[Congressional Record Volume 142, Number 39 (Wednesday, March 20, 1996)]
[Extensions of Remarks]
[Pages E385-E386]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           A SELLOUT TO CHINA

                                 ______


                         HON. TILLIE K. FOWLER

                               of florida

                    in the house of representatives

                        Tuesday, March 19, 1996

  Mrs. FOWLER. Mr. Speaker, China's recent saber-rattling in the Taiwan 
Strait has raised eyebrows and anxiety levels all over the world and 
generated news coverage about China's defense buildup and weapons and 
technology sales to other nations. These are issues of extraordinary 
importance, and I am glad to see that they are finally getting some 
attention.
  One area, however, which has been virtually ignored is the fact that 
United States Government officials have actually aided the People's 
Republic of China in these activities by loosening export controls and 
only selectively enforcing laws which are meant to prevent critical 
technology from falling into the wrong hands. Some of the effects of 
this short-sighted and dangerous trend were described last week in an 
article in the Wall Street Journal written by Michael Ledeen, a senior 
scholar at the American Enterprise Institute and an expert on foreign 
policy.
  The article addresses some of the implications of our Nation's 
transfer of technology to China, including the fact that the transfers 
are undermining stability in the region and jeopardizing our national 
security. I include a copy of the article to be included in the 
Congressional Record following my remarks.

             [From the Wall Street Journal, Mar. 12, 1996]

                           A Sellout to China

                          (By Michael Ledeen)

       Those of us who believe that free trade and free markets 
     are morally, politically and economically superior to state 
     planning must nonetheless recognize that the government 
     should take measures to prevent the sale of particularly 
     dangerous technology to actual and potential enemies. Our 
     victory in the Cold War was due in no small measure to the 
     Reagan administration's successful program to deny the Soviet 
     Union advanced military technology.
       Yet that lesson has been forgotten in the scramble for 
     business in the last major Communist dictatorship, the 
     People's Republic of China. As a recent fiasco proves, the 
     Clinton administration has encouraged American corporations 
     to facilitate the rapid growth of Chinese military power, 
     which is now being used to intimidate our democratic friends 
     and allies in Taiwan and elsewhere in Asia, and may someday 
     be directed against us.


                          a struggling company

       The story involves a struggling aircraft company, McDonnell 
     Douglas. Led to believe they could cash in on a Chinese 
     proposal to purchase large numbers of civilian aircraft, 
     McDonnell executives, in violation of export-control 
     legislation, permitted the Chinese to visit a plant in 
     Columbus, Ohio, where parts for the B-1 bomber and the C-17 
     strategic transport plane were manufactured. The Chinese took 
     extensive notes, photographs and even videotapes of the 
     machinery, involving advanced ``five axis'' tools used to 
     manufacture components not only for aircraft but also for 
     cruise missiles and nuclear warheads. Workers at the plant, 
     already enraged by McDonnell's decision to phase out the 
     facility, protested against the Chinese inspection tours. To 
     avoid the workers's wrath, the McDonnell executives smuggled 
     the Chinese in at night or on weekends. The Chinese were so 
     keen to get their hands on the technology that they linked 
     future cooperation with McDonnell to their ability to buy the 
     machinery.
       Even though other American companies were interested in 
     buying the equipment. McDonnell, lured by Chinese promises to 
     buy dozens of jointly produced MD-90 passenger planes, 
     insisted on selling it to China at bargain basement prices 
     (about 10 cents on the dollar). The Commerce Department 
     approved an export license in September 1994. According to 
     government officials, the contents of the factory filled 280 
     semi-trailers, which were driven to the West Coast, whence 
     the stuff was shipped to China.
       On its face the sales seemed to violate international 
     agreements among the ``Nuclear Suppliers Group.'' which 
     forbid selling five-axis machinery to any country known to be 
     a nuclear ``proliferator'' (China is dubbed a ``proliferation 
     concern'' by the U.S. itself). To justify this extraordinary 
     action, the licenses stipulated that the five-axis machines 
     would be sent exclusively to a new Chinese facility in 
     Beijing, where they could be monitored, but U.S. officials 
     failed to conduct any preshipment inspection of the new 
     factory. If they had, they would have discovered that it did 
     not exist. The Chinese had created a Potemkin factory in 
     order to acquire

[[Page E386]]

     the technology, which was destined for military facilities. 
     The intelligence community expected this to happen, and it 
     did; Six of the machines were illegally diverted to Nanchang, 
     a major center for Chinese missile programs.
       By last spring, McDonnell executives realized they'd been 
     had. The machines had gone to a military facility, the 
     Beijing factory was a hoax, and the Chinese had already 
     canceled the bulk of their promised order. McDonnell informed 
     the Commerce Department of the Chinese diversion, and asked 
     that the license be suspended, Commerce did that, and began 
     an investigation, but before its completion, the Chinese came 
     up with another scheme: Why not send the machines to a 
     factory in Shanghai that was already part of the joint 
     venture with McDonnell? McDonnell filed a request to amend 
     the export license, and in late January a Commerce official 
     told the Far Eastern Economic Review's Nigel Holloway that 
     the amended license had been approved. It is hard to imagine 
     a more classic act of appeasement: A sale that never should 
     have been approved in the first place turns out to have been 
     an illegal diversion, but instead of punishing the criminals 
     involved, the Clinton administration simply covers it up by 
     rewriting the documents.
       As if this were not enough, it turns out that McDonnell is 
     hotly pursuing another project with the Chinese, which would 
     expand its MD-90 airplane facility at Shenyang to 
     manufacture parts for a smaller version, the MD-95. Some 
     officials in the Defense Department were concerned that 
     advanced machine tools at Shenyang were grossly 
     underutilized, and they believe they have now found an 
     explanation. On Feb. 5, a joint Chinese-Russian project 
     was announced for the construction of Su-27 fighters--some 
     of the most advanced in the world--at Shenyang. No clearer 
     proof could be imagined of the military value of the 
     McDonnell hardware. One would hope that our president 
     would come down hard on a company that was contributing so 
     mightily to Chinese military power. Instead, at a 
     campaign-style appearance at a McDonnell plant in Long 
     Beach, Calif., on Feb. 23, Bill Clinton announced that the 
     government was buying another batch of McDonnell military 
     transports.
       The McDonnell case is just one example among many of the 
     Clinton administration's determination to give China most 
     everything it wants, national security be damned. As early as 
     October 1993, Secretary of Defense William Perry announced in 
     Beijing that he'd told the Chinese they could cut back on 
     their nuclear testing by using advanced computers to simulate 
     the explosions, adding that the U.S. was prepared to share 
     this know-how. Within two months, Mr. Clinton announced a 
     massive decontrol on exports of the necessary supercomputers.
       While it is true that the computer simulations might reduce 
     the need for some nuclear testing, they also permit the 
     Chinese to conduct their nuclear program with greater 
     secrecy, thereby making it far more difficult for the West to 
     find out what China is up to in this delicate area. But 
     Clinton & Co. don't seem terribly worried by anything the 
     Chinese might care to do. The Washington Times revealed on 
     Feb. 5 that the intelligence community had discovered that 
     China is shipping the Pakistanis components for their nuclear 
     weapons program. This leak, nicely timed to coincide with the 
     Washington visit of China's foreign minister, shamed the 
     administration into promising it would raise the issue 
     with him.
       Another leak--this time that the Chinese are providing Iran 
     with the technology for advanced chemical weapons factories--
     appeared just in time for the arrival in Washington of their 
     national security adviser. But why should the Chinese worry? 
     This is the crowd that decontrolled the supercomputers, and 
     pointedly refused to take punitive action when advanced 
     technology was illegally diverted to military projects. The 
     administration even refused to invoke sanctions when Adm. 
     Scott Redd, commander of U.S. naval forces in the Persian 
     Gulf, warned that missiles supplied by China to Iran threaten 
     our ships.


                               only words

       The Clinton administration's threats to ``get tough'' with 
     China are only words, and the words are belied by its 
     actions. Just before the release of the State Department's 
     criticism of Chinese human rights practices last week, the 
     White House announced the lifting of yet another sanction on 
     China: American companies like Loral, Hughes and Lockheed 
     Martin can now use Chinese rockets to put their satellites 
     into orbit. It doesn't take a Confucian scholar to understand 
     the meaning of Mr. Clinton's behavior: The words assuage his 
     domestic critics, but the actions strengthen and delight the 
     Chinese.
       Mr. Clinton's policy is based on the theory that we can 
     best influence the behavior of China by enmeshing that 
     country in a vast network of trade. For those old enough to 
     remember, this theory was tested in the mid-1970s on the 
     U.S.S.R., when Richard Nixon and Henry Kissinger called it 
     ``detente.'' It did not change Soviet behavior; instead it 
     made the Soviets technologically and militarily more 
     powerful. It will certainly do the same for the Chinese.
       Let us hope that neither our Pacific friends and allies nor 
     our own children will have to face terrible weapons of 
     destruction, designed and manufactured by American computers 
     and machines, foolishly and irresponsibly provided by Bill 
     Clinton, Ron Brown, William Perry and their willing 
     accomplices in government and business.

                          ____________________