Important Note: This declassified report summarizes many important
findings and judgments contained in the Select Committee's classified
Report, issued January 3, 1999. U.S. intelligence and law enforcement
agencies within the Clinton administration have determined that
other significant findings and judgments contained in the Select
Committee's classified Report cannot be publicly disclosed without
affecting national security or ongoing criminal investigations.
A. The People's Republic of China (PRC) has stolen design
information on the United States' most advanced thermonuclear
The People's Republic of China (PRC) has stolen classified
design information on the United States' most advanced thermonuclear
weapons. These thefts of nuclear secrets from our national weapons
laboratories enabled the PRC to design, develop, and successfully
test modern strategic nuclear weapons sooner than would otherwise
have been possible. The stolen U.S. nuclear secrets give the
PRC design information on thermonuclear weapons on a par with
The PRC thefts from our National Laboratories began at least
as early as the late 1970s. Significant secrets are known to
have been stolen, from the laboratories or elsewhere, as recently
as the mid-1990s. Such thefts almost certainly continue to the
· The stolen information includes classified information
on seven U.S. thermonuclear warheads, including every currently
deployed thermonuclear warhead in the U.S. ballistic missile
· The stolen information also includes classified
design information for an enhanced radiation weapon (commonly
known as the "neutron bomb"), which neither the United
States, nor any other nation, has yet deployed.
· The PRC has obtained classified information on
the following U.S. thermonuclear warheads, as well as a number
of associated reentry vehicles (the hardened shell that protects
the thermonuclear warhead during reentry).
In addition, in the mid-1990s the PRC stole from a U.S. national
weapons laboratory classified thermonuclear weapons information
that cannot be identified in this unclassified Report. Because
this recent espionage case is currently under investigation and
involves sensitive intelligence sources and methods, the Clinton
administration has determined that further information cannot
be made public without affecting national security or ongoing
The W-88, a miniaturized, tapered warhead, is the most sophisticated
nuclear weapon the United States has ever built. In the U.S.
arsenal, it is mated to the D-5 submarine-launched ballistic
missile carried aboard the Trident nuclear submarine. The United
States learned about the theft of the W-88 Trident D-5 warhead
information, as well as about the theft of information regarding
several other nuclear weapons, in 1995.
The PRC has stolen
U.S. design information and other classified information for
neutron bomb warheads. The PRC stole classified U.S. information
about the neutron bomb from a U.S. national weapons laboratory.
The U.S. learned of the theft of this classified information
on the neutron bomb in 1996.
In the late 1970s, the PRC stole design information on the
U.S. W-70 warhead from the Lawrence Livermore Laboratory. The
U.S. government first learned of this theft several months after
it took place. The W-70 warhead contains elements that may be
used either as a strategic thermonuclear weapon, or as an enhanced
radiation weapon ("neutron bomb"). The PRC tested the
neutron bomb in 1988.
The Select Committee is aware of other PRC thefts of U.S.
thermonuclear weapons-related secrets. The Clinton administration
has determined that further information about PRC thefts of U.S.
thermonuclear weapons-related secrets cannot be publicly disclosed
without affecting national security.
The PRC acquired this and other classified U.S. nuclear weapons
information as the result of a 20-year intelligence collection
program to develop modern thermonuclear weapons, continuing to
this very day, that includes espionage, review of unclassified
publications, and extensive interactions with scientists from
the Department of Energy's national weapons laboratories.
The Select Committee has found that the primary focus of this
long-term, ongoing PRC intelligence collection effort has been
on the following national weapons laboratories:
· Los Alamos
· Oak Ridge
The Select Committee
judges that the PRC will exploit elements of the stolen design
information on the PRC's next generation of thermonuclear weapons.
The PRC plans to supplement its silo-based CSS-4 ICBMs targeted
on U.S. cities with mobile ICBMs, which are more survivable because
they are more difficult to find than silo-based missiles.
The PRC has three mobile ICBM programs currently underway
- two road-mobile and one submarine-launched program - all of
which will be able to strike the United States.
The first of these new People's Liberation Army (PLA) mobile
ICBMs, the DF-31, may be tested in 1999, and could be deployed
as soon as 2002. These mobile missiles require small warhead
designs, of which the stolen U.S. design information is the most
advanced in the world.
In addition, the PRC could choose to use elements of the stolen
nuclear weapons design information - including the neutron bomb
- on intermediate- and short-range ballistic missiles, such as
its CSS-6 missiles.
The PRC has the infrastructure and technical ability to use
elements of the stolen U.S. warhead design information in the
PLA's next generation of thermonuclear weapons. The Select Committee
concludes that the production tools and processes required by
the PRC to produce small thermonuclear warheads based on the
stolen U.S. design information, including the stolen W-88 information,
would be similar to those developed or available in a modern
aerospace or precision-guided munitions industry. The Select
Committee judges that the PRC has such infrastructure and is
capable of such production.
The Select Committee judges that the PRC is likely to continue
its work on advanced thermonuclear weapons based on the stolen
U.S. design information. The PRC could begin serial production
of such weapons during the next decade in connection with the
development of its next generation of intercontinental ballistic
A series of PRC nuclear weapons test explosions from 1992
to 1996 began a debate in the U.S. Government about whether the
PRC's designs for its new generation of nuclear warheads were
in fact based on stolen U.S. classified information. The apparent
purpose of these PRC tests was to develop smaller, lighter thermonuclear
warheads, with an increased yield-to-weight ratio.
The United States did not become fully aware of the magnitude
of the counterintelligence problem at the Department of Energy
national weapons laboratories until 1995. In 1995 the United
States received a classified PRC document that demonstrated that
the PRC had obtained U.S. design information on the W-88 warhead
and technical information concerning approximately half a dozen
other U.S. thermonuclear warheads and associated reentry vehicles.
The document was provided by a PRC national, unsolicited by
the CIA - a "walk in." This individual approached the
CIA outside the PRC, and turned over a number of documents. Among
these was an official PRC document classified "Secret"
by the PRC.
This PRC document included, among other matters, stolen U.S.
design information on the W-88 thermonuclear warhead used on
the Trident D-5 missile, as well as U.S. technical information
on several other strategic U.S. nuclear warheads. The document
recognized that the U.S. weapons represented the state-of-the-art
against which PRC nuclear weapons should be measured.
By mid-1996 the CIA had determined that the individual who
provided the information was secretly under the direction of
the PRC intelligence services. The CIA and other U.S. intelligence
community analysts have nevertheless concluded that the classified
PRC document contained U.S. thermonuclear warhead design information
and other technical information on U.S. nuclear weapons.
The stolen U.S.
nuclear secrets give the PRC design information on thermonuclear
weapons on a par with our own. Currently deployed PRC ICBMs
targeted on U.S. cities are based on 1950s-era nuclear weapons
designs. With the stolen U.S. technology, the PRC has leaped,
in a handful of years, from 1950s-era strategic nuclear capabilities
to the more modern thermonuclear weapons designs. These modern
thermonuclear weapons took the United States decades of effort,
hundreds of millions of dollars, and numerous nuclear tests to
Such small, modern warheads are necessary for all of the elements
of a modern intercontinental nuclear force, including:
· ICBMs with
multiple warheads (MRVs or MIRVs)
The PRC has an ongoing program to use these modern thermonuclear
warheads on its next generation of ICBMs, currently in development.
Without the nuclear secrets stolen from the United States, it
would have been virtually impossible for the PRC to fabricate
and test successfully small nuclear warheads prior to its 1996
pledge to adhere to the Comprehensive Test Ban Treaty.
B. The Select Committee judges that elements of the stolen
information on U.S. thermonuclear warhead designswill assist
the PRC in building its next generation of mobile ICBMs, which
may be tested this year.
The stolen U.S. design information will assist the PRC in
building smaller nuclear warheads - vital to the success of the
PRC's ongoing efforts to develop survivable, mobile missiles.
Current PRC ICBMs, which are silo-based, are more vulnerable
to attack than mobile missiles.
The PRC has currently underway three intercontinental mobile
missile programs - two road-mobile, and one submarine-launched.
All of these missiles are capable of targeting the United States.
The first of these, the road-mobile solid-propellant DF-31,
may be tested in 1999. Given a successful flight-test program,
the DF-31 could be ready for deployment in 2002.
The Select Committee
judges that the PRC will in fact use a small nuclear warhead
on its new generation ICBMs. The small, mobile missiles that
the PRC is developing require smaller warheads than the large,
heavy, 1950s-era warheads developed for the PRC's silo-based
missiles. The main purpose of a series of nuclear tests conducted
by the PRC between 1992 and 1996 was evidently to develop new
smaller, lighter warheads with an increased yield-to-weight ratio
for use with the PRC's new, mobile nuclear forces.
The Select Committee judges that the PRC will exploit elements
of the stolen U.S. thermonuclear weapons designs on its new ICBMs
currently under development. The advanced U.S. thermonuclear
warheads for which the PRC has stolen U.S. design information
are significantly smaller than those for which the PRC's silo-based
missiles were designed. The U.S. designs, unlike those in the
PRC's currently-deployed arsenal, can be used on smaller mobile
The Select Committee judges that:
· The PRC
is likely to continue to work on small thermonuclear warheads
based on stolen U.S. design information
· The PRC
has the infrastructure and ability to produce such warheads,
including warheads based on elements of the stolen U.S. W-88
Trident D5 design information
· The PRC
could begin serial production of small thermonuclear warheads
during the next decade in conjunction with its new generation
of road-mobile missiles
· The introduction
of small warheads into PLA service could coincide with the initial
operational capability of the DF-31, which could be ready for
deployment in 2002
These small warhead designs will make it possible for the
PRC to develop and deploy missiles with multiple reentry vehicles
(MRVs or independently targetable MIRVs).
Multiple reentry vehicles increase the effectiveness of a
ballistic missile force by multiplying the number of warheads
a single missile can carry as many as ten-fold.
Multiple reentry vehicles also can help to counter missile
defenses. For example, multiple reentry vehicles make it easier
for the PRC to deploy penetration aids with its ICBM warheads
in order to defeat anti-missile defenses.
The Select Committee is aware of reports that the PRC has
in the past undertaken efforts related to technology with MIRV
applications. Experts agree that the PRC now has the capability
to develop and deploy silo-based intercontinental ballistic missiles
with multiple reentry vehicles (MIRVs or MRVs).
Experts also agree that the PRC could have this capability
for its new mobile intercontinental ballistic missiles within
a reasonable period of years that is consistent with its plans
to deploy these new mobile missiles. The PRC could pursue one
or more penetration aids in connection with its new nuclear missiles.
If the PRC violates the Comprehensive Test Ban Treaty by testing
surreptitiously, it could further accelerate its nuclear development.
The Select Committee
judges that, if the PRC were successful in stealing nuclear test
codes, computer models, and data from the United States, it could
further accelerate its nuclear development. By using such
stolen codes and data in conjunction with High Performance Computers
(HPCs) already acquired by the PRC, the PRC could diminish its
need for further nuclear testing to evaluate weapons and propose
The possession of the stolen U.S. test data could greatly
reduce the level of HPC performance required for such tasks.
For these reasons, the Select Committee judges that the PRC has
and will continue to aggressively target for theft our nuclear
test codes, computer models, and data.
Although the United States has been the victim of systematic
espionage successfully targeted against our most advanced nuclear
weapons designs - and although the Select Committee judges that
the PRC will exploit elements of those designs for its new generation
of ICBMs - the United States retains an overwhelming qualitative
and quantitative advantage in deployed strategic nuclear forces.
Nonetheless, in a crisis in which the United States confronts
the PRC's conventional and nuclear forces at the regional level,
a modernized PRC strategic nuclear ballistic missile force would
pose a credible direct threat against the United States.
Neither the United States nor the PRC has a national ballistic
missile defense system.
In the near term,
a PRC deployment of mobile thermonuclear weapons, or neutron
bombs, based on stolen U.S. design information, could have a
significant effect on the regional balance of power, particularly
with respect to Taiwan. PRC deployments of advanced nuclear weapons
based on stolen U.S. design information would pose greater risks
to U.S. troops and interests in Asia and the Pacific.
In addition, the PRC's theft of information on our most modern
nuclear weapons designs enables the PRC to deploy modern forces
much sooner than would otherwise be possible.
At the beginning of the l990s, the PRC had only one or two
silo-based ICBMs capable of attacking the United States. Since
then, the PRC has deployed up to two dozen additional silo-based
ICBMs capable of attacking the United States; has upgraded its
silo-based missiles; and has continued development of three mobile
ICBM systems and associated modern thermonuclear warheads.
If the PRC is successful in developing modern nuclear forces,
as seems likely, and chooses to deploy them in sufficient numbers,
then the long-term balance of nuclear forces with the United
States could be adversely affected.
C. Despite repeated PRC thefts of the most sophisticated
U.S. nuclear weapons technology, security at our national nuclear
weapons laboratories does not meet even minimal standards.
The PRC stole design information on the United States' most
advanced thermonuclear weapons as a result of a sustained espionage
effort targeted at the United States' nuclear weapons facilities,
including our national weapons laboratories. The successful penetration
by the PRC of our nuclear weapons laboratories has taken place
over the last several decades, and almost certainly continues
to the present.
More specifically, the Select Committee has concluded that
the successful penetration of our National Laboratories by the
PRC began as early as the late 1970s; the PRC had penetrated
the Laboratories throughout the 1980s and 1990s; and our Laboratories
almost certainly remain penetrated by the PRC today.
Our national weapons laboratories are responsible for, among
other things, the design of thermonuclear warheads for our ballistic
missiles. The information at our national weapons laboratories
about our thermonuclear warheads is supposed to be among our
nation's most closely guarded secrets.
programs at the national weapons laboratories today fail to meet
even minimal standards. Repeated efforts since the early
1980s have failed to solve the counterintelligence deficiencies
at the National Laboratories. While one of the Laboratories has
adopted better counterintelligence practices than the others,
all remain inadequate.
Even though the United States discovered in 1995 that the
PRC had stolen design information on the W-88 Trident D-5 warhead
and technical information on a number of other U.S. thermonuclear
warheads, the White House has informed the Select Committee,
in response to specific interrogatories propounded by the Committee,
that the President was not briefed about the counterintelligence
failures until early 1998. In May, 1999, as part of the declassification process to make this report publicly available, National Security Advisor Samuel (Sandy) R. Berger advised the Select Committee that the President was briefed in July, 1997, although no written record of this meeting exists.
Moreover, given the great significance of the PRC thefts,
the Select Committee is concerned that the appropriate committees
of the Congress were not adequately briefed on the extent of
the PRC's espionage efforts.
A counterintelligence and security plan adopted by the Department
of Energy in late 1998 in response to Presidential Decision Directive
61 is a step toward establishing sound counterintelligence practices.
However, according to the head of these efforts, significant
time will be required to implement improved security procedures
pursuant to the directive. Security at the national weapons laboratories
will not be satisfactory until at least sometime in the year
See the chapters PRC Acquisition of U.S. Technology, PRC Theft
of U.S. Thermonuclear Warhead Design Information, and PRC Missile
and Space Forces for more detailed discussions of the Select
Committee's investigation of these matters.
A. The PRC has stolen U.S. missile technology and exploited
itfor the PRC's own ballistic missile applications.
The PRC has proliferated such military technology to a number
of other countries, including regimes hostile to the United States.
The Select Committee has found that the PRC has stolen a specific
U.S. guidance technology used on current and past generations
of U.S. weapons systems. The stolen guidance technology is currently
used on a variety of U.S. missiles and military aircraft, including:
· The U.S.
Army Tactical Missile System (ATACMS)
· The U.S.
Navy Stand-off Land Attack Missile-Extended Range (SLAM-ER)
· The U.S.
· The U.S.
Air Force F-15, F-16, and F-117 fighter jets
The stolen guidance technology has direct applicability to
the PRC's intercontinental, medium- and short-range ballistic
missiles, and its spacelift rockets.
The theft of U.S. ballistic missile-related technology is
of great value to the PRC. In addition to ICBMs and military
spacelift rockets, such technology is directly applicable to
the medium- and short-range PLA missiles, such as the CSS-6 (also
known as the M-9), the CSS-X-7 (also known as the M-11), and
the CSS-8 that have been developed for, among other purposes,
CSS-6 missiles were, for example, fired in the Taiwan Strait
and over Taiwan's main ports in the 1996 crisis and confrontation
with the United States.
The Select Committee has uncovered instances of the PRC's
use of this specific stolen U.S. technology that:
the PRC's military capabilities
U.S. national security interests
· Pose a
direct threat to the United States, our friends and allies, or
The Clinton administration has determined that particular
uses by the PRC of this stolen U.S. technology cannot be disclosed
publicly without affecting national security.
The PRC has proliferated weapons systems and components to
other countries including Iran, Pakistan, Libya, Syria, and North
B. In the late 1990s, the PRC stole or illegally obtained
U.S.developmental and research technology that, if taken to successful
conclusion, could be used to attack U.S. satellites
During the late l990s, U.S. research and development work
on electromagnetic weapons technology has been illegally obtained
by the PRC as a result of successful espionage directed against
the United States. Such technology, once developed, can be used
for space-based weapons to attack satellites and missiles.
In 1997, the PRC stole classified U.S. developmental research
concerning very sensitive detection techniques that, if successfully
concluded, could be used to threaten U.S. submarines.
C. Currently-deployed PRC ICBMs targeted on the United States
based in significant part on U.S. technologiesillegally obtained
by the PRC in the 1950s.
This illustrates the potential long-term effects of technology
Even in today's rapidly changing technological environment,
technology losses can have long-term adverse effects. Currently-deployed
PRC ICBMs targeted on the United States are based on U.S. and
Russian technologies from the 1950s and 1960s.
In the 1950s, a U.S. military officer and associated members
of the design team for a U.S. ICBM program (the "Titan"
missile program) emigrated to the PRC and illegally gave U.S.
missile and missile-related technology to the PRC.
This information formed the basis for the up to two dozen
PRC CSS-4 ICBMs that are currently targeted on the United States.
All but two of these missiles have been deployed by the PRC
for the first time in this decade.
D. In the aftermath of three failed satellite launches since
1992,U.S. satellite manufacturers transferred missile design
information and know-how to the PRC without obtaining the legally
This information has improved the reliability of PRC rockets
useful for civilian and military purposes.
The illegally transmitted information is useful for the design
and improved reliability of future PRC ballistic missiles, as
U.S. satellite manufacturers analyzed the causes of three
PRC launch failures and recommended improvements to the reliability
of the PRC rockets. These launch failure reviews were conducted
without required Department of State export licenses, and communicated
technical information to the PRC in violation of the International
Traffic in Arms Regulations.
The Select Committee has concluded that the PRC implemented
a number of the recommended improvements to rocket guidance and
to the fairing (or nose cone), which protects a satellite during
launch. These improvements increased the reliability of the PRC
Long March rockets. It is almost certain that the U.S. satellite
manufacturers' recommendations led to improvements in the PRC's
rockets and that the improvements would not have been considered
or implemented so soon without the U.S. assistance.
It is possible or even likely that, absent the U.S. satellite
manufacturers' interventions on the problems associated with
the defective fairing on the PRC's Long March 2E rocket and the
defective guidance system on the PRC's Long March 3B rocket,
one or more other PRC launches would have failed.
The PRC Long March
rockets improved by the U.S. technology assistance are useful
for both commercial and military purposes. The military uses
communications and reconnaissance satellites
weapons, if successfully developed
for modern command and control and sophisticated intelligence
The Select Committee judges that the PRC military has important
needs in these areas, including notably space-based communications
and reconnaissance capabilities.
In addition, design and testing know-how and procedures communicated
during the launch failure reviews could be applied to the reliability
of missiles or rockets generally. U.S. participants' comments
during the failure investigations related to such matters as:
· The application
of technical know-how to particular failure analyses
To the extent any valuable information was transferred to
the PRC's space program, such information would likely find its
way into the PRC's ballistic missile program. The ballistic missile
and space launch programs have long been intertwined and subordinate
to the same ministry and state-owned corporation in the PRC.
For example, the PRC's Long March 2 rockets and their derivatives
(including the Long March 2E, on which Hughes advised the PRC)
were derived directly from the PRC's silo-based CSS-4 intercontinental
ballistic missiles that are currently targeted on the United
The various institutes and academies in the PRC involved in
ballistic missile and rocket design also share design and production
responsibilities. Many of the PRC personnel in these organizations
have responsibilities for both commercial rocket and military
missile programs. Attendees at important failure review meetings
included PRC personnel from such organizations.
In fact, information
passed during each of the failure analyses has the potential
to benefit the PRC's ballistic missile program. The independent
experts retained by the Select Committee judge that information
valuable to the PRC's ballistic missile and space programs was
transferred to the PRC in the failure investigations.
The rocket guidance system on which Loral and Hughes provided
advice in 1996 is judged by the Select Committee to be among
the systems capable of being adapted for use as the guidance
system for future PRC road-mobile intercontinental ballistic
missiles, although if a better system is available, it is more
likely to be chosen for that mission.
The Select Committee judges that information on rocket fairings
(that is, nose cones) provided to the PRC by Hughes may assist
the design and improved reliability of future PRC MIRVed missiles,
if the PRC decides to develop them, and of future submarine-launched
When Loral and Hughes assisted the PRC, they could not know
whether the PRC would in fact use such information in their military
i. In 1993 and 1995, Hughes showed the PRC how to improve
the design and reliability of PRC rockets.
Hughes' advice may also be useful for design and improved
reliability of future PRC ballistic missiles.
Hughes deliberately acted without seeking to obtain the legally
In 1993 and 1995, Hughes showed the PRC how to improve the
design and reliability of PRC Long March rockets with important
military applications. The information provided by Hughes also
may be useful for improving the reliability of future PRC ballistic
missiles. Hughes deliberately acted without the legally required
In 1993 and 1995
Hughes analyzed the causes of PRC launch failures and, for both
failures, illegally recommended to the PRC improvements to
the fairing, a part of the rocket that protects the payload.
The PRC changed the fairing of its Long March rocket to incorporate
the Hughes recommendations.
Hughes also corrected deficiencies in the PRC's coupled loads
analysis, a critical rocket design technology.
Hughes also identified changes needed in PRC launch operations.
The State Department's Office of Defense Trade Controls has
concluded that Hughes significantly improved the PRC space launch
program and contributed to the PRC goal of assured access to
space. The State Department further concluded that the lessons
learned by the PRC are inherently applicable to their missile
The State Department administers arms export licensing, and
would have been the proper authority to license the Hughes failure
The State Department found that the PRC and Hughes personnel
engaged in an extensive exchange of data and analyses, which,
among other things, identified and corrected for the PRC deficiencies
in a number of technical areas, including:
design and manufacture
The illegally transmitted information improved the PRC's military
rockets and operations. The illegally transmitted information
may assist the PRC in the design and improved reliability of
future silo-based or mobile PRC ballistic missiles, including
particularly missiles that require fairings (or nose cones).
These would include missiles with advanced payloads (that is,
multiple warheads, or certain penetration aids designed to defeat
missile defenses), and submarine launched ballistic missiles.
The PRC has the capability to develop and deploy silo-based
missiles with multiple reentry vehicles (MIRVs or MRVs). Within
a reasonable period of years that is consistent with the PRC's
possible deployment of new mobile missiles, the PRC could deploy
multiple warheads on those mobile missiles, as well. The PRC
also appears to have gained practical insight into U.S. coupled
loads analysis, and insight into diagnostic and failure analysis
techniques for identifying the causes of a launch failure. Such
lessons could be applied to both rockets and missiles.
In both 1993 and 1995, Hughes failed to apply for or obtain
the required Department of State licenses for its activities,
because Hughes knew that the Department of State would be unlikely
to grant the license and that the licensing process would in
any case be lengthy.
Hughes also engaged in deliberate efforts to circumvent the
Department of State licensing requirement. To this end, Hughes
sought the approval of a Department of Commerce official for
its 1995 activities and claims to have sought the approval of
a Department of Defense monitor for some of its 1993 activities,
although Hughes knew that neither official was legally authorized
to issue the required license.
Hughes had important commercial interests in the PRC at the
time it engaged in the failure investigations. These interests
included future sales of satellites to the PRC or to parties
serving the PRC market, and reducing the cost and improving the
safety of launching satellites in the PRC.
ii. In 1996, Loral and Hughes showed the PRC how to improve
the design and reliability of the guidance system used in the
PRC's newest Long March rocket.
Loral's and Hughes' advice may also be useful for design
and improved reliability of elements of future PRC ballistic
Loral and Hughes acted without the legally required license,
although both corporations knew that a license was required.
Loral and Hughes analyzed for the PRC the potential causes
of a 1996 PRC launch failure, identified for the PRC the true
cause of the failure as a particular element within the Long
March rocket's guidance unit, and provided the PRC with technical
assistance that may be useful not only for the PRC's commercial
and military space launch programs, but for ballistic missiles
In so doing, Loral and Hughes deliberately acted without the
legally required license, and violated U.S. export control laws.
Although Loral and Hughes were well aware that a State Department
license was required to provide assistance related to the guidance
system of a PRC rocket, neither company applied for or obtained
the required license. Loral was warned of the need for a license
at the time it agreed to participate in the investigation, but
took no action.
Loral and Hughes also failed to properly brief participants
in the failure investigation of U.S. export requirements, failed
to monitor the investigation as it progressed, and failed to
take adequate steps to ensure that no prohibited information
was passed to the PRC.
Loral and Hughes submitted lengthy written materials analyzing
the cause of the guidance system failure to the PRC and to other
foreign nationals. In addition, Loral and Hughes engaged in technical
discussions, including discussions about the details and causes
of the guidance system failure, that were almost certainly recorded
by the PRC.
While some aspects of these discussions have been identified
by the Select Committee and reviewed by independent experts retained
by the Select Committee, the full range and content of these
discussions remains unknown. The Select Committee was unable
to talk to several important participants in the failure investigation,
and the PRC refused to agree to the Select Committee's request
for interviews. Additional controlled information may have been
received by the PRC.
The information and assistance conveyed by Loral and Hughes
led to improvements to the guidance system of the PRC's Long
March 3B rocket. While the launch that failed was commercial,
the information transmitted by Loral and Hughes was useful, as
well, for military space launch purposes.
Loral and Hughes
provided valuable additional information that exposed the PRC
to Western diagnostic processes that could lead to improvements
in the reliability of all PRC ballistic missiles. Loral's
and Hughes' advice could help reinforce or add vigor to the PRC's
adherence to good design and test practices, which could be transferred
to the ballistic missile program. The exposure to U.S. diagnostic
and test processes outlined by Loral and Hughes has the potential
to improve PRC pre- and post-flight failure analysis for the
ballistic missile program.
The technology transferred by Loral and Hughes thus has the
potential, if used by the PRC, to increase the reliability of
future PRC ballistic missiles.
The independent experts retained by the Select Committee had
access not just to the written report prepared by Loral with
input from Hughes, but also to the comments of participants about
meetings in Beijing. The independent experts conclude that information
valuable to the PRC's space and ballistic missile programs was
Neither Loral nor Hughes disclosed to export control officers
of the U.S. Government their unlicensed activities until after
they were contacted by U.S. Government licensing officials demanding
an explanation for their conduct. The U.S. Government officials
became aware of the improper activities through an article in
a widely-read industry publication. This article also came to
Loral's attention prior to Loral's disclosure to the U.S. Government.
Loral and Hughes had important commercial interests in the
PRC when they engaged in the 1996 failure investigation. These
interests included future sales of satellites to the PRC or to
parties serving the PRC market, and reducing the cost and improving
the safety of launching satellites in the PRC.
E. In light of the PRC's aggressive espionage campaign against
U.S. technology, it would be surprising if the PRC has not exploited
security lapses that have occurred in connection with launches
of U.S. satellites in the PRC.
The original policy permitting U.S. manufactured satellites
to be launched in the PRC envisioned strict compliance with requirements
to prevent unauthorized technology transfers.
These requirements are encompassed in U.S. regulations and
licenses. Pursuant to a bilateral agreement between the United
States and the PRC, the requirements include U.S. control over
access to the satellite while it is in the PRC. Many of these
requirements imposed on exporters are to be closely monitored
by U.S. Government officials provided by the Defense Department.
The Select Committee
has found numerous lapses in the intended pre-launch technology
safeguards. Defense Department monitors have reported numerous
security infractions by exporters. Exporters often hire private
security guards to assist in the performance of their duties
to prevent technology transfers, and these private guards have
also reported security lapses.
In addition, it is likely that other security lapses have
gone unreported. In the mid-1990s, three launches and associated
pre-launch activities were not monitored by the Defense Department.
Launches that were monitored have lacked proper staffing.
Because of the PRC's aggressive efforts to acquire U.S. technology,
it would be surprising if the PRC has not exploited security
lapses while U.S.-built satellites and associated equipment and
documents were in the PRC. Prior to launch, the satellite, associated
test equipment, and controlled documents are transported to the
PRC and may remain in the PRC for periods as short as a couple
of weeks or as long as two months. The PRC would likely exploit
opportunities to gain information while the U.S. satellite and
associated equipment are in the PRC before launch.
Unrestricted access to a satellite for as little as two hours
could provide the PRC with valuable, non-public information about
major satellite subsystems, as well as the design and manufacture
of such subsystems.
There are numerous reasons for security infractions, some
of which may be addressed through changes in procedures:
Department monitors on occasion have found poor attitudes toward
security among both company management and private guards
security guards hired by satellite exporters may have an inherent
conflict of interest when reporting on their current and prospective
· Both Defense
Department monitors and private security guards may lack sufficient
Department monitors sometimes lack continuity with a given launch
only one Defense Department monitor may have been present on
F. Foreign brokers and underwriters of satellite and space
launch insurance have obtained controlled U.S. space and missile-related
technology outside of the system of export controls that applies
to U.S. satellite manufacturers.
While existing laws address such exports, U.S. export control
authorities may not be adequately enforcing these laws in the
space insurance industry context, nor paying sufficient attention
to these practices.
Satellite and space insurance is underwritten by overseas
and multinational organizations to which U.S. technical information
is always passed to assess insurance risks. This is particularly
true where the insurers have particular reasons to be concerned
about launch failures.
These insurers have, on occasion, received controlled U.S.
technical information. It is not clear that manufacturers and
purchasers of satellites are transmitting satellite information
to such foreign brokers and underwriters in compliance with U.S.
export control rules and regulations.
As insurance is critical to commercial space launches, the
insurance role cannot be eliminated. Existing laws address exports
to brokers and insurers. The administration of these laws must
be applied to exports of sensitive U.S. technology to the space
launch and satellite insurance industry.
G. The Strom Thurmond National Defense Authorization Act
took important steps to correct deficiencies in the administration
of U.S. export controls on commercial space launches in the PRC.
But the aggressive implementation of this law is vital, and
other problems with launches in the PRC that the Act does not
address require immediate attention.
The Fiscal 1999 Department of Defense Authorization Act sought
to increase safeguards on technology transfer during foreign
launches of U.S. satellites.
The measures set forth in the Act include transferring licensing
jurisdiction to the Department of State, and increased support
for the Defense Department's efforts to prevent technology loss.
However, additional measures - including better training for
Defense Department monitors and improved procedures for hiring
professional security personnel - will be needed.
H. It is in the national security interest of the United
States to increase U.S. domestic launch capacity.
While U.S. policy since 1988 has permitted launching satellites
in the PRC, U.S. national security interests would be advanced
by avoiding the need for foreign launches through increased domestic
The Reagan administration's decision to permit launches in
the PRC was affected by two factors: insufficient domestic launch
options in the aftermath of the Challenger disaster, and the
perception of the PRC as a strategic balance against the Soviet
Union in the context of the Cold War. These factors are no longer
Launching Western satellites has provided the PRC with additional
experience that has improved its space launch capabilities. Even
in the absence of any loss of U.S. technology, such experience
benefits a potential long-run competitor of the United States.
See the chapters PRC Missile and Space Forces, Satellite
Launches in the PRC: Hughes, and Satellite Launches in
the PRC: Loral for more detailed discussion of the Select
Committee's investigation of these matters.
A. Recent changes in international and domestic export control
regimes have reduced the ability to control transfers of militarily
i. The dissolution of COCOM in 1994 left the United States
without an effective, multilateral means to control exports of
militarily useful goods and technology.
The Wassenaar Arrangement on Export Controls for Conventional
Arms and Dual-Use Goods and Technologies (Wassenaar) leaves international
controls over the transfer of military technologies to national
The dissolution of the Coordinating Committee for Multilateral
Export Controls (COCOM) in March 1994 left the United States
without an effective international mechanism to control the transfer
of important military technologies. Other multilateral control
regimes set guidelines for particular kinds of transfers (for
example, certain transfers related to missiles or weapons of
In the post-COCOM period, the United States dramatically liberalized
A new COCOM-like agreement, under which national exports of
certain militarily useful goods and technologies are subject
to international agreement, would enhance efforts to restrict
technology transfers. The United States should seek to negotiate
such a new arrangement.
ii. The expiration of the Export Administration Act in 1994
has left export controls under different legislative authority
that, among other things, carries lesser penalties for export
violations than those that can be imposed under the Act.
Following the expiration of the Export Administration Act
in 1994, export controls on dual-use items have been continued
under the provisions of the International Emergency Economic
Powers Act. This law carries significantly lesser penalties for
criminal and civil violations of export controls than those that
applied under the Export Administration Act.
While the general criminal penalties of Title 18 of the U.S.
Code may be imposed under either scheme, administration of export
controls would be enhanced by a reauthorization of the Export
Administration Act that would restore more significant penalties
for export control violations.
iii. U.S. policy changes announced in 1995 that reduced the
time available for national security agencies to consider export
licenses need to be reexamined in light of the volume and complexity
of licensing activities.
New procedures and deadlines for processing Commerce Department
export license applications instituted in late 1995 placed national
security agencies under significant time pressures.
Commerce officials alone are less likely to have the expertise
for identifying national security implications of exports of
militarily useful technologies. While national security agencies
may be informed of applications, due time is needed for their
However, the time frame for consideration is not always sufficient
for the Department of Defense to determine whether a license
should be granted, or if conditions should be imposed.
In addition, the Intelligence Community has sought a role
earlier in the licensing process in order to evaluate the technology
and end user.
B. Dividing the licensing responsibilities for satellites
between the Departments of Commerce and State permitted the loss
of U.S. technology to the PRC.
The 1996 decision to give Commerce the lead role in satellite
exporting was properly reversed by the Congress.
Divided jurisdiction between Commerce and State over satellite
export licensing has facilitated the loss of U.S. technology
to the PRC.
While licensing authority regarding rockets has always remained
with the State Department, in 1992 certain aspects of satellite
licensing were transferred to Commerce.
For nearly a three-year period thereafter, Commerce licenses
did not require Department of Defense monitors for launch campaigns.
Accordingly, U.S. Government officials did not monitor several
launches and launch campaigns. Given the PRC's efforts at technology
acquisition, it would be surprising if the PRC did not attempt
to exploit this situation.
In 1995, a Commerce Department official improperly authorized
the transfer, in the context of a launch failure investigation,
of information regarding rocket design that would almost certainly
have been prevented had the Department of State been consulted.
In October 1996, all remaining authority for commercial satellite
licensing was transferred to Commerce.
Legislation passed by Congress in 1998 eliminated the split
jurisdiction and assigned all licensing of satellite exports
to the Department of State.
C. U.S. policies relying on corporate self-policing to prevent
technology loss have not worked.
Corporate self-policing does not sufficiently account for
the risks posed by inherent conflicts of interest, and the lack
of priority placed on security in comparison to other corporate
To protect the national security interests of the United States,
the U.S. Government imposes substantial requirements on U.S.
businesses exporting technology to the PRC. These can include
obtaining a license, satisfying additional conditions imposed
in the license, paying for U.S. Government monitors, and providing
Under current policies, whether U.S. national security is
in fact protected from the loss of export-controlled information
thus depends in large part on the vigilance, good will, and efforts
dedicated by business to comply with lawful requirements.
Corporations may often face inherent conflicts of interest
in complying with U.S. export laws. Corporate interests that
may conflict with restricting exports as required by U.S. law
goals to expand overseas markets and to satisfy current or prospective
business priorities that compete for the attention of corporate
· An unwillingness
to devote the financial resources necessary for effective security
Protecting the national security interest simply may not be
related to improving a corporation's "bottom line."
In cases discussed later in this Report, two U.S. satellite
manufacturers, Hughes and Loral, failed to live by the requirements
of U.S. law. The failure of Hughes to obtain legally required
licenses, for example, reflects a deliberate decision to assist
the PRC immediately, rather than risk the possibility that a
license application would be delayed or rejected.
Such pressures may be great where important commercial opportunities
or relationships may seem to a corporation to be at stake.
U.S. policies relying on corporate self-policing to prevent
technology loss have not sufficiently accounted for the risks
posed by inherent conflicts of interest, and by the lack of priority
placed on dedicating resources to security in comparison to other
D. The PRC requires high performance computers (HPCs) for
the design, modeling, testing, and maintenance of advanced nuclear
weapons based on the nuclear weapons design information stolen
from the United States.
The United States relaxed restrictions on HPC sales in 1996;
and the United States has no effective way to verify that HPC
purchases reportedly made for commercial purposes are not diverted
to military uses.
The Select Committee judges that the PRC has in fact used
HPCs to perform nuclear weapons applications.
PRC research institutes with connections to PLA military industries
have access to numerous U.S.-built HPCs that could be used for
unlawful military applications. HPCs are important for many military
applications, and essential for some.
One key concern is diversion of U.S. HPCs to the PRC's nuclear
weapons program. If the PRC complies with the Comprehensive Test
Ban Treaty, then its need for HPCs to design, weaponize, deploy,
and maintain nuclear weapons will be greater than that of any
other nation possessing nuclear weapons, according to the Department
HPCs are useful for two-dimensional and critical to three-dimensional
computer modeling that would be necessary for the PRC to develop,
modify, and maintain its nuclear weapons in the absence of physical
The utility of nuclear weapons computer modeling depends on
the amount of data available from actual nuclear weapons tests,
the computing capacity that is available, and programmer expertise.
For this reason, in the judgment of the Select Committee, the
PRC has targeted U.S. nuclear test data for espionage collection,
which, if successful, would reduce its HPC performance requirements.
Complete three-dimensional models, critical to stockpile maintenance
and assessment of the effect of major warhead modifications in
the absence of physical testing, require HPCs of one million
MTOPS (millions of theoretical operations-per-second, a measure
of computer performance and speed) or more. Assessing the effects
of a new warhead without testing would require three-dimensional
Although the precise utility of HPCs in the 2,000 to 10,000
MTOPS range for two-dimensional modeling is unclear, these HPCs
may be powerful enough to help the PRC incorporate nuclear weapons
design information that it stole from the U.S. into delivery
systems without further testing.
In fact, the Select
Committee judges that the PRC has been using HPCs for nuclear
weapons applications. The illegal diversion of HPCs for the
benefit of the PRC military is facilitated by the lack of effective
post-sale verifications of the locations and purposes for which
the computers are being used. HPC diversion for PRC military
use is also facilitated by the steady relaxation of U.S. export
controls over sales of HPCs.
Until 1998, there was no verification of the end uses of HPCs
in the PRC. Modest verification procedures were announced in
June 1998, but even if these are implemented fully, they will
Over the past several years, U.S. export controls on the sale
of HPCs to the PRC have been steadily relaxed. As a result, while
the PRC had virtually no HPCs in 1996, the PRC had over 600 U.S.-origin
HPCs at the end of 1998.
The PRC has demonstrated the capability to assemble an HPC
using U.S.-origin microprocessors. The Select Committee has concluded,
however, that the PRC has virtually no indigenous high-end computer
production capability. Moreover, while the PRC might attempt
to perform some HPC functions by other means, these computer
work-arounds remain difficult and imperfect.
Data from the Commerce Department and Defense Department indicate
that HPCs from the United States have been obtained by PRC organizations
involved in the research and development of:
and laser sensors
Given the lack of an effective verification regime, it is
possible that these HPCs have been diverted for military uses,
which could include the following:
or adapting nuclear weapons designs
and maintaining nuclear and chemical weapons
mobile forces with high-technology weapons
a modern fleet of combat and combat support aircraft and submarines
a reliable, accurate ballistic and cruise missile force
a battlefield with electronic or information warfare
command, control, communications, and intelligence capabilities
Finally, the Select Committee judges that nuclear testing
data and related computer codes are a target of PRC espionage,
and that the PRC's nuclear weapons programs would benefit from
the illegal acquisition of such information.
In conjunction with such data and codes, HPCs can be used
to improve nuclear weapons designs, performance, modeling, and
nuclear stockpile maintenance that would otherwise be extremely
difficult or impossible given the restrictions imposed by the
Comprehensive Test Ban Treaty.
E. The PRC has attempted to obtain U.S. machine tools and
jet engine technologies through fraud and diversions fromcommercial
In one 1991 case studied by the Select Committee, the Department
of Commerce decontrolled jet engines without consulting either
the Defense Department or the State Department.
i. In 1994 and 1995 the PRC attempted to divert an export
of machine tools by McDonnell Douglas to military uses.
The Select Committee's classified Report includes significantly
more detail on this subject than this unclassified version. The
Justice Department has requested that the Select Committee not
disclose the details of much of its investigation into these
matters to protect the Justice Department's prosecution of the
China National Aero-Technology Import/Export Corporation (CATIC)
and McDonnell Douglas.
ii. In 1991 the Commerce Department decontrolled Garrett
jet engines without consulting either the Defense Department
or the State Department.
This led to a PRC effort to acquire related jet engine
production technology. The Commerce Department was prepared to
approve this transfer, which was only thwarted when the Defense
Department was alerted by the U.S. Embassy in Beijing.
See the chapters High Performance Computers, U.S. Export
Policy Toward the PRC, and Manufacturing Processes for a
more detailed discussion of the Select Committee's investigation
of these matters.
The PRC has vigorously pursued over the last two decades the
acquisition of foreign military technologies. These efforts represent
the official policy of the PRC and its Chinese Communist Party
leadership. The PRC seeks foreign military technology as part
of its efforts to place the PRC at the forefront of nations and
to enable the PRC to fulfill its international agenda. The PRC's
long-run geopolitical goals include incorporating Taiwan into
the PRC and becoming the primary power in Asia.
The PRC has not ruled out using force against Taiwan, and
its thefts of U.S. technology have enhanced its military capabilities
for any such use of force.
The PRC has also asserted territorial claims against other
Southeast Asian nations and Japan, and has used its military
forces as leverage in asserting these claims.
These PRC goals conflict with current U.S. interests in Asia
and the Pacific, and the possibility of a U.S.-PRC confrontation
cannot be dismissed.
A. The PRC has mounted a widespread effort to obtain U.S.
military technologies by any means - legal or illegal.
These pervasive efforts pose a particularly significant threat
to U.S. export control and counterintelligence efforts.
The PRC seeks military-related technology through a broad
range of activities that complicate U.S. counterintelligence
Many of these efforts are less centralized than was the case
with those of the Soviet Union. The number of PRC nationals who
seek access to U.S. technology is much greater than the number
of persons who sought similar kinds of information for the Soviet
The Select Committee
has determined that the Intelligence Community is insufficiently
focused on the threat posed by PRC intelligence and the targeted
effort to obtain militarily useful technology from the United
States. Due to our sustained focus on the Soviet Union during
the Cold War, intelligence collection against the PRC was not
a top priority for our intelligence agencies in those years.
For the last several years, the U.S. Intelligence Community
has begun to place a greater priority on the PRC. Nonetheless,
the Intelligence Community lacks sufficient Chinese linguists
and needs increased resources to address the challenge posed
by the PRC's intelligence collection efforts.
The FBI has inadequate resources in light of the extensive
numbers of PRC visitors, students, diplomats, business representatives,
and others who may be involved in intelligence and military-related
technology transfer operations in the United States.
B. Efforts to deny the PRC access to U.S. military technology
are complicated by the broad range of items in which the PRC
is interested, and by transfers to the PRC of Russian military
and dual-use technologies, which may make the consequences of
the PRC's thefts of U.S. technology more severe.
The PRC seeks and has acquired from the United States and
elsewhere a broad range of military and related technologies.
Russia, for example, has provided the PRC with extensive military
assistance and related technologies, including a number of complete
military systems. The Select Committee has been advised that
the sheer number of transfers of military equipment and technology
to the PRC from Russia, most of which have been a product of
dramatically increased PRC-Russian military cooperation since
1992, is vastly greater than the number of transfers from the
United States, most of which are the result of PRC espionage.
Together, the added capabilities that the PRC has gained and
continues to gain from foreign sources makes it difficult to
assess how quickly the PRC will be able to make full use of any
systems or technologies stolen from the United States. For example,
the PRC's reported acquisition of solid-fuel and mobile missile
launcher technologies, if successfully combined with stolen U.S.
nuclear design information, will enable the PRC to field a robust
road-mobile, intercontinental ballistic missile threat to the
United States sooner than would otherwise have been possible.
C. The PRC uses commercial and political contacts to advance
its efforts to obtain U.S. military, as well as commercial, technology.
The PRC has adopted policies in recent years aimed at increasing
its influence within the United States in order to increase access
to U.S. military, as well as commercial, technology.
To this end, the PRC has used access to its markets to induce
U.S. business interests to provide military-related technology.
The PRC also uses access to its markets to induce U.S. businesses
to lobby in behalf of common goals, such as liberalized export
standards and practices.
Agents tied to the PRC's military industries who have illegally
provided political contributions may have used these contributions
to gain access to U.S. military and commercial technology.
D. The PRC has proliferated nuclear, missile, and space-related
technologies to a number of countries.
The PRC is one of the leading proliferators of complete ballistic
missile systems and missile components in the world.
The PRC has sold complete ballistic missile systems, for example,
to Saudi Arabia and Pakistan, and missile components to a number
of countries including Iran and Pakistan. The PRC has proliferated
military technology to Iran, Pakistan, and North Korea.
In 1991, the PRC agreed to adhere to the April 1987 Missile
Technology Control Regime (MTCR) guidelines, but the PRC has
not accepted the revisions to those guidelines issued in 1993.
The 1993 MTCR guidelines increase the kinds of missile systems
subject to controls and call for a "strong presumption to
deny" both sales of complete missile systems and components
that could be used in ballistic missiles.
The PRC has provided, or is providing, assistance to the missile
and space programs of a number of countries according to the
Congressional Research Service. These countries include, but
are not limited to:
· Iran. The
PRC has provided Iran with ballistic missile technology, including
guidance components and the recent transfer of telemetry equipment.
The PRC reportedly is providing Iran with solid-propellant missile
technology. Additionally, the PRC provided Iran with the 95-mile
range CSS-8 ballistic missile. Since the mid-1980s, the PRC has
transferred C-802 anti-ship cruise missiles to Iran. The PRC
has also provided assistance to Iran's nuclear programs.
The PRC has provided Pakistan with a wide range of assistance.
The PRC reportedly supplied Pakistan with CSS-X-7/M-11 mobile
missile launchers and reportedly has provided Pakistan with the
facilities necessary to produce M-11 missiles. The PRC provides
Pakistan with assistance on uranium enrichment, ring magnets,
and other technologies that could be used in Pakistan's nuclear
· Saudi Arabia.
The PRC provided a complete CSS-2 missile system to Saudi Arabia
in 1987. The conventionally-armed missile has a range of 1,200
to 1,900 miles.
· North Korea.
The Select Committee judges that the PRC has assisted weapons
and military-related programs in North Korea.
The Select Committee is aware of information of further PRC
proliferation of missile and space technology that the Clinton
administration has determined cannot be publicly disclosed without
affecting national security.
See the chapter PRC Acquisition of U.S. Technology
for more detailed discussion of the Select Committee's investigation
of these matters.