China: U.S. and European Union Arms Sales Since the 1989 Embargoes
(Testimony, 04/28/98, GAO/T-NSIAD-98-171).

Pursuant to a congressional request, GAO discussed the status of the
arms embargoes imposed on China by the European Union (EU) and the
United States following the 1989 massacre of demonstrators in Beijing's
Tiananmen Square, focusing on the: (1) terms of the EU embargoes; (2)
extent of EU and U.S. sales of military items to China since 1989; and
(3) potential role that such items could play in addressing China's
defense needs.

GAO noted that: (1) the EU embargo consists of a 1989 political
declaration that EU members will embargo the trade in arms with China;
(2) each EU member may interpret and implement the embargo's scope for
itself; (3) GAO found no instances of EU members entering into new
agreements to sell China lethal military items after 1989, although some
delivered lethal and nonlethal military items to China during the
1990s--apparently in connection with pre-embargo agreements--and have
more recently agreed to deliver additional nonlethal military items; (4)
according to experts, the embargo is not legally binding and any EU
member could legally resume arms sales to China if it were willing to
bear the political consequences of doing so; (5) GAO noted that at least
two EU members are presently reconsidering whether the EU embargo should
be continued; (6) in contrast to the EU embargo, the U.S. embargo is
enacted in U.S. law and bars the sale to China of all military
items--lethal and nonlethal--on the U.S. Munitions List; (7) the
President may waive this ban if he believes that doing so is in the
national interest; (8) since 1989, the President has issued waivers to:
(a) allow the delivery to China of military items valued at $36.3
million to close out the U.S. government's pre-1989 defense agreements
with China; and (b) license commercial military exports valued at over
$312 million--primarily commercial satellite and encryption items; (9)
the rather small amount of EU and U.S. sales of military items to China
since 1989 could help address some aspects of China's defense needs;
(10) however, their importance to China's modernization goal may be
relatively limited because Russia and the Middle East have provided
almost 90 percent of China's imported military items during this period;
(11) according to experts with whom GAO spoke, China must overcome
obstacles posed by its military's command and control, training, and
maintenance processes before it can fully exploit such items; (12)
recent U.S. executive branch actions suggest that its view of China's
human rights record--the basis for the embargo in the first place--may
be changing; and (13) in light of the possible weakening of support for
continuing the embargo by some European governments, the question facing
the U.S. government appears to be how the United States should respond
if the EU embargo were to erode significantly in the near future.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-NSIAD-98-171
     TITLE:  China: U.S. and European Union Arms Sales Since the 1989 
             Embargoes
      DATE:  04/28/98
   SUBJECT:  Foreign governments
             Weapons systems
             Export regulation
             International trade restriction
             Foreign trade policies
             Foreign military sales
             Military materiel
             International relations
IDENTIFIER:  European Union
             U.S. Munitions List
             Russia
             Middle East
             Beijing (China)
             
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Cover
================================================================ COVER


Before the Joint Economic Committee

For Release on Delivery
Expected at
10:00 a.m., EDT
Tuesday,
April 28, 1998

CHINA - U.S.  AND EUROPEAN UNION
ARMS SALES SINCE THE 1989
EMBARGOES

Statement of Harold J.  Johnson, Associate Director, International
Relations and Trade Issues, National Security and International
Affairs Division

GAO/T-NSIAD-98-171

GAO/NSIAD-98-171t

China

(711295)


Abbreviations
=============================================================== ABBREV

  DOD - Department of Defense
  EU - European Union

============================================================ Chapter 0

Mr.  Chairman and Members of the Committee: 

I am pleased to be here today to discuss the status of the arms
embargoes imposed on China by the European Union (EU) and the United
States following the 1989 massacre of demonstrators in Beijing's
Tiananmen Square.  Specifically, I will discuss (1) the terms of the
EU and U.S.  embargoes, (2) the extent of EU and U.S.  sales of
military items to China since 1989, and (3) the potential role that
such items could play in addressing China's defense needs. 

As you requested, we developed information regarding EU and U.S. 
arms sales to China; and did not assess China's military
modernization efforts.\1 However, these efforts are the context for
China's arms imports.  In 1985, China adopted a military doctrine
that emphasizes the use of modern naval and air power in joint
operations against regional opponents.  It later began buying foreign
military hardware to support its new doctrine.  The 1989 Tiananmen
Square massacre ruptured China's growing defense relationships with
the United States and the European Union.\2 Since then, China has
relied heavily on other nations, such as Russia, for its military
hardware imports--although it is impossible to know the extent to
which China's import patterns would have been different had the
Tiananmen massacre not occurred. 

Before I begin, I should emphasize that we focused on military
items--that is to say, items that would be included on the U.S. 
Munitions List.  As you know, this list includes both lethal items
(such as missiles) and nonlethal items (such as military radars) that
cannot be exported without a license.  We did not address exports of
items with both civil and military applications because the embargoes
do not bar the sale of such "dual-use" items to China, although
experts believe that dual-use imports are an important source of high
technology for the Chinese military.  Also, I should note that the
information presented in this statement was developed from open data
sources and, therefore, its completeness and accuracy may be subject
to some degree of uncertainty. 


--------------------
\1 For a fuller discussion of China's military, see our report
entitled National Security:  Impact of China's Military Modernization
in the Pacific Region (GAO/NSIAD-95-84, June 6, 1995). 

\2 In 1989, the European Union consisted of Belgium, Denmark, France,
Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands,
Portugal, Spain, and the United Kingdom.  Austria, Finland, and
Sweden have since become EU members. 


   SUMMARY
---------------------------------------------------------- Chapter 0:1

The EU embargo consists of a 1989 political declaration that EU
members will embargo the "trade in arms" with China.  Each EU member
may interpret and implement the embargo's scope for itself.  We found
no instances of EU members entering into new agreements to sell China
lethal military items after 1989, although some members delivered
lethal and nonlethal military items to China during the
1990s--apparently in connection with pre-embargo agreements--and have
more recently agreed to deliver additional nonlethal military items. 
According to experts, the embargo is not legally binding and any EU
member could legally resume arms sales to China if it were willing to
bear the political consequences of doing so.  We noted that at least
two EU members are presently reconsidering whether the EU embargo
should be continued. 

In contrast to the EU embargo, the U.S.  embargo is enacted in U.S. 
law and bars the sale to China of all military items--lethal and
nonlethal--on the U.S.  Munitions List.  The President may waive this
ban if he believes that doing so is in the national interest.  Since
1989, the President has issued waivers to (1) allow the delivery to
China of military items valued at $36.3 million to close out the U.S. 
government's pre-1989 defense agreements with China and (2) license
commercial military exports valued at over $312 million--primarily
commercial satellite and encryption items. 

The rather small amount of EU and U.S.  sales of military items to
China since 1989 could help address some aspects of China's defense
needs; however, their importance to China's modernization goal may be
relatively limited because Russia and the Middle East have provided
almost 90 percent of China's imported military items during this
period.  According to experts with whom we spoke, China must overcome
obstacles posed by its military's command and control, training, and
maintenance processes before it can fully exploit such items. 

Recent U.S.  executive branch actions suggest that its view of
China's human rights record--the basis for the embargo in the first
place--may be changing.  In light of the possible weakening of
support for continuing the embargo by some European governments, the
question facing the U.S.  government appears to be how the United
States should respond if the EU embargo were to erode significantly
in the near future. 


   EU MILITARY EXPORTS TO CHINA
   HAVE BEEN LIMITED
---------------------------------------------------------- Chapter 0:2

In reaction to the Tiananmen Square massacre, the European
Council--an EU decision-making body comprised of ministers from EU
member countries--imposed several sanctions in June 1989, including
"an embargo on trade in arms with China." However, according to
experts, the Council's declaration was not legally binding.  It also
did not specify the embargo's scope.  For example, it did not state
whether the embargo covers all military articles, including weapons
platforms, nonlethal military items, or components. 

EU and other European officials told us that the European Union has
left the interpretation and enforcement of the declaration to its
individual member states\3 and that the members have interpreted the
embargo's scope in different ways.  Officials in some EU nations
informed us that their nations have embargoed the sale of virtually
all military items to China.  In contrast, the United Kingdom's
interpretation of the EU embargo does not bar exports of nonlethal
military items, such as avionics and radars.  The UK embargo is
limited to lethal weapons (such as bombs and torpedoes), specially
designed components of lethal weapons, ammunition, military aircraft
and helicopters, warships, and equipment likely to be used for
internal repression.  European and EU officials told us that EU
members tried during the early 1990s to develop a detailed EU-wide
interpretation of the embargo's scope.  These attempts apparently
fell short and resulted only in the members' mutual recognition that
they were not selling China lethal weapons. 

According to EU and European officials, the EU embargo could be
formally ended by unanimous consent or informally eroded by
individual EU members' resumption of military trade with China.  EU
members, whose defense firms are faced with severe economic
pressures, could move to modify their participation in the embargo if
they believe China's human rights situation is improving.  A recent
EU report noted that human rights in China, while still far from
meeting international standards, had improved over the past 20 years. 
There have been signs that some EU members have sought to increase
military sales to China.  We found that at least two EU members are
now reassessing whether the embargo should be continued. 


--------------------
\3 EU officials informed us that this reliance on the EU members
reflects the members' independence in defense matters. 


      EU SALES OF MILITARY ITEMS
      TO CHINA SINCE 1989
-------------------------------------------------------- Chapter 0:2.1

As of today, no EU members appear to have concluded new agreements to
sell lethal weapons to China since the imposition of the EU embargo. 
As shown in table 1, three EU members have delivered, or agreed to
deliver, military items to China since 1989. 



                                     Table 1
                     
                        Deliveries of EU Military Items to
                                  China, 1990-97

Country                     System                  Lethal        Agreement date
--------------------------  ------------------  --  ------------  --------------
France                      Castor-2B naval         No            Pre-1989
                            fire control radar      Yes           Pre-1989
                            Crotale ship-to-        No            Pre-1989
                            air missile and         No            Pre-1989
                            launcher                No            Pre-1989
                            TAVITAC naval           No            Pre-1989
                            combat automation
                            system
                            Sea Tiger naval
                            surveillance radar
                            AS-365N Dauphin-2
                            helicopter
                            SA-321 Super
                            Frelon helicopter

Italy                       Aspide air-to-air       Yes           1989\a
                            missile                 No            Pre-1989
                            Electronic              No            1993
                            countermeasures
                            for A-5M aircraft
                            Radar for F-7M and
                            F-7MP fighters

United Kingdom              Avionics for F-7M       No            1989\b
                            fighter                 No            1996
                            Searchwater
                            airborne early
                            warning radar
                            (no deliveries to
                            date)
--------------------------------------------------------------------------------
\a According to the source of the information, this agreement's exact
date is unclear. 

\b This agreement appears to have been concluded prior to June 1989. 

Sources:  Stockholm International Peace Research Institute, various
other public sources. 

Two EU member states delivered lethal weapons to China after the
embargo, according to publicly available sources of information. 
These deliveries of French Crotale ship-to-air missiles and Italian
Aspide air-to-air missiles appear to have been made in connection
with pre-embargo agreements.  Similarly, French-licensed Chinese
production of the Super Frelon and Dauphin helicopters, which
continued into the 1990s, began prior to 1989.  Also, the United
Kingdom honored a pre-embargo agreement by providing China with
radars, displays, and other avionics for its F-7M fighter aircraft. 

During the 1990s, Italy and the United Kingdom agreed to sell China
nonlethal military items.  Italy agreed to sell fire control radars
for use on Chinese F-7M and F-7MP export fighters.  The United
Kingdom agreed to sell China the Searchwater airborne early warning
radar system.  UK officials informed us that the decision to do so is
consistent with the U.K.  interpretation of the EU embargo because
the Searchwater is not a lethal weapon or a weapons platform.  (The
appendix briefly describes the systems in table 1.)


   WAIVERS HAVE ALLOWED EXPORTS OF
   SOME U.S.  MILITARY ITEMS TO
   CHINA
---------------------------------------------------------- Chapter 0:3

On June 5, 1989, immediately after the massacre of pro-democracy
demonstrators at Tiananmen Square, the President announced sanctions
on China to protest its actions.  In February 1990, Congress codified
the sanctions' prohibition on weapon sales in Public Law 101-246. 
The law suspended export licenses for items on the U.S.  Munitions
List and specifically barred the export of U.S.-origin satellites for
launch on Chinese launch vehicles.  It exempted from this prohibition
U.S.  Munitions List items that are designed specifically for use in
civil products (such as internal navigation equipment for commercial
airliners) unless the President determines the end user would be the
Chinese military.  Because the U.S.  Munitions List includes
nonlethal military equipment (for example, radios and radars) in
addition to lethal equipment (such as missiles), the U.S. 
prohibition on arms sales to China covers a broader range of items
than the EU embargo, as implemented.\4

Under the law, Munitions List items can be exported to China if the
President reports to Congress that it is in the national interest to
allow the export.\5 Presidents Bush and Clinton exercised this option
and issued waivers for exports of Munitions List and satellite
equipment to China based on determinations that doing so was in the
national interest.\6

U.S.-China relations have slowly improved since the 1989 massacre. 
According to press reports, the executive branch is now considering
easing restrictions on commercial satellite projects in China--in
part through the use of blanket waivers.  Moreover, for the first
time in several years, the United States recently decided against
sponsoring a United Nations resolution condemning China's human
rights. 


--------------------
\4 The Munitions List can also include dual-use items if they are
specifically designed, developed, configured, adapted, or modified
for military application and have significant military or
intelligence applicability such that controlling them as munitions is
necessary. 

\5 The law also allows the President to lift the sanctions if he
reports to Congress that China has made progress on a program of
political reform covering a range of issues, including human rights. 

\6 Since 1990, many items once controlled on the Munitions List have
been moved to Commerce Department control and are therefore no longer
subject to U.S.  sanctions barring their export to China.  In 1992,
many items were moved as part of a larger rationalization process. 


      SALES OF MUNITIONS LIST
      ITEMS TO CHINA SINCE 1989
-------------------------------------------------------- Chapter 0:3.1

The United States has delivered or licensed for export to China
almost $350 million in Munitions List equipment since 1990.  These
exports were made through (1) government-to-government agreements
managed by the Department of Defense (DOD) under the Foreign Military
Sales Program and (2) commercial exports licensed by the State
Department, the majority of which were related to launches of
U.S.-origin satellites in China.  All were authorized under
presidential waivers declaring the export to be in the national
interest or were specifically exempted from the sanctions under the
law. 


      GOVERNMENT-TO-GOVERNMENT
      SALES
-------------------------------------------------------- Chapter 0:3.2

In December 1992, President Bush issued a waiver stating that it was
in the national interest to allow the export of military equipment in
order to close out four government-to-government military assistance
programs that had been suspended by the sanctions.  The waiver stated
that these deliveries would not significantly contribute to China's
military capability and closing these cases would improve the
prospects for gaining further cooperation from China on
nonproliferation issues.  The total value of these exports, which are
shown in table 2, was about $36.3 million. 



                                     Table 2
                     
                       U.S. Government Exports of Munitions
                             Items to China, 1990-97

                              (Dollars in millions)

Program                    Description                Deliveries
-------------------------  -------------------------  --------------------------
Peace Pearl -F-8           Provide modern avionics    Two modified F-8
modernization              for China's F-8 fighters.  fuselages, four avionics
                                                      kits, and related
                                                      equipment.

MK-46 Mod 2 torpedoes      Provide four torpedoes     Four torpedoes, including
                           for test and evaluation    spares and related test
                           purposes with ultimate     and maintenance equipment.
                           deployment on Chinese
                           Navy ships and
                           helicopters.

Artillery locating radars  Provide four AN/TPQ-37     Two AN/TPQ-37 radars,
                           "Firefinder" counter-      including parts and
                           artillery radar systems.   support equipment. Two of
                                                      these radars had been
                                                      shipped before the
                                                      sanctions.

Large-caliber artillery    Provide production         Miscellaneous components.
plant                      capability for large-      Major equipment was
                           caliber artillery          shipped prior to the
                           munitions.                 sanctions.
--------------------------------------------------------------------------------
These programs were in various states of completion when U.S. 
sanctions prohibited further assistance or deliveries.  No new
government-to-government agreements have been opened since 1990. 
There are now no open or unfulfilled agreements pending between the
U.S.  government and China under the Foreign Military Sales Program. 

The equipment ending these programs was delivered to China between
1993 and 1995.  It included four MK-46 Mod 2 torpedoes, spare parts,
maintenance, and test equipment.  The Chinese Navy was to test the
torpedoes for use on its ships and helicopters. 


      COMMERCIAL EXPORTS OF
      MUNITIONS LIST ITEMS
-------------------------------------------------------- Chapter 0:3.3

The Department of State has approved for export to China about $313
million in Munitions List items since 1990.\7 As shown in table 3,
$237 million of these exports involved launches of U.S.-origin
satellites from China. 



                                     Table 3
                     
                     Approved U.S. Commercial Export License
                         Applications for Munitions List
                      Equipment to China, January 1990-April
                                       1998

                              (Dollars in millions)

Waiver requirement                 Munitions List Items                    Value
---------------------------------  ---------------------------------  ----------
Approved export licenses for       Satellites and related equipment       $237.0
 Munitions List items requiring a   Encryption for civil                    63.1
 presidential waiver for export     applications or satellites
 to China

Approved export licenses for       Munitions List equipment for             12.7
 items not covered by U.S.          inclusion in civil products
 sanctions                          (e.g., inertial navigation gear
                                    for civil airliners)
================================================================================
Total                                                                     $312.8
--------------------------------------------------------------------------------
Note:  Values represent figures provided on the export applications,
not the value of actual shipments.  In practice, the value of actual
exports is often less. 

The President determined that allowing these exports was in the
national interest.  According to State officials, since 1990, 11
presidential waivers have been issued removing export restrictions on
21 satellite projects.  Presidential waivers were also granted to
permit the export of encryption equipment controlled on the Munitions
List. 

Since 1990, over $12 million in export licenses have been approved
for Munitions List equipment designed for inclusion in civil
products.  These exports are not prohibited under U.S.  sanctions and
therefore do not require a presidential waiver.  The majority of
these exports involve navigational electronics used in commercial
airliners operated in China. 

Between 1992 and 1996, control over exports of commercial encryption
equipment and commercial satellites was moved from the Munitions List
to the Commerce Department's Commodity Control List.  Since U.S. 
sanctions restrict Munitions List exports and do not prohibit the
export of dual-use items, commercial encryption equipment can now be
exported to China without a presidential waiver.  U.S.-origin
commercial satellites, however, though no longer on the Munitions
List, are covered by the law, and exports still require a
presidential waiver.\8


--------------------
\7 State also denied, or returned without action, export license
applications valued at over $1 billion. 

\8 Other items that have moved from the Munitions List to Commerce's
jurisdiction since 1990 include jet engine hot-section technology,
commercial global positioning system equipment, and some night vision
equipment.  See our reports entitled Export Controls:  Issues in
Removing Militarily Sensitive Items From the Munitions List
(GAO/NSIAD-93-67, May 31, 1993); and Export Controls:  Change in
Export Licensing Jurisdiction for Two Sensitive Dual-Use Items
(GAO/NSIAD-97-24, Jan.  14, 1997.)


   CHINA'S EU AND U.S.  MILITARY
   IMPORTS COULD HELP ADDRESS SOME
   DEFENSE NEEDS
---------------------------------------------------------- Chapter 0:4

The small amount of EU and U.S.  military item sales to China since
1989 could help address some of China's defense needs.  However,
their importance to China's modernization goal is overshadowed by the
much larger amounts of military equipment provided by Russia and the
Middle East.  Moreover, before China can fully exploit such items, it
must overcome obstacles in its military's command and control,
training, and maintenance. 


      CHINESE USE OF EU AND U.S. 
      MILITARY ITEMS
-------------------------------------------------------- Chapter 0:4.1

China has used French helicopters to reinforce its weak antisubmarine
warfare capabilities.  According to open sources, China has imported
or built under license between 65 and 105 modern French
turbine-powered helicopters, including about 40 after 1989.  The
helicopters include the SA-321 Super Frelon (built as the Z-8) and
the AS-365 Dauphin-2 (built as the Z-9).  China's Navy has adapted 25
of these helicopters to serve as its antisubmarine warfare helicopter
force and equipped some with antisubmarine torpedoes.  Several
Chinese naval vessels carry the Z-9 helicopter.  China's Army has
also tested the Z-9 helicopter with ground-attack equipment,
including antitank missiles. 

According to experts, China's only effective ship-to-air missile is
the French Crotale missile system.  China has deployed the Crotale on
four ships, including its two most modern destroyers.\9 Also, China
has reverse-engineered the Crotale--reducing China's dependence on
foreign suppliers.  Similarly, China has reportedly reverse
engineered the Italian Aspide air-to-air missile for use as a
ship-to-air missile. 

China's planned purchase of six to eight British Searchwater airborne
radar systems would provide China with some degree of warning against
low-flying air attacks as well as help it direct fighter aircraft,
detect small vessels, and augment over-the-horizon targeting.\10
China is expected to mount the radars on converted Y-8 transport
aircraft. 

China could possibly use its four U.S.  Mod 2 version MK-46 torpedoes
to improve its copy of the Mod 1 version, which China has already
deployed on its French helicopters.  The early-1970s era Mod 2 has an
improved computer that provides it with a re-attack capability.  The
MK-46 torpedo's range and speed exceed that of China's other western
air launched, antisubmarine torpedo--the mid-1970s era Italian
Whitehead 244S.\11

It is unclear whether China has benefited from any of the U.S. 
commercial satellite transfers.  State officials told us that U.S. 
export licenses for satellite projects in China contain provisos
intended to minimize the risk of any unauthorized transfer of
sensitive technology.  Recent press reports have asserted that,
despite these controls, U.S.  technology has been transferred to
China and has improved the reliability of China's nuclear missiles. 
We have not examined the security guidelines and control procedures
on satellite launches or how they are being implemented. 


--------------------
\9 These ships, however, still lack long-range, ship-to-air missiles. 

\10 The United Kingdom has been reported as offering its Argus
airborne warning system to China, although China appears to have
chosen an Israeli system. 

\11 China acquired the Whitehead in the mid-1980s and has deployed it
on helicopters. 


      RUSSIA AND MIDDLE EAST
      PROVIDE MOST OF CHINA'S
      MODERN MILITARY ITEMS
-------------------------------------------------------- Chapter 0:4.2

While these EU and U.S.  military items could be used to address some
modernization needs, they constitute only a small part of the range
of military items that China has imported from foreign suppliers
since 1989.  As shown in figure 1, total EU and U.S.  exports
constituted less than 9 percent of the military items imported by
China during the first 7 years of the embargoes.  This share falls to
less than 3.4 percent if U.S.  exports of commercial satellites and
encryption items are excluded. 

   Figure 1:  Deliveries of
   Foreign Military Items to
   China, 1990-96

   (See figure in printed
   edition.)

Total value:  $5.3 billion (current-year dollars)

Note:  The U.S.  commercial share depicted above is based on the
value of export licenses granted since 1990, rather than on the value
of actual deliveries. 

Sources:  U.S.  Arms Control and Disarmament Agency; the Departments
of State and Defense. 

Moreover, Russia and Israel have sold or agreed to sell China items
that are far more lethal than those sold by EU members, as well as
items similar to those obtained from EU members.  For example,
reported Russian arms agreements include

  -- two Sovremenniy destroyers, which are more modern than China's
     domestically produced destroyers and which typically carry
     advanced supersonic antiship missiles, ship-to-air missiles with
     a much greater range than the Crotale, and antisubmarine
     helicopters that are considerably larger than the Z-9
     helicopter;

  -- about 50 Su-27 fighter aircraft--similar to U.S.  F-15s--armed
     with potent air-to-air missiles, and assistance in producing
     more Su-27s in China;

  -- about 25 Mi-17 transport assault helicopters; and

  -- four Kilo diesel electric submarines (including two of a very
     quiet class that Russia has never before exported) and homing
     torpedoes. 

Israel has helped China with its development of the F-10 fighter
aircraft (similar to the U.S.  F-16) by providing technology
developed for the aborted Israeli Lavi fighter project--and of
various missiles.  It has also offered to sell to China its Phalcon
airborne phased array surveillance radar which, if fitted to a
Russian airframe, would provide China an airborne warning and command
system. 


      CHINA FACES DIFFICULTIES IN
      INCORPORATING MODERN ARMS
-------------------------------------------------------- Chapter 0:4.3

According to experts, China will have to overcome several persistent
problems before it can effectively use its imported arms to support
its new military doctrine and help reinvigorate its domestic defense
industry. 

China lacks command and control capabilities needed to effectively
integrate its armed forces in the fast-moving joint offensive
operations called for by its new doctrine.  China's Air Force units
are hampered in their ability to communicate with air defense, naval,
and ground units.  China also lacks a reliable air defense
intelligence system.  While its future airborne early warning systems
will help address this problem, China will still have to learn how to
integrate such systems into its air defense system.  Experts informed
us that military systems integration remains a weakness for China. 

China's acquisition of new and advanced military systems will also
test its training and maintenance processes.  China may have to
significantly enhance the training, quality, and education level of
its military personnel to use increasingly advanced equipment. 
Moreover, according to experts, China's Air Force has not yet
considered the training implications of its new offensive joint
operations doctrine.  Chinese pilots fly fewer hours than their
Western counterparts and tend to fly less demanding training missions
that do not emphasize joint operations.  Experts informed us that
China's preference for buying relatively small numbers of foreign
military systems and skimping on training and maintenance support
packages reduces opportunities for its military personnel to become
familiar with their new equipment and to augment China's weak
maintenance efforts. 

This practice of buying limited numbers of foreign systems may
reflect China's interest in obtaining foreign arms for
reverse-engineering purposes.  China has long stressed its need to
become self-sufficient in weapons development and less dependent on
foreign suppliers.  However, despite some successes, China has had a
mixed record in reverse-engineering foreign systems.  Its efforts to
do so are hampered by an inefficient defense sector and by the
increasing complexity of modern military systems. 


-------------------------------------------------------- Chapter 0:4.4

Mr.  Chairman and members of the Committee, this concludes my
prepared remarks.  I would be happy to answer any questions that you
may have. 


DESCRIPTION OF SELECTED EUROPEAN
UNION MILITARY ITEMS PROVIDED TO
CHINA, 1990-97
==================================================== Appendix Appendix

According to various public sources, European Union (EU) member
states have delivered, or agreed to deliver, the following items to
China since 1989. 

  -- Naval Systems for the Luhu destroyers.  France has provided
     several systems for China's Luhu destroyers, including the
     Crotale missile system.  France first installed the Crotale on
     its ships in the late 1970s.  In 1982, it developed the Crotale
     variant later provided to China.  According to public sources,
     the Crotale is a short-range (up to 13 kilometers), ship-to-air
     point defense missile.  The system consists of the missile
     (which can travel at more than twice the speed of sound), a
     missile director, a missile launcher mounting, a fire control
     room with supporting electronics, and a console in a combat
     information center.  The missile director uses a Castor radar,
     as well as infrared and television tracking systems. 

Other French equipment on the Luhu destroyers includes the Sea Tiger
naval surveillance radar, the Dauphin-2 (Z-9) helicopter (described
later), and the TAVITAC combat data system (which is used to
integrate the Luhus' various onboard systems). 

  -- Dauphin-2 (Z-9) Helicopter.  In 1980, France agreed to allow
     China to build the AS-365 Dauphin-2 in China as the Z-9
     helicopter.  The Chinese Navy has equipped Dauphin-2s with
     sensors, torpedoes, and missiles for use aboard its vessels. 
     The Dauphin-2 is a medium-weight multirole helicopter that is
     powered by two turbine engines.  Capable of carrying 11
     passengers and
     2 pilots, the Dauphin-2 has a top speed of 140 nautical miles
     per hour and a range of 410 nautical miles.  Composite materials
     are used in its main and rear rotor blades, and its tail rotor
     is built into the vertical fin. 

  -- Super Frelon (Z-8) Helicopter.  France delivered the SA-321
     Super Frelon helicopter to China in 1977 and 1978 and agreed to
     allow China to build the Super Frelon, under the designation of
     Z-8, in 1981.  The Chinese Navy has used Super Frelons for
     anti-submarine missions and has equipped them with sensors,
     torpedoes, and anti-ship missiles.  The Super Frelon is a heavy
     shipboard helicopter that is powered by two turbine engines.  It
     has a top speed of 134 nautical miles per hour and a range of
     440 nautical miles.  The Super Frelon can carry 27 fully armed
     troops or 39 unequipped troops. 

  -- Aspide Missile.  According to one public source, Italy developed
     the Aspide from the U.S.  Sparrow air-to-air missile.  Aspide
     production began in 1977.  The semi-active radar-guided Aspide
     has a top speed of more than twice the speed of sound and a
     range of about 7 nautical miles. 

  -- Searchwater Airborne Early Warning Radar.  The United Kingdom
     first deployed the Searchwater aboard its Nimrod aircraft in
     1979 and adapted it for use aboard Sea King helicopters during
     its 1982 war with Argentina over the Falkland Islands.  It later
     developed the Skymaster version of the Searchwater, which it
     subsequently incorporated into the Searchwater
     2 system.  According to a public source, the airborne Skymaster
     uses an I-band transmitter that can operate in (1) a pulse
     Doppler mode to provide look-down detection of airborne targets
     and (2) a frequency agile conventional mode to detect ships as
     well as aircraft flying above the Skymaster.  When operating at
     10,000 feet, it is capable of detecting (1) fighters and small
     boats below it at ranges of about 70 nautical miles, (2) bombers
     flying below it about 100 nautical miles away, and (3) larger
     vessels about 130 nautical miles away.  The radar can store and
     update data on 100 airborne and 32 surface targets
     simultaneously. 

  -- F-7M/F-7MP Avionics.  The United Kingdom and Italy have provided
     avionics for the F-7M and F-7MP fighter aircraft.  The Soviet
     Union first authorized China to build the F-7--a variation of
     the MiG-21 fighter--in 1961.  China later developed the F-7M and
     MP versions for export to other nations, including Pakistan. 
     According to public sources, the United Kingdom provided China
     with heads-up displays, weapon-aiming computers, and fire
     control radars for the F-7M.  Italy later provided a new fire
     control radar for the F-7M and F-7MP. 


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