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CHAPTER 1
PRC Acquisition of U.S. Technology
CHAPTER 1 SUMMARY
THE STRUCTURE OF THE PRC GOVERNMENT
COSTIND: The CCP's Use of Corporations for Military Aims
CCP Supremacy Over the State, the PLA, and the Economy
DEVELOPMENT OF THE CCP'S TECHNOLOGY POLICIES
The 863 and Super-863 Programs:
Importing Technologies for Military Use
Biological Warfare
Space Technology
Military Information Technology
Laser Weapons
Automation Technology
Nuclear Weapons
Exotic Materials
The 16-Character Policy: 'Give Priority to Military Products'
The PRC's Use of Intelligence Services to Acquire U.S.
Military Technology
METHODS USED BY THE PRC TO ACQUIRE ADVANCED
U.S. MILITARY TECHNOLOGY
The 'Princelings'
Acquisition of Military Technology from Other Governments
Russia
Israel
The United States
Joint Ventures with U.S. Companies
Acquisition and Exploitation of Dual-Use Technologies
Front Companies
Direct Collection of Technology by
Non-Intelligence Agencies and Individuals
Illegal Export of Military Technology
Purchased in the United States
PRC Purchase of Interests in U.S. Companies
Methods Used by the PRC to Export
Military Technology from the United States
PRC Incentives for U.S. Companies to
Advocate Relaxation of Export Controls
THE PRC'S EFFORTS TO ASSIMILATE
ADVANCED U.S. MILITARY TECHNOLOGY
U.S. GOVERNMENT MONITORING OF PRC TECHNOLOGY
ACQUISITION EFFORTS IN THE UNITED STATES
CHAPTER 1 NOTES
CHAPTER 2
PRC Theft of U.S.
Thermonuclear Warhead Design Information
CHAPTER 2 SUMMARY
PRC THEFT OF U.S. THERMONUCLEAR WARHEAD
DESIGN INFORMATION
THE PRC'S NEXT GENERATION NUCLEAR WARHEADS
THE IMPACT OF THE PRC'S THEFT OF U.S. THERMONUCLEAR
WARHEAD DESIGN INFORMATION
Mobile and Submarine-Launched Missiles
Acceleration of PRC Weapons Development
Effect on PRC Nuclear Doctrine
Multiple Warhead Development
Proliferation
Russian Assistance to the PRC's Nuclear Weapons Program
HOW THE PRC ACQUIRED THERMONUCLEAR WARHEAD
DESIGN INFORMATION FROM THE UNITED STATES:
PRC ESPIONAGE AND OTHER PRC TECHNIQUES
HOW THE U.S. GOVERNMENT LEARNED OF THE PRC'S
THEFT OF OUR MOST ADVANCED THERMONUCLEAR
WARHEAD DESIGN INFORMATION
The "Walk-In"
THE PRC'S FUTURE THERMONUCLEAR WARHEAD
REQUIREMENTS: THE PRC'S NEED FOR NUCLEAR
TEST DATA AND HIGH PERFORMANCE COMPUTERS
U.S. GOVERNMENT INVESTIGATIONS OF NUCLEAR
WEAPONS DESIGN INFORMATION LOSSES
Investigation of Theft of Design Information
for the Neutron Bomb
Investigation of Thefts of Information Related to the Detection
of Submarines and of Laser Testing of Miniature Nuclear Weapons
Explosions
Investigation of Theft of Design Information
for the W-88 Trident D-5 Thermonuclear Warhead
Investigation of Additional Incidents
THE DEPARTMENT OF ENERGY'S COUNTERINTELLIGENCE
PROGRAM AT THE U.S. NATIONAL WEAPONS LABORATORIES
NOTIFICATION OF THE PRESIDENT AND SENIOR U.S. OFFICIALS
CHAPTER 2 NOTES
CHAPTER 3
High Performance Computers
CHAPTER 3 SUMMARY
HIGH PERFORMANCE COMPUTERS
MILITARY OBJECTIVES CONTRIBUTE TO THE PRC'S
INTEREST IN HIGH PERFORMANCE COMPUTERS
U.S. HIGH PERFORMANCE COMPUTERS HAVE
THE GREATEST POTENTIAL IMPACT ON THE PRC'S
NUCLEAR WEAPONS CAPABILITIES
Existing PRC Nuclear Weapons
New PRC Nuclear Weapons
Nuclear Weapons Stockpile Stewardship
TRANSFER OF HPS TECHNOLOGY CAN BENEFIT
PRC INTELLIGENCE CAPABILITIES
Sensors for Surveillance, Target Detection,
and Target Recognition
Sensor Platforms for Aerial and Space-Based Reconnaissance
Cryptology
TRANSFER OF HIGH PERFORMANCE COMPUTER TECHNOLOGY
TO THE PRC COULD CONTRIBUTE TO THE MANUFACTURE
OF WEAPONS OF MASS DESTRUCTION, MISSILES,
AND OTHER WEAPONS
Missiles
Chemical and Biological Weapons
Information Warfare
TRANSFER OF HIGH PERFORMANCE COMPUTER
TECHNOLOGY TO THE PRC COULD SUPPORT ATTAINMENT
OF OTHER PRC MILITARY OBJECTIVES
Command, Control, and Communications
Meteorology for Military Operations
Cartography for Military Operations
Military Training Systems
NATIONAL SECURITY IMPLICATIONS OF HIGH PERFORMANCE
COMPUTER USE BY THE PRC MILITARY
U.S. EXPORT POLICY HAS GRADUALLY RELAXED CONTROLS
ON HIGH PERFORMANCE COMPUTERS
Some Reviews That Contributed to High Performance Computer
Policy Changes in 1996 Have Been Criticized
The Stanford Study
Defense Department Review of
Military Applications for HPCs
Institute for Defense Analyses Technical Assessment
Defense Department Proliferation Criteria
Details of the 1996 High Performance Computer Export Control
Policy Changes
Export Administration Act Provisions and Export Administration
Regulations Currently Applicable to
High Performance Computers
The Second Stanford Study
Arms Export Control Act Provisions and International Traffic
in Arms Regulations Currently Applicable to Computers
CONCERNS OVER HIGH PERFORMANCE COMPUTER
EXPORTERS' ABILITY TO REVIEW END-USERS IN THE PRC
PROMPTED THE REQUIREMENT FOR PRIOR NOTIFICATION
The U.S. Government Has Conducted Only One End-Use Check
for High Performance Computers in the PRC
Some U.S. High Performance Computer Exports to the PRC
Have Violated U.S. Restrictions
New World Transtechnology
Compaq Computer Corporation
Digital Creations
Lansing Technologies Corporation
HIGH PERFORMANCE COMPUTERS AT U.S. NATIONAL WEAPONS LABORATORIES
ARE TARGETS FOR PRC ESPIONAGE
U.S. National Weapons Laboratories Have Failed to Obtain
Required Export Licenses for Foreign High Performance Computer
Use
PRC Students Have U.S. Citizen-Like Access to High Performance
Computers at the National Weapons Laboratories
MANY TYPES OF COMPUTER TECHNOLOGY HAVE
BEEN MADE AVAILABLE TOTHE PRC THAT
COULD FACILITATE RUNNING PROGRAMS OF
NATIONAL SECURITY IMPORTANCE
THE PRC HAS A LIMITED CAPABILITY TO PRODUCE
HIGH PERFORMANCE COMPUTERS
U.S. HIGH PERFORMANCE COMPUTER EXPORTS
TO THE PRC ARE INCREASING DRAMATICALLY
THE PRC IS OBTAINING SOFTWARE FROM
U.S. AND DOMESTIC SOURCES
POTENTIAL METHODS OF IMPROVING END-USE VERIFICATION
Tagging
Technical Safeguards
Other Possibilities
TECHNICAL AFTERWORD: Changing High Performance Computer Technology
Is Making Export Control More Difficult
CHAPTER 3 NOTES
CHAPTER 4
PRC Missile and Space Forces
CHAPTER 4 SUMMARY
INTRODUCTION
THE PLA'S BALLISTIC MISSILE FORCES
Development of the PLA's Ballistic Missile Forces
The Soviet Union's Contribution to the PLA's Ballistic
Missile Force
The Role of Qian Xuesen in the Development of the PRC's
Ballisitc Missile and Space Programs
Development of the PLA's Intermediate- and Short-Range
Ballistic Missiles
The PLA's Current 'East Wind' Intercontinental
Ballistic Missiles
The PLA's Future 'East Wind' Intercontinental
Ballistic Missiles
The PRC's Medium- and Short-Range Ballistic Missiles
Stolen U.S. Technology Used on PRC Ballistic Missiles
The PRC's Strategic Forces Doctrine
The PRC's Opposition to U.S. Missile Defenses
The PRC's Acquisition of Foreign Ballistic Missile Technology
The PRC's Indigenous Ballistic Missile Design Capabilities
PRC Missile Proliferation
Iran
Pakistan
Saudi Arabia
THE PRC'S MILITARY AND CIVIL SPACE PROGRAM
The PRC's Commercial Space Launch Program
The PRC's Future Space Launch Capabilities
PRC Space Weapons
The PRC's Manned Space Program
The PRC's Communications Satellite Programs
The PRC's Use of Foreign Components on
Communications Satellites
The PRC's Reliance on Western Communications Satellites
PRC Use of Very Small Aperture Terminals (VSATs)
The PLA's Reconnaissance Satellite Program
The PRC's Other Military Satellite Programs
The Asia-Pacific Mobile Telecommunications
(APMT) Satellite
The Role of PLA General Shen Rongjun
and His Son in APMT
SIMILARITIES BETWEEN THE PRC'S
BALLISTIC MISSILE AND ROCKET TECHNOLOGY
Background
Propulsion Systems
Airframes
Ballistic Missile and Rocket Stages
Guidance Systems
Ground Support
Systems Integration
Payload
Conclusion
CHAPTER 4 NOTES
CHAPTER 5
Satellite Launches in the PRC: Hughes
CHAPTER 5 SUMMARY
OPTUS B2, APSTAR 2 LAUNCH FAILURES: PRC GAINS
SENSITIVE KNOWLEDGE FROM HUGHES INVESTIGATIONS
THE PROHIBITION AGAINST TECHNOLOGY TRANSFER
IN FOREIGN LAUNCHES
International Traffic in Arms Regulations
and the U.S. Munitions List
Department of Defense Monitoring Role
OPTUS B2
The Optus B2 Licenses
The Optus B2 Fails To Achieve Orbit
Failure Investigation Teams
Failure Investigation Begins
Hughes' Export Administrators Deal
with the Licensing Question
A 'Political' Business Solution
The Optus B3: Hughes' Efforts to Improve
the Long March Continue
APSTAR 2
The Apstar 2 License
The Apstar 2 Failure
Failure Investigation Teams
Failure Investigation Schedule
The Need for a License
Commerce Department Conference
Same Fairing Failure Identified by Hughes
A 'Political' Business Solution, Again?
The Commerce Department Approves Data Release to the PRC
Hughes Tries to Get the PRC to Accept Its Findings
CIA Analyst Visits Hughes
A 'Consolidated Solution'
Final Failure Investigation Report Released
to the PRC by the Commerce Department
Implementing the 'Consolidated Solution'
U.S. Government Actions Following
the Apstar 2 Launch Failure
Defense Department Assessments
of Damage to National Security
Damage to National Security from
the Apstar 2 Failure Investigation
Damage to National Security from the Sharing
of Coupled Loads Analysis
Damage to National Security from Providing the PRC
with Information Concerning Deficiencies in the Fairing,
and Resultant Improvements to PRC Rockets
and Ballistic Missiles
Other Information Learned by the PRC,
and Defense Department Reaction
State Department Assessments of Damage to National Secuirty
Damage to National Security Identified
by the Select Committee's Technical Consultant
CHARLIE TRIE, THE PRC, AND HUGHES ELECTRONICS
FURTHER INVESTIGATION WARRANTED
TECHNICAL AFTERWORD: Nose Fairings on Rockets
and Ballistic Missiles
CHAPTER 5 NOTES
CHAPTER 6
Satellite Launches in the PRC: Loral
CHAPTER 6 SUMMARY
INTELSAT 708 LAUNCH FAILURE: LORAL INVESTIGATION PROVIDES
PRC WITH SENSITIVE INFORMATION: OVERVIEW OF EVENTS
The PRC's Launch Failure Investigation
The Asia Pacific Telecommunications Insurance Meeting
The PRC's Creation of an 'Independent Review Committee'
The Independent Review Committee's Meetings
The Independent Review Committee's Report
Substance of the Preliminary Report
The Report Goes to the PRC
Defense Department Analyst Discovers the Activities of
the Independent Review Committee
Loral and Hughes Investigate the Matter
The Aftermath: China Great Wall Industry Corporation Revises
Its Findings on the Cause of the Accident
U.S. Government Assessments of the Independent Review Committee's
Report, and Referral to the Department of Justice
DETAILS OF THE FAILED LONG MARCH 3B-INTELSAT 708 LAUNCH AND
INDEPENDENT REVIEW COMMITTEE ACTIVITIES
Background on Intelsat and Loral
Intelsat
Loral Space and Communications
Space Systems/Loral
Intelsat 708 Launch Program
The Intelsat 708 Launch Failure
Events Leading Up to the Creation of the Independent Review
Committee
The Government Security Committee Meeting at Loral
The Apstar 1A Insurance Meeting
The April 1996 Independent Review Committee Meetings in
Palo Alto
Meeting on April 22, 1996
Meeting on April 23, 1996
Meeting on April 24, 1996
United States Trade Representative Meeting on April 23,
1996
The April and May 1996 Independent Review Committee Meetings
in Beijing
Meeting on April 30, 1996
Members' Caucus at the China World Hotel
Meeting on May 1, 1996
The Independent Review Committee Preliminary Report
Writing the Report
Loral Sends the Draft Report to the PRC
The Contents of the Draft Report
Notification to Loral Officials That a Report Had Been
Prepared
Loral Review and Analysis of the Independent Review Committee
Report
The Final Preliminary Report is Sent to the PRC
Another Copy of the Report is Sent to Beijing
Loral Management Actions After Delivery of the Report
to the PRC
Defense Department Official Discovers the Activities of
the Independent Review Committee
Meeting with the Defense Technology Security Administration
Meeting with the State Department
Reynard's Telephone Call to Loral
Loral Management Discovers the Independent Review Committee
Report Has Been Sent to the PRC
Loral's 'Voluntary' Disclosure
Investigation by Loral's Outside Counsel
Loral Submits Its 'Voluntary' Disclosure to the State Department
The PRC Gives Its Final Failure Investigation Report
Assessments By U.S. Government Agencies and Referral to
the Department of Justice
Defense Department 1996 Assessment
Central Intelligence Agency Assessment
Department of State Assessment
Defense Technology Security Administration 1997 Assessment
Interagency Review Team Assessment
Outline of What Was Transferred to the PRC
Independent Review Committee Meeting Minutes
Independent Review Committee Preliminary Report
Loral's Inaccurate Instructions on Releasing Public Domain
Information to Foreigners
Instructions to the Independent Review Committee Regarding
Public Domain Information
State Department Views on Public Domain Information
The Defense Department Concludes That the Independent Review
Committee's Work Is Likely to Lead to the Improved Reliability
of PRC Ballistic Missiles
The Cross-Fertilization of the PRC's Rocket
and Missile Design Programs
The Independent Review Committee Aided the PRC in Identifying
the Cause of the Long March 3B Failure
The PRC Implemented All of the Independent Review Committee's
Recommendations
The Independent Review Committee Helped the PRC Improve
the Reliability of Its Long March Rockets
AFTERWORD: U.S. Companies' Motivations to Launch SATELLITES
in the PRC
CHRONOLOGY OF KEY EVENTS
TECHNICAL AFTERWORD: Technical Aspects of Technology Transfer
During the Loral Failure Investigation: Background
CHAPTER 6 NOTES
CHAPTER 7
Protecting Sensitive Information
at PRC Launch Sites
CHAPTER 7 SUMMARY
PROTECTING SENSITIVE INFORMATION
AT PRC LAUNCH SITES: BACKGROUND
U.S.-PRC Bilateral Agreement
Export Licenses for PRC Launching of U.S. Satellites
Defense Department Monitors
UNAUTHORIZED ACCESS ALLOWS OPPORTUNITIES TO GAIN INFORMATION
CONCERNING U.S. SATELLITES AND OTHER CONTROLLED TECHNOLOGY
INADEQUACY OF CURRENT SAFEGUARDS
SAFEGUARDING U.S.-BUILT SATELLITES AND U.S. ROCKET TECHNOLOGY
AT PRC LAUNCHES
Country-to-Country Agreements
Export Licenses
THE DEFENSE DEPARTMENT'S RESPONSIBILITIES FOR SAFEGUARDING
U.S. TECHNOLOGY AT LAUNCHES
DEFICIENCIES OBSERVED IN THE CURRENT SYSTEM
U.S.-PRC Technical Discussions Occur Prior to the Issuance
of Export Licenses
Technology Transfer Control Plans and Security Plans Vary
Throughout the Space Industry
Temporary Assignments of Defense Department Monitors Disrupt
Continuity of Launch Site Security
An Inadequate Number of Defense Department Monitors Is
Assigned to PRC Launches
Uneven Prior Technical Experience of
the Defense Department Monitors
Inadequate Headquarters Review of Monitor Reports
Lack of Headquarters' Support
Lack of Intermediate Sanction Authority
Conflicting Industry Priorities
Satellite Manufacturers, Not the Defense Department, Supervise
Site Security Personnel
Reliance on Private Contractor Security Is Inadequate
Insufficient Numbers of Security Guards at PRC Launche
Sites
CORRECTING SECURITY DEFICIENCIES
The 1999 Defense Authorization Act
EXCERPTS FROM DEFENSE DEPARTMENT MONITORS' REPORTS OF SECURITY
LAUNCHES OF U.S. SATELLITES
CHAPTER 7 NOTES
CHAPTER 8
The Role of Commercial Space Insurance in Technology Transfer
to the PRC
CHAPTER 8 SUMMARY
THE ROLE OF COMMERCIAL SPACE INSURANCE IN TECHNOLOGY TRANSFER
TO THE PRC
Insurance Aspects of
the Long March 3B-Loral-Intelsat 708 Failure
The Formation of the Independent Review Committee
The April 15-16, 1996 Insurance Meeting in Beijing
The Space Insurance Industry's Involvement in the Release
of the Independent Review Committee's Interim Report
CHRONOLOGY OF KEY EVENTS
TECHNICAL AFTERWORD: The Commercial Space Insurance Industry
CHAPTER 8 NOTES
CHAPTER 9
Statutory and Regulatory Controls: The Export of Our Militarily
Sensitive Technology
CHAPTER 9 SUMMARY
STATUTORY AND REGULATORY CONTROLS:
THE EXPORT OF OUR MILITARY SENSITIVE TECHNOLOGY
Export Administration Act
National Security Controls
Foreign Policy Controls
Short Supply Controls
CONTROLS MAINTAINED IN COOPERATION
WITH OTHER NATIONS
COCOM (Coordinating Committee on
Multilateral Export Controls)
Wassenaar Arrangement
Australia Group
Missile Technology Control Regime
Nuclear Suppliers Group
ENHANCED PROLIFERATION CONTROL INITIATIVE
EXPORT ADMIISTRATION REGULATIONS
ARMS EXPORT CONTROL ACT
INTERNATIONAL TRAFFIC IN ARMS REGULATIONS
OMNIBUS TRADE AND COMPETITIVENESS ACT OF 1988
ECONOMIC ESPIONAGE ACT OF 1996
EXPORT LICENSES FOR MILITARILY SENSITIVE TECHNOLOGY:
DEPARTMENT OF COMMERCE
Export License Processing Until December 1995
License Processing Since Executive Order 12981
in December 1995
Pre-License Checks and Post-Shipment Verifications
Roles of Other Departments and Agencies
in Commerce's Export Licensing Policy
Department of State
Department of Defense
Central Intelligence Agency
Enforcement
Voluntary Disclosures
Penalties for Violation of
the Export Administration Regulations
Penalties Under the 1979 Act (Expired Since 1994)
Administrative Sanctions
Penalties Under the International Emergency
Economic Powers Act
Customs Enforcement
Commodity Classification Requests Under
the Commerce Control List
EXPORT LICENSES FOR MILITARILY SENSITIVE TECHNOLOGY: DEPARTMENT
OF STATE
Procedures for Referral to Other Departments and Agencies
of Requests to Export U.S. Munitions List Items
Commodity Jurisdiction Process
Registration of Exports
Congressional Oversight and Required Reports
Foreign-Origin Items with U.S. Content
Enforcement
Penalties for Violations of
the Arms Export Control Act and ITAR
Voluntary Disclosures
BLUE LANTERN Checks
EXPORT CONTROL POLICY TOWARD THE PRC
Background
Launch of Satellites on PRC Rockets
Satellite Launches in the PRC Following Tiananmen Square
Missile Proliferation Sanctions on the PRC
U.S. Munitions List Changes Regarding Satellites
Relaxation of Satellite Export Rules
The Trade Promotion Coordinating Committee Recommends Moving
Satellites to Commerce Department Jurisdiction
The 1996 Transfer of Jurisdiction Over Commercial Satellites
to Commerce
The 1999 Return of Jurisdiction Over Commercial Satellites
to the State Department
High Performance Computers
Machine Tools
Treatment of Hong Kong
John Huang, Classified U.S. Intelligence, and the PRC
CHAPTER 9 NOTES
CHAPTER 10
Manufacturing Proceses: PRC Efforts to Acquire Machine Tool
and Jet Engine Technologies
CHAPTER 10 SUMMARY
MANUFACTURING PROCESSES: PRC EFFORTS TO ACQUIRE MACHINE TOOL
AND JET ENGINE TECHNOLOGIES
PRC TARGETING OF ADVANCED MACHINE TOOLS
Export Controls on Machine Tools
Export Administration Regulations
The PRC's Machine Tool Capabilities and Foreign Acquisitions
CASE STUDY: McDONNELL DOUGLAS MACHINE TOOLS
Findings of the U.S. General Accounting Office
The U.S. Government's Actions in Approving the Export Licenses
Intelligence Community Assessments
Changes to the Trunkliner Program
Discussions in the Advisory Committee for Export Policy
The License is Issued
McDonnell Douglas's Plans
McDonnell Douglas's Limited Role at the Machining Center
Trunkliner Program
Commerce Department Delays Investigating Machine Tool Diversion
for Six Months
The Commerce Department's Actions in April 1995
The Commerce Department's Actions in October 1995
Allegation that the Commerce Department Discouraged the
Los Angeles Field Office's Investigation
The Office of Export Enforcement's Los Angeles Field Office's
Request for a Temporary Denial Order Against CATIC
PRC Diversion of Machine Tools
CATIC Letter Suggests Trunkliner Program at Risk
CATIC's Efforts to Create the Beijing Machining Centerwith
Monitor Aerospace
Diversion of the Machine Tools to Nanchang Aircraft Company
Nanchang Accepts Responsibility
CHRONOLOGY OF KEY EVENTS
PRC TARGETING OF U.S. JET ENGINES
AND PRODUCTION TECHNOLOGY
CASE STUDY: GARRETT ENGINES
PRC Targeting of Garrett Engines
U.S. Government Approval of
the Initial Garrett Engine Exports
Commerce Department Decontrol of the Garrett Jet Engines
The Interagency Review of the Proposed Export
of Garrett Jet Engines
Consideration of Enhanced
Proliferation Control Initiative Regulations
Consideration of COCOM
and Export Administration Regulations
Resolution of the Garrett Engine Controversy
THE PRC CONTINUES TO ACQUIRE
JET ENGINE PRODUCTION PROCESSES
TECHNICAL AFTERWORD: The PRC's Acquisition of Machine Tools,
Composite Materials, and Computers for Aircraft and Missile Manufacturing
CHAPTER 10 NOTES
CHAPTER 11
Recommendations
APPENDICES
THE INVESTIGATION
MEMBERS AND STAFF
H. RES. 463
HEARINGS AND MEETINGS
INTERVIEWS, DEPOSITIONS, AND DOCUMENT REQUESTS
GLOSSARIES
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