sales continued.

Beijing has persistently denied that the weaponry sales are occurring.

In an anxious bid to avoid another confrontation just five months after a showdown over the emergency landing of a U.S. spy plane in China, U.S. officials met twice this week with Chinese diplomats, in Washington and Beijing, to warn them that punitive action was imminent if their government did not act. The State Department gave China a couple of days to come back with an explanation for recent sales but did not receive a response.

“They think they can get away with it. And they don’t know how, once caught, to get out of it gracefully,” the senior administration official said.

U.S. officials willing to discuss the sanctions requested anonymity, a common practice on sensitive subjects.

Although Powell had hoped to be able to cut back on the number of sanctions imposed by the U.S., the administration felt that it had no alternative in light of the gravity of the alleged violations--and the potential dangers down the road in volatile South Asia, where rivals Pakistan and India are engaged in a race to acquire weapons of mass destruction.

They are the first new sanctions imposed by the Bush administration.

“We want to have a constructive relationship with China. But we also have to impress on the Chinese that they have to do what’s right. So we decided now is the time to go forward,” a senior State Department official said Friday. “Sanctions are a measure of how important an issue this is to us.”

U.S. officials concede that the sanctions also will be a blow to America’s satellite industry because China provided the cheapest and most available launch services.

“It’d be a setback for the Chinese because most commercial satellites are made in the U.S. and are less expensive and more capable than those made in other countries. Given a choice, satellite operations prefer American satellites,” said John E. Pike, director of GlobalSecurity.org, a nonprofit U.S. organization specializing in space, defense and intelligence. “But it might turn out to be just as serious a setback to America’s communications satellite industry. The U.S. satellite industry could find itself losing an edge to the competition--for instance, more French satellites going up on Chinese rockets.”

Missile technology is divided into categories. Category 1 is whole missiles. According to U.S. officials, China has been exporting Category 2 technology to Pakistan, its largest customer. Category 2 includes a wide range of equipment, such as propulsion components and flight-control systems. Pakistan is developing missiles capable of carrying nuclear warheads.

“China is helping Pakistan quite a bit, which is the problem,” the senior administration official said. “The November 2000 arrangement was intended to be a major transition point between past behavior and future cooperation. But instead, China has engaged in repeated violations.”

Although U.S. law mandates action, the issue has been intensely debated within the administration. East Asia specialists argued that the move would make Bush’s trip to China next month more difficult, while arms proliferation experts warned of the dangers of not halting the flow of weapons of mass destruction to Pakistan, according to U.S. officials. Not enforcing the November pact also would leave the U.S. vulnerable to challenges on other agreements.

The administration hopes that imposing sanctions will force Beijing to begin complying by mid-October.

“We have given them a road map to get this back on track by the time of the president’s visit,” the senior administration official added. “There’s time for redemption. But China will have to do what it promised and promulgate regulations, get its company under control and generally get serious about the issue.”

For years, China has argued that its arms sales to Pakistan--which shares Beijing’s concerns about their heavily armed neighbor, India--are no different from U.S. arms sales to Taiwan. Washington rejects that position.

Pakistan’s importance to Beijing was reflected during the May visit of Chinese Premier Zhu Rongji. At the time, he publicly denied ongoing exports to Pakistan. But the U.S. officials said other branches of the Chinese government feel that security issues outweigh the risks of irritating the United States.