TECHNOLOGY TRANSFER CONTROVERSY


Since April 1998 investigations into illegal campaign contributions from Chinese sources to the 1996 presidential campaign and allegat- ions that sensitive military technology was possibly transferred to the Chinese military through a program that has allowed American satellite companies to launch their satellites on Chinese rockets have crossed paths. The investigations intersect over the charge that in 1996 funds from an executive at China Aero-space, a company controlled by Chinaís Peopleís Liberation Army (PLA) were passed to democratic fund-raiser Johnny Chung as contributions to the Democratic National Committee.

The allegation asserts that the contribution was intended to influence the administrationís decision to give the Commerce Department jurisdiction over the approval process for launching a satellite in China. Members of Congress have voiced their criticism of the transfer of the program from the Department of State to the Commerce Department on the grounds that the Commerce Department is more inclined to place business interests ahead of national security interests.

The change in federal agency jurisdiction is held responsible for the approval of a satellite launch by Space Systems/Loral while the company was under investigation by the Department of Justice for possibly passing sensitive military technology to China through its participation in a study of a 1996 failed rocket launch.

News sources have stated that the findings of the study group, that included members from Loral and another satellite company, Hughes, were faxed to China without first being presented to the proper federal agencies to ensure that national security was not compromised. A classified study issued in May 1997 by the Pentagon, however, concluded that the information passed to China by Loral contained information that would improve the reliability of Chinaís nuclear missiles and thereby had harmed national security.

The approval of the launch while Loral was under investigation for such charges has led to questions of whether American policy has been influenced by the large donations Loral and other satellite companies have made to Clintonís election and re-election campaigns. Both the administration and the companies involved in the investigation deny that any special treatment was provided. In interviews on May 19 and 21, 1998, State Department spokesman James P. Rubin defended the administrationís approval of the waiver and the licensing program that is currently administered by Commerce. He and other industry defenders made the case that barring American companies from cost-effectively launching their satellites also undermines national security. Rubin argued that the current safeguards are adequate and that there is no evidence of a linkage between the policy and campaign contributions from American or Chinese sources.

These investigations have led some members of Congress, military and other federal agencies to question a policy that was initiated under President Bush at the urging of several Californian lawmakers.

The policy established a waiver system whereby American satellite companies could continue to compete in the international market by launching their satellites in China at a considerable savings. The waiver was required after the U.S. imposed sanctions on the Chinese government following the 1989 Tiananmen Square incident. Eleven waivers have been signed by Presidents Bush and Clinton.

Congressional reaction to the allegations that national security is compromised by such launchings prompted Congress to pass legislation prohibiting the export of American-made satellites and missile technology to China by a vote of 412ó6 on May 20, 1998. Since then the Senate has launched investigations headed by four committees (Armed Services, Foreign Relations, Governmental Affairs, and Intelligence) and the House has initiated an investigation led by Representative Christopher Cox (R-Calif.).

At the time of publication, the committees have not concluded their investigations and are unlikely to do so before Congress goes into recess. The Senate is also unlikely to hold a vote on the legislation passed in the House on May 20, 1998. Therefore the issue must be reintroduced in the next Congressional session that begins in 1999.


November Newsletter Index || U.S.-China Policy Review Mainpage