Red Dragon Needs To Be Stopped.
2010 REPORT TO CONGRESS of the
U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION
ONE HUNDRED ELEVENTH CONGRESS SECOND SESSION NOVEMBER 2010
U.S.-China Economic and Security Review Commission
Available via the World Wide Web: http://www.uscc.gov/
CHINA’S ACTIVITIES DIRECTLY
AFFECTING U.S. SECURITY INTERESTS
SECTION 1: CHINA’S GROWING AIR AND
CONVENTIONAL MISSILE CAPABILITIES
ANNUAL REPORT TO CONGRESS
Military and Security Developments Involving the People’s Republic of China 2010
Five of our nation’s seven mutual defense treaties are with nations in the Asia-Pacific region. We continue to work closely with these regional treaty allies – Australia, Japan, Republic of Korea, Republic of the Philippines and Thailand – to strengthen and leverage our relationships to enhance security within the region.
China fields a growing number of sophisticated multi-role fighter aircraft, including the SU-27 and SU-30 purchased from Russia and indigenously produced 4th generation aircraft. The PLA Air Force (PLAAF) and Naval air forces have continued to focus on improving pilot and controller proficiencies in complex, multi-plane combat scenarios, including operations over water.
The PLA has focused considerable effort on building up its integrated air defense capabilities and has deployed an increasing number of upgraded Russian SA-20 PMU 2 long range surface-to-air missile systems along the Taiwan Strait.
China is also developing and testing a conventional anti-ship ballistic missile based on the DF-21/CSS-5 MRBM designed specifically to target aircraft carriers.
China’s Strategic Capabilities. China maintains a nuclear force capable of ranging most of the world, including the continental United States. This capability has been enhanced through the development of increasingly sophisticated road mobile delivery systems as well as the development of the Type 094 nuclear-powered ballistic missile submarine (JIN-class SSBN). Despite assertions that China opposes the "weaponization" of space, the PLA is developing a multi-dimensional program to deny potential adversaries the use of space, an element of which was demonstrated in January 2007 when China intentionally destroyed one of its own weather satellites with a direct ascent anti-satellite weapon. U.S. military and government networks and computer systems continue to be the target of intrusions that appear to have originated from within the PRC. Although most intrusions focus on exfiltrating data, the skills being demonstrated would also apply to network attacks.
The complexity, unique significance, and growing importance of the U.S.-India Strategic Partnership warrant considering this nation apart from the broader Allies and Partners focus previously discussed. Our nation’s partnership with India is especially important to long term South and Central Asia regional security and to U.S. national interests in this vital sub-region. India’s leadership as the largest democracy, its rising economic power, and its influence across South Asia as well as its global influence attest
to its pivotal role in shaping the regional security environment.
Mongolia. A strong partner, Mongolia continues to demonstrate support for U.S. regional and global policy objectives, while managing positive relations with its two neighbors, China and Russia. The Mongolia Defense Reform (MDR) assists the Mongolian Armed Forces with their transformation into a self-sustaining, international peacekeeping force capable of contributing to UN, international, and coalition missions. In support of the Defense Security Cooperation Agency (DSCA), which serves as the Executive Agent for MDR, U.S. Pacific Command implements bilaterally agreed-to initiatives and priorities further the defense relationship between the U.S. and Mongolia.
Members of the Mongolia Armed Forces regularly participate in bilateral and
multilateral for a such as the Pacific Army Management Seminar, Pacific Rim Air Chiefs
Conference, Chief of Defense Conference, and NCO subject matter expert exchanges. Mongolia continues to support peacekeeping and coalition operations and, with assistance from the Global Peace Operations Initiative (GPOI), continues to develop the Five Hills Training Center into a national, and eventually, a regional peacekeeping training center which hosts UN-certified training and component-level peacekeeping exercises for
regional participants. Every year, the Mongolian Armed Forces partner with either U.S. Army Pacific or U.S. Marine Forces Pacific to host KHAAN QUEST. Following two years as the GPOI capstone peacekeeping exercise in 2006 and 2007, KHAAN QUEST remains an important multi-lateral peacekeeping exercise.
Finally, I would like to add that Mongolia committed to deploying 800 personnel to Chad in late-2009 in support of the UN, while continuing to support the UN in Sierra Leone and other UN missions in Africa. A strong supporter in U.S. overseas contingency operations, in the fall of 2009, Mongolia deployed 200 troops in Afghanistan, with a security company and a mobile training team under Operation ENDURING FREEDOM and a 40 soldier security detachment under the Germans as part of the International Security Assistance Force.
U.S. Pacific Command coordinates all Russian security cooperation activities with U.S. European Command to ensure the efforts of both geographic combatant commands are mutually supportive. We seek engagement with Russia in areas of mutual interest such as counter-terrorism, peacekeeping, and search-and-rescue
operations. U.S. Pacific Command contacts were re-established in 2009 when the USS COWPENS and USS STETHEM conducted port visits to Vladivostok. These port visits were symbolic of the historic and positive relationship that has existed in recent years between U.S. Pacific Command and Russia’s Far East Command, particularly between our two navies. We plan to build on the success of these port visits by continuing to engage Russia in areas of mutual interest in accordance with the Military Cooperation Work Plan.
Our military-to-military ties with Malaysia remain solid amidst a warming bilateral political relationship and enhanced ties between the U.S. and ASEAN nations. In 2009, U.S. Pacific Command developed closer ties to the Malaysian Joint Forces Command by participating in major command post exercises and by supporting their forces to enhance their capacity in maritime security operations. Malaysia maintains a strong leadership role in the region by being tough on terrorism, serious about maritime security, and committed to global peace and stability. We will continue to expand our cooperation with Malaysia and address our common security challenges.
Cambodia is emerging as a strong supporter of U.S. policy in the region. The Cambodia Ministry of National Defense and Royal Cambodian Armed Forces are seeking U.S. engagement opportunities. In 2009, U.S. Pacific Command supported Cambodia’s major initiatives of counter-terrorism, maritime security, defense reform, HA/DR, and peacekeeping operations. In 2010, we will continue to assist Cambodia on its Defense Reform initiative; augment its counter-terrorism efforts with 1206 funding; and, together with Australia and Japan, work with their defense establishment and interagency to achieve their maritime security goals.
With the U.S. Defense Attaché now in place, U.S.–Laos military-tomilitary engagement is expanding. The Joint Task Force Full Accounting recovery mission, led by the Joint POW/MIA Accounting Command (JPAC), continues to be an important focus in developing U.S.–Laos military relations. Laos has placed a priority on English language training to enable greater training opportunities and participation in bilateral or multilateral operations. In our bilateral defense discussions with the Ministry of National Defense, both sides agreed to explore greater engagement opportunities
associated with military medical cooperation, civil military operations, training and education, and counter-narcotics cooperation.
As we prepare to mark the 15th anniversary of the normalization of U.S.- Vietnam relations, our military-to-military relationship with Vietnam continues to improve. Vietnam hosted several ship visits this year including the Seventh Fleet Flag Ship, the USS BLUE RIDGE, and its escort, the USS LASSEN, whose commanding officer was born in Vietnam. In support of JPAC, USNS BRUCE HEEZEN, with embarked Vietnamese scientists and personnel, conducted the first combined hydrographic survey in Vietnamese waters, successfully identifying potential crash sites. During his visit to Pacific Command last December, Vietnam’s Minister of Defense indicated a desire for activities that foster greater understanding and cooperation in various areas such as disaster management, conflict resolution, trafficking in persons, and improving relations with its neighbors. We look forward to Vietnam’s chairmanship of ASEAN this year and its desire to take a more responsible role in promoting peace and security in the region.
Timor-Leste. U.S. Pacific Command remains optimistic about the future of this young democracy. The government of Timor-Leste managed to maintain control of the country and return home more than 10 percent of its population who were living in IDP camps. Timor-Leste is working with several other countries to begin critical institutional development which includes the Timor-Leste Defense Force (F-FDTL). Although its soldiers lack many basic capabilities, the F-FDTL leadership is developing a recruiting and training program to establish a legitimate, professional military. U.S. Pacific Command’s interaction with Timor-Leste increased significantly in 2009, highlighted by our first military-to-military bilateral discussions. The F-FDTL
participated in the Marine Exercise MAREX 09, a multilateral exercise with Timorese and Australian Defense Forces that concentrated on basic infantry skills and medical and dental readiness. Although current engagement with Timor-Leste is mostly in the form of medical and dental readiness exercises and engineer assistance by U.S. Navy SEABEEs, we are hopeful that engagements such as MAREX 09 will form the basis of our relationship as the F-FDTL develops into a professional military.
Beyond the significant issues associated with their human rights record, Burma presents challenges to regional stability in a number of other areas, including a maritime border dispute with Bangladesh, narcotics trafficking, trafficking-in-persons, and potential for rapid spread of pandemic disease. The recently completed U.S. government policy review and subsequent high level visits to Burma by senior-level members of the U.S. Government have not altered our military engagement with Burma. It remains essentially non-existent as a matter of policy and public law. That said, U.S. Pacific Command is prepared to re-engage in a military-to-military dialogue with the Burmese
whenever U.S. policy allows.
Democratic Socialist Republic of Sri Lanka. The conclusion of the Government of Sri Lanka’s war against the Liberation Tigers of Tamil Eelam (LTTE) terrorist group in May 2009 brought about an uneasy peace to Sri Lanka. Concerns over the welfare of nearly 300,000 Internally Displaced Persons (IDPs) initially caused the international community to pressure the Government of Sri Lanka to better provide for the IDPs while expediting the return to their homes. To its credit, the Government of Sri Lanka has taken steps to lower the number of IDPs in camps to a current estimate of around 100,000.
As a consequence of allegations of human rights violations, all U.S. military-to-military engagement with Sri Lanka was halted in August 2009, with the exception of humanitarian assistance. In the meantime, we await development of a USG strategy that may include enhanced mil-to-mil.
Republic of Maldives.
Since President Nasheed took office in November 2008, we have seen a marked increase with Maldives’ desire to interact with U.S. Pacific Command. Maldives strategic location astride key shipping lanes in addition to its archipelagic geography make it a key region for maritime security in the Indian Ocean. Maldives requested U.S. assistance in helping the Maldives National Defense Force transform itself into a force more capable of defending against the threats of terrorism, piracy, and illegal drug trafficking. In response to the Government of Maldives’ concerns that international terrorist organizations were actively recruiting Maldivian citizens, we provided assistance in development of a national intelligence capability enabling quicker responses across various agencies of their government.
The resignation by the Maoist government in May 2009 resulted in a political stalemate that continues to cast serious doubts as to whether Nepal’s Constituent Assembly can ratify a constitution by the May 2010 deadline. The Maoists, who still control a plurality of seats in the Assembly, have staged numerous walkouts and demonstrations, effectively impeding the Constituent Assembly and the constitution drafting process.
Due to the potential for the current peace to unravel, U.S. Pacific Command’s focus is on humanitarian assistance and efforts to support the peaceful integration of members of the Maoist People’s Liberation Army into the Nepalese security forces. Senior level
dialogue and defense sector reform events are the primary means to assist this change. Additionally, U.S. Pacific Command continues to assist Nepal in the development of its peacekeeping operations and training capabilities through GPOI. While PACOM is focused on humanitarian assistance and peacekeeping activities, we are also noting an increase in violence in the southern Terai region. These poorly governed areas are susceptible to exploitation by terrorist groups in South Asia. PACOM will continue to closely monitor this issue and stands ready to assist Nepal in building its CT capacity.
People’s Republic of Bangladesh. The return to democracy in Bangladesh, while a positive step, has also resulted in occasional civilian-military tension that could potentially destabilize this moderate nation of 150 million people. U.S. Pacific Command has initiated several programs and events to assist in promoting civilian-military trust, transparency and cooperation.
Despite their political issues, Bangladesh continues to be a strong partner who works closely with the U.S. to enhance regional security. The establishment of a naval counter-terrorism force and their hosting of a regional forum to counter violent extremist organizations are examples of Bangladesh’s commitment to improve their counterterrorism capacity. We also continue to work closely with Bangladesh to expand and improve their peacekeeping, HA/DR and maritime security capabilities.
New Zealand shares many U.S. security concerns such as terrorism, maritime security, transnational crime, and the proliferation of weapons of mass destruction. New Zealand is supportive of our overseas contingency operations, deployed for the fourth round its Special Air Service (SAS) special operations troops to Afghanistan
and has extended their commitment to lead the Provincial Reconstruction Team in Bamyan
Province, Afghanistan until September 2010. While the New Zealand nuclear-free zone legislation and resultant U.S. defense policy guidelines constrain some bilateral military-to-military engagement, the New Zealand Defense Force participates in many multilateral events that advance our common security interests. In 2010, New Zealand will be an observer in “Rim of the Pacific”
(RIMPAC) – the Pacific AOR premier multinational naval exercise. Our Marines continue to assist in New Zealand’s efforts to integrate their multi-role maritime patrol vessel into regional HA/DR operations.
New Zealand remains active in global security initiatives, from stabilization efforts in Timor-Leste and the Solomon Islands, to operations in Korea, Sudan, and throughout the Middle East. Additionally, the New Zealand Defense Force supports our National Science Foundation efforts in Antarctica by serving as the primary staging area for the multinational Operation DEEP FREEZE.
China’s Military Employment of American Dual-Use Technologies
by Richard Fisher, Jr.
Published on August 1st, 2008
On June 5, 1989 President George H.W. Bush announced the United States suspension of sales of items on the U.S. munitions list, or an arms embargo, in response to the June 3-4 Tiananmen Massacre in Beijing, China. In 1990 this policy was codified by the U.S. Congress. But almost from its inception successive American presidents have made exceptions to this law, primarily by issuing wavers to allow the purchase of Chinese satellite launch services. In addition, by the mid-1990s the U.S. Commerce Department has allowed a growing trade in so-called "dual-use" items that may have a military use but are not weapons in and of themselves.
In a 2005 exchange regarding U.S. exports of dual use technologies to China, former Department of Defense official Lawrence Korb (then with the Center for American Progress) told Peter Lichtenbaum, then Acting Undersecretary for Industry and Security of the Department of Commerce, that "…the United States exports equipment and technology to China that actively contributes to Beijing's ability to wage war." Korb noted that U.S. exports were not "…being used in a manner consistent with our national security and nonproliferation interests."
Lichtenbaum disagreed, noting, "The United States maintains an arms embargo on China. Because dual-use items (such as computers) have important commercial uses, we do not have an embargo on exports of dual-use items to China. However, we have a general policy of denying export license applications for dual-use items to Chinese military end-users." Nevertheless, it is clear that the State and Commerce Departments have used this distinction to allow an increasing traffic in American made or designed products to China which do have a specific military use. Despite Mr. Lichtenbaum’s assurance, these items are going directly into the People’s Liberation Army (PLA) inventory, or are easily accessible by the PLA from Chinese "civilian" entities.
Open source information shows that the PLA and China’s People’s Armed Police (PAP) are benefitting from many American made or designed products. Some, like the AM General Humvee vehicle, were explicitly designed for military use. Others, like jet airliners, utility helicopters, all-terrain vehicles (ATVs) and Segway personal transports may not have been originally designed for military or police use, but are thus used in the West, and now in China. In the case of airliners, it is proving the case that both the United States and Europe have sold China a considerable potential military capability. As such, one can conclude that the State Department and the Commerce Department are not doing their job and ensuring that these dual use items do not end up increasing China’s military capabilities.
PAP Segway Squad: As part of sanctioned exports of US police technology, the People’s Armed Police now uses the innovative American Segway transporter. Source: Chinese Internet
From 2005 to the present, both the Bush Administration and the U.S. Congress have expressed their opposition to Europe relaxing its 1989 arms embargo. In 2008 the European Parliament and the U.S. Congress have affirmed their support for Europe’s embargo. However, Europe also has its problem in allowing a greater traffic in dual-use technology that is increasing Chinese military capabilities. This is especially true in the case of helicopter and transport aircraft technologies. Despite the 1989 EU arms embargo Eurocopter has sustained a technology relationship with Chinese helicopter companies, and is now co-developing the EC-175/Z-15 advanced utility helicopter with China. Furthermore, in its rush to secure a greater share of the Chinese airliner market from rival Boeing, Airbus has transferred an airline "kit" assembly line to Tianjin that can only help China advance its own program to build a large airliner by 2020, one that will likely be produced in multiple military variants.
American All Terrain Vehicle (ATV) maker Polaris has shifted much of its production to China, which makes it easy for the PLA to use Polaris ATVs as do U.S. Army Special Forces units, photographed in May 2008. Source: Chinese Internet and RD Fisher
However, it is critical that before Washington considers taking any complaints to Brussels, that it review how American dual-use exports to China are being used to improve PLA and PAP capabilities. What follows is a list of U.S. dual-use technologies that are benefiting China’s military.
AM General Humvee Light Truck While the ubiquitous M998 High Mobility Multipurpose Wheeled Vehicle (HMMWV, or Humvee) is now being quickly supplanted by thousands of more heavily armored Mine Resistant Armor Protected (MRAP) vehicles in U.S. service, tens of thousands of this AM General design have entered the U.S. armed forces and about 45 other countries since the early 1980s. Designed as the successor to the iconic Willy’s Jeep of World War II fame, the 1.5 ton Humvee can carry a much greater array of modern weapons and equipment and has been produced in over twenty variants for the U.S. services alone, from utility transport, to ambulance, anti-tank, anti-aircraft, electronic warfare and weather station missions. The Humvee became a critical system to fulfill new U.S. Army doctrines of the 1980s that stressed greater mobility and firepower, and thousands were successfully used during the 1990-1991 and 1993 wars against Iraq.
Dong Feng Motors and Shenyang Humvees: A Dong Feng Motors production line for Humvees and a Shenyang Aircraft Corporation copy of the Humvee, with SAMs, seen at the 2004 Zhuhai Airshow. Source: Chinese Internet and RD Fisher
While the PLA was reportedly very impressed with the Humvee’s performance during the first Gulf War, its introduction to this vehicle predated that war. In 1988 AM General was reported to have displayed the Humvee at a military exhibition in Beijing. Other Chinese sources have noted that the U.S. Government may have given China a small number in the late 1980s as part of early anti-narcotics cooperation. However, at the 2000 Zhuhai Airshow this analyst noted that a picture of a Humvee-like vehicle appeared in a brochure of the Shenyang Aircraft Corporation. And then at the 2004 Zhuhai show, an actual Shenyang copy was put on display, armed with the TY-90 anti-aircraft missile of Luoyang Optoelectric Technology Company. But by this time it was apparent that a second copy was also being produced by the Dong Feng Motors Company, called the EQ2050 "Meng Shi." This version was marketed at the 2005 IDEX show in Abu Dhabi armed with a turret equipped with FN-6 short-range surface-to-air missiles (SAMs) that almost copied the Boeing FIM-92A Avenger still in use by the U.S. Army.
China’s Avenger: A Boeing FIM-92A Avenger Humvee-mouted SAM carrier, seen in May 2008, and a Chinese facsimile, seen on a Dong Feng copy of the Humvee, in model form from the 2007 IDEX show. Source: RD Fisher
Despite repeated inquiries from 2005 onward, this analyst could not get a response from AM General officials regarding the reasons why two Chinese companies would be producing Humvee vehicles. This changed in early 2008 when on AM General official, on condition of anonymity, explained that the State and Commerce Departments sanctioned the sale and co-production of the civilian H-1 version of the Humvee for the Chinese market in the 1997 time frame. This led to a partnership with Dong Feng Motors. It is less clear that there was a formal relationship with the Shenyang Aircraft Corporation. However, the official noted that AM General sells parts to both companies. This official also acknowledged that the PLA and the Chinese government are the main customers for these co-produced Humvees. So far it appears that Dong Feng may produce 1,500 copies but that has not happened yet. However, neither company has rights to sell versions to the civilian market. AM General had also received in 2007 a reconfirmation from the Commerce Department of its authorization to sell Humvees to the Chinese market.
Dong Feng “Humvees” In Tibet: A line of Dong Feng Motors trucks outside a Tibetian monestary, which includes versions of the Humvee. Source: Chinese Internet Currently Dong Feng Motors appears to be the most active producer of Chinese-made Humvee versions. Dong Feng made Humvees apparently use a slightly more powerful diesel engine. One Chinese article suggested that if Dong Feng were to enlist other companies, it could produce up to 100,000 a year for wartime production. So far Chinese-made Humvees have been purchased by Chinese Police departments, the PLA Marines, various PLA Army units to very likely include Airborne and Special Forces units. Dong Feng markets a version armed with a roof-mounted 23mm cannon and another Special Forces version armed with a automatic grenade launcher and a squad machine gun. Another version of the Humvee forms the carrier for 81mm automatic mortar and a twin-23mm anti-aircraft gun, and are being used by a novel PLA "Mechanized" Special Forces unit. The Poly Technologies arms trading firm markets the "FB-6A Missile Launching Vehicle," which is armed with eight FB-6A man-portable air defense system (MANPADS) anti-aircraft missiles. This vehicle is a virtual copy of the Boeing Avenger system. Inasmuch as Taiwan makes extensive use of several version of the Humvee, and has purchased 72 Boeing Avengers for Army air defense, the PLA’s growing inventory of Humvee copies presents many opportunities for surprise and deception operations against Taiwanese forces.
PLA Special Forces Humvee Variants: This variant Humvee chasis now carries a 81mm automatic mortar or a twin 23mm anti-aircraft cannon, as part of an effort to create a “Mechanized” or more heavily armed helicopter-portable Special Forces Unit. Dong Feng also makes a Special Forces variant (bottom) Source: Chinese Internet
Despite the capability that has been transferred to the PLA and the growing threat this presents to U.S. friends like Taiwan, AM General faces tough competition in the China military vehicle market from European automakers. The Italian IVECO designed NJ2046 produced by Chinese partner NAVECO is used by the PLA in several versions, including one for Airborne Forces. The PAP uses one IVECO van version as a mobile lethal-injection prisoner execution platform. Germany’s Mercedes Benz has several truck versions in production in China, and the PAP uses an armored Mercedes G-Class vehicle with an anti-sniper detection device.
As it has at various times during the Bush Administration there has been the suggestion that the U.S. relent on Tiananmen related sanctions and permit the sale of spare parts for the 24 Sikorsky S-70 Blackhawk helicopters sold to the PLA in the 1980s. Most recently China requested these spare parts for humanitarian concerns related to the S-70’s role in relief operations responding to the devastating May 12, 2008 Sichuan earthquake. However, this idea has been repeatedly rejected, in large part due to the S-70s overt military role; this helicopter is regularly seen in PLA exercises carrying artillery and Special Forces vehicles. It will almost certainly be employed in any future operations against Taiwan—which also operates the S-70 and is seeking more.
PLA S-70s: The PLA’s Sikorsky S-70 Blackhawk contributed to relief efforts following the May 12 earthquake, and it could in the future carry Special Forces vehicles to help attack Taiwan. Source: Chinese Internet
However, in part due to pressure from the U.S. helicopter industry the Commerce and State Departments have relented in permitting sales of U.S. helicopters to "civilian" Chinese entities. In 2001 United Technologies subsidiary Sikorsky Aircraft Corporation sold S-76 transport helicopters to the Chinese Ministry of Communications, and in 2005 sold S-92 helicopters to China Easter General Aviation to support offshore oil drilling operations. In 2007 Sikorsky entered into a partnership with Chinese helicopter maker Change Aircraft Industries Corporation to co-produce S-76 airframes to support Sikorsky production. In 1998 Sikorsky entered into a partnership with China’s AVIC-2 consortium to co-develop the larger S-92 helicopter, and it manufactures the tail of that helicopter. In 2003 Sikorsky established its Chinese partner "Shanghai Sikorsky," and in 2008 AVIC-2, though its subsidiary Change, became a shareholder of Shanghai Sikorsky. Change also co-produces the Sikorsky-Schweitzer S-300, a lightweight training helicopter, which also formed the basis for U.S. Navy’s Northrop Grumman MQ-8B Fire Scout unmanned helicopter.
Sikorsky S-92 Superhawk: Shown being delivered to a branch of China Eastern Airways, the S-92 is one of the most modern and capable helicopters in the world. Source: Chinese Internet
Another United Technologies subsidiary, the Pratt Whitney Canada aircraft engine maker, sold ten of its PT6C-67C helicopter turboshaft engines in 2000-2001 to assist the Chinese Medium Helicopter program of the Chinese Helicopter Research and Development Institute (CHRDI), the chief designer of China’s helicopters. In 2007 Pratt and Whitney Canada claimed they thought they were assisting the "civilian" version of this program, which had been thought to include the 5.5 ton WZ-10 dedicated attack helicopter, and a 6 ton utility helicopter based on the same drive train. The later has yet to materialize, while several prototypes of the Z-10 military attack helicopter are now flying powered by PT6C-67C engines. The Z-10 is about the same size and configuration as the Eurocopter Tiger, one of the world’s most modern and capable attack helicopters. Full production of the Z-10 powered by Pratt Whitney engines would give the PLA an unprecedented level of "aerial artillery" to support amphibious invasion and subsequent operations against Taiwan.
PLA Z-10 and United Technologies PT6C-67: A Pratt Whitney Canada turboshaft engine (top) powers the current prototypes of the PLA’s new sophisticated attack helicopter, which is comparable to the Eurocopter Tiger and as capable at Taiwan’s Bell AH-1 Cobra attack helicopters. Meanwhile, China is blackmailing U.S. helicopter makers selling to Taiwan. Source: Chinese Internet and RD Fisher
Bell Helicopter Canada, a subsidiary of the American Textron Company, sold its Bell-427 light helicopter in China after 2000, and in 2003 entered into a partnership with Hafei Aviation Industries to manufacture airframes for the Bell-430 helicopter.
However, on a corporate or company level there is a thin-to-no distinction between selling to a "civilian" and a "military" entity in China. All of China’s helicopter companies perform either research and development or manufacturing for the PLA. While one might quibble that Sikorsky S-76 and Bell-430 airframes or S-300 helicopters are relatively low-tech, it is likely that China’s intelligence services have targeted these companies to ensure that Chinese companies benefit from data gathered in China, or via cyber espionage operations that could benefit from an understanding of corporate data bases. In addition, all U.S. helicopters sold to "civilian" Chinese entities are theoretically subject to emergency military mobilization. This was demonstrated in the response to the May 12 Sichuan earthquake when a S-76 helicopter sold to a "civilian" operator was used along with Russian Mil Mi-17s and European Eurocopter AS-332 helicopters sold to other Chinese "civil" operators. These helicopters are equally likely to be used to support potential Chinese military operations against Taiwan, Japan and India.
Civil Helicopter Lineup: This lineup of Chinese civilian helicopters aiding earthquake relief efforts includes a Sikorsky S-76, an indication that the Chinese government could mobilize these helicopters for military missions against Taiwan as well. Source: Chinese Internet
As is the case with autos, American helicopter companies believe they must compete with Russian and European firms which gain political favor by selling helicopters and technology to the PLA. The PLA has purchased about 240 Russian Mil Mi-17I/V5 medium utility helicopters and has just entered a kit-based co-production agreement anticipated to add an additional 160 to its inventory over five years. While Russia may hope to safeguard its technology, it is apparent that Europe views the transfer of its helicopter technology as key to securing future helicopter market share. Eurocopter helped CHRDI design the drive train for the Z-10 attack helicopter. Since 2004 Eurocopter and China’s AVIC-2 have proceeded with a co-development and co-production project to create a new 8-ton utility helicopters, called the EC-175 in Europe and the Z-15 in China. Its first flight is expected in 2009 and it is expected to be certified in 2011. A Eurocopter official told this analyst that they do not expect the Chinese military to use the EC-175. But Eurocopter’s record is not encouraging; Eurocopter’s SA321, SA365, AS350 and HC-120, all co-produced in China, serve in the PLA, as the Z-8, Z-9, Z-11 and HC-120.
PLAAF Boeing B-737-300 Electronic Platform
At the November 2004 Zhuhai Airshow this analyst noticed a peculiar feature in a video presented by the Xian Aircraft Corporation. In a section of the video that showed newly built H-6 bombers outside the Xian factory, there was a Boeing B-737 jet transport with what appeared to be new fairings atop the fuselage. When the author asked Asian military contacts about this oddity there was a surprising report: China had converted two Boeing 737 airliners to serve as electronic control and monitoring platforms to support testing for new long range Land Attack Cruise Missiles. Subsequent Internet-source pictures of the aircraft revealed that new fairings has been placed on top of and on the bottom of the fuselage. Such a configuration could support a command and control or the suggested cruise missile test monitoring mission. A more recent Internet-source photo shows the aircraft to be part of a special PLA Air Force squadron equipped with other electronic and radar test aircraft.
PLAAF’s “Pirate” Boeing 737: A Xian Aircraft Co. video from 2004 offered the first indication that China had altered a Boeing 737 for military missions (top) and subsequent internet photos show this PLAAF aircraft has new fairings ontop and below the fuselage. Source: RD Fisher and Chinese Internet
In early 2005 officials in the State and Commerce Departments told Bill Gertz of the Washington Times that this PLA use of an American-made aircraft was under investigation. A State Department official reported to Gertz, "…commercial jets are permitted for export to China without a license, but that converting a civilian aircraft into a military jet is not allowed under U.S. export rules." This official then stated, "It is unquestionably true that these jets could not have been sold to the Chinese military without a presidential waiver, which is very unlikely," Gertz also reported that if China had violated U.S. export rules, "penalties could range from fines to the imposition of economic sanctions on China that would bar purchases of U.S. aircraft worth hundreds of millions of dollars." However, three and half years later, there has been no action by the State Department or the Commerce Department reacting to this flagrant Chinese military employment of a controlled American technology. Instead, Boeing continues to sell its B-737 airliners to Chinese airlines, which now operate over 200. In March 2008 the Pentagon reported that China could have as many as 250 new Land Attack Cruise Missiles targeting Taiwan. In early 2007 Taiwan’s Ministry of Defense reported that only 100 such PLA cruise missiles were deployed.
PLA’s Boeing 737s In Regiment: This Chinese Internet photo from 2008 shows two modified Boeing 737s in a PLAAF regiment dedicated to radar and electronic warfare testing aircraft.
PLA Use of American Cargo Airliners for Military Operations
A more ominous use of American made airliners is the PLA’s regular incorporation of civilian airliners into military troop and cargo transport missions. It has long been known that the PLA uses China’s fleet of civilian airliners as a "reserve" air transport resource. These airliners have been used to perform troop rotations and are occasionally used in troop transport exercises. Following the May 12 Sichuan earthquake the PLA again used Boeing and Airbus airliners with China Southern and China Eastern airlines to make emergency shipments of personnel and material. These supplemented the use of PLAAF Ilyushin Il-76 and Xian Y-8 transports for the same missions. But then in mid-June, perhaps capitalizing on the need to hone emergency airlift mobilization, the PLA conducted another exercise in which PLAAF Il-76 and both Airbus and Boeing airliners were mobilized to move PLA Airborne troops.
However, there was a unique addition to this mid-June exercise: the use of at least one Boeing B-747F and one McDonnell Douglas MD-11F dedicated cargo transports. A cursory count of U.S. made cargo airliners used by Chinese airlines—which would now include Hong Kong’s airlines-- indicates that they have at least 31 Boeing 747F cargoliners of various models and 9 MD-11F models, for a current total of 40 cargoliners. An Il-76 can carry about 48 metric tons while a Boeing B-747F-400 can carry about 55 metric tons. If one accepts current estimates that the PLAAF has about 20 Il-76 cargo transports, then the potential addition of U.S. made cargoliners could potentially treble the PLA’s air cargo lift capacity. But this is set to increase as Hong Kong’s Cathay Airlines has 16 Boeing B-747 cargoliners on order, and China Southern Airlines has six new Boeing B-777 cargoliners on order.
Enlisting "civilian" cargoliners in potential operations against Taiwan would be very attractive to the PLA. These aircraft could concentrate on moving the wide variety of palletized cargo, from bullets to artillery rockets to beans, that would be needed to sustain light and medium weight tracked and wheeled armored forces that would be best moved by Il-76s. By using civilian cargoliners to build up weapons and supplies, PLA Airborne armored forces sent to capture a Taiwanese airport could quickly move from a defensive to an offensive mission.
PLA Cargoliners: A mid-June 2008 PLA mobilization exercise saw the first noted use of civilian Chinese Boeing B-747F and MD-11F cargoliners to help transport PLA Airborne troops and their equipment. Source: Chinese Internet
Despite the U.S. and European arms embargos of 1989 responding to the Tiananmen Massacre, an event for which the Chinese government refuses still to acknowledge responsibility or offer justice, China’s military is making flagrant and increasing military use of American and European dual use technologies. In the case of the PLA Air Force’s "pirate" Boeing B-737, the U.S. State Department and Commerce Department cannot even organize themselves to define and enforce American law. This aircraft has very likely made a major contribution to the development of the PLA’s now rapidly growing offensive cruise missile capabilities. Co-produced Humvees, Sikorsky and Bell helicopters, plus Boeing and McDonnell Douglas cargoliners all are available now to the PLA to undertake direct attack or deception operations against Taiwan.
But there is perhaps another lesson for American policy makers. Instead of quietly increasing its exploitation of this growing instance of American weakness, China’s leaders are instead pressing for their own "embargo," actually threatening American aircraft makers Boeing, Bell and Sikorsky that they cannot sell to the Chinese market if they sell new weapons to Taiwan.
In mid-May Defense News reported:
"Over the past two years, China has threatened to stop buying commercial airliners from Boeing and civil helicopters from Bell Helicopter and Sikorsky if the companies continue to sell weapons and "advanced helicopter technologies" to Taiwan, sources said. Each of the companies stands to lose billions of dollars in potential orders, sources added… In 2006, China’s threats led Boeing to shutter its Taipei office and move the staff to Singapore, sources said."
The fact of the matter is that China cannot yet make its own commercial/military high-capacity transport aircraft or even keep pace with helicopter technology without foreign assistance. This, however, could change dramatically in the next decade should Airbus and Eurocopter, either willingly or otherwise, give China the technology needed to make competitive aircraft that will form the basis for indigenous military versions. Yet the Chinese leadership believes that it is now strong enough to blackmail American aircraft corporations into forcing the American government into betraying a longstanding security interest in Asia: defending the democracy on Taiwan.
The regular and evidently intentional fudging of restrictions on dual use and other exports is most likely understood as manifesting the rarely-spoken but clear expectations that have set Washington’s expectations since the 1970s. These are first that whatever happens, China will sooner or later emerge as the supreme economic and military power in Asia. The second is that it is therefore essential for the United States to be friendly with that China, regardless.
Expert opinion is divided. Some believe China will indeed continue smoothly on her present course and that her neighbors will sooner or later acquiesce. The result will be a replication of the China-centered tributary system that, although it never existed in fact, was widely portrayed in traditional Chinese writings. Others see dangers ahead for China—not just popular unrest and the problem of keeping political control without elections or free speech, but also environmental degradation, waste of resources—and if China attempts to coerce her neighbors, the emergence of a powerful coalition to balance her.
For Washington to plump so firmly on one side of this debate, making little provision for internal problems in China or external adventures, is most unwise. For the moment, however, that seems to be the signal being sent to China by the White House.
Reading this, the Chinese see themselves as engaged in a classic test of will what they consider the declining power of the United States and its allies. Analyzing our policy choices, they see an increasing willingness to defer to their wishes rather than to consider the interests of Asia as a whole. Few things are more dangerous in international affairs than a state that expects to be able to step into a position of primacy, be it regional or global, more or less effortlessly—indeed with the hegemon-emeritus smoothing the way. That China would actually be able to assume such a position and that the United States would knowingly smooth the way are both most doubtful propositions. But if our actions, for example with respect to dual use technologies, have the effect of convincing China that we are packing up and leaving the field to them, and leading our allies to think that they will soon be on their own, the results are likely to be opposite to what Washington intends—and potentially conflictual.
 H.R. 3792, Foreign Relations Authorization Act, Fiscal Years 1990 and 1991, (Considered and Passed by House), http://thomas.loc.gov/cgi-bin/query/F?c101:1:./temp/~c101LWTHBp:e212825:
 See, "An E-mail Exchange between the Department of Commerce and the Center for American Progress," March 27, 2005, http://www.americanprogress.org/issues/2005/03/b727703.html
 "EQ2050 High Mobility Utility Vehicle," SinoDefense.com, March 27, 2007, http://www.sinodefence.com/army/transport/eq2050.asp; There are many English and Chinese language references to, and photographic coverage of China’s co-produced Humvees: "PRC HMMWVs," Wikipdeia, http://en.wikipedia.org/wiki/PRC_HMMWVs; There has also been steady coverage of these vehicles in SinoDefence.com forum, China-Defense.com web page and Chinese language military issue web pages like CJDBY.com, Warsky, FYJS and Top81.
 Brochure, Poly Technologies, "FN-6 Portable Air Defense Missile System," obtained at the 2005 IDEX show.
 "Mengshi vehicles could have wartime annual output of 100,000," viewed on the War-Sky web page, June 28, 2008, http://www.war-sky.com/forum/htm_data/4/0804/249918.html
 Christopher Foss, "NORINCO develops quick-firing 81 mm self-propelled mortar," Jane’s International Defence Review, July 2008, p. 12.
 Brochure, Poly Technologies, "FB-6A Missile Launching Vehicle," obtained at the 2007 IDEX show.
 "US has "no plans" to lift China sanctions," Agence France Presse, October 17, 2001.
 Elizabeth Keck, "China’s Changing Skies," The China Business Review, March-April 2001, http://www.chinabusinessreview.com/public/0103/keck.html; "S-76," Deagle.com, http://www.deagel.com/Commercial-Helicopters/S-76_a000105001.aspx; Press Release, "Sikorsky Selects Changhe to Supply S-76 Helicopter," August 24, 2007, http://www.prlog.org/10028356-sikorsky-aircraft-selects-changhe-to-supply-76-helicopter-airframes.html
 "AVIC-II Joins Shanghai Sikorsky," China Aviation, February 8, 2008, http://chinaaviation.aero/news/airline/7268/59/AVIC-II-Joins-Shanghai-Sikorsky-
 David Pugliese, "Canadian engine flies Chinese attack helicopter, sale OK’d for civilian version of helicopter, Pratt Whitney says," The Ottowa Citizen, October 18, 2007, http://www.canada.com/ottawacitizen/news/story.html?id=372f9669-ca0f-4aaf-9088-1e27ec0a724f&k=68206; for previous reporting see "Elementary Watson, There Is A Z-10," ShowNews, Farnborough 2004, July 19, 2004, p.16, http://aviationweek.com/shownews/04farn/sn_071904.pdf; Robert Hewson, "China’s Z-10 helicopter build on Western Expertise," Jane’s Defence Weekly, April 13, 2005.
 Pugliese, op-cit.
 "China, Canada to Jointly Manufacture Bell-430 Helicopters," People’s Daily, September 30, 2003, http://english.people.com.cn/200309/04/eng20030904_123734.shtml
 Photos of these helicopters in the quake zone was posted on the FYJS web page on June 12, 2008, http://www.fyjs.cn/bbs/htm_data/27/0806/145738.html
 Prasun K. Sengupta, "Mi-17 Deliveries On The Rise In Southeast Asia," Tempur, July 2008, pgs. 87-88.
 At the November 2007 Dubai Airshow a Russian source had noted their concern about protecting their helicopter technology in light of China’s blatant copying of the Sukhoi Su-27 as the basis of its J-11B fighter.
 Hewson, op-cit.
 Interview, Dubai Airshow, November 2007.
 Bill Gertz, "Conversion of jetliners in China draw attention," The Washington Times, February 1, 2005, http://www.washtimes.com/national/20050131-115544-1044r.htm
 Office of the Secretary of Defense, Annual Report To Congress, Military Power of the People’s Republic of China 2008, p. 56.
 Bradley Perret, "Almost 1,000 Chinese missiles ranged against Taiwan," Aviation Week and Space Technology, January 29, 2007, p. 27.
 Numbers of U.S.-made cargoliners in Chinese, Macau and Hong Kong airlines from "World Airline Directory," Flight International, March 27, 2007, April 15, 2008 and April 22, 2008.
 Wendell Minnick and Vago Muradian, "China Threatens U.S. Defense Contractors Over Taiwan," Defense News, May 12, 2008.
Fuel Maker for Reactors Has China as Investor
By KEITH BRADSHER
Published: June 18, 2010
HONG KONG — A company here that is partly owned by the Chinese government has quietly purchased a 5.1 percent stake in the only American-owned provider of enriched uranium for use in civilian nuclear reactors.
USEC’s enrichment complex in Kentucky is the single largest user of electricity in the country.
• Companies Bet on Rise in Demand for Uranium (June 19, 2010)
The company that bought the stake, the Noble Group, is the world’s second-largest commodities trading and logistics company after Cargill and is based here. One of its minority owners is the Chinese government’s sovereign wealth fund.
The American company is USEC, which is based in Bethesda, Md., and enriches uranium so that fission can occur in nuclear reactors. It currently supplies enriched uranium for use in the United States, Japan, South Korea and Taiwan.
Noble said in a filing with the Securities and Exchange Commission that it had purchased the shares on the open market from May 25 to June 2. Noble wants to become USEC’s partner in marketing uranium enrichment for reactors in Asia, particularly mainland China, according to Richard Elman, Noble’s founder and executive chairman. USEC has had American regulatory clearance for years to sell enriched uranium to mainland China, but has not actively pursued such sales.
China, though, could prove to be a ready buyer of USEC’s product. It has a major nuclear power plant construction program under way to help meet its ravenous energy demands. And while China has its own fuel processing factories, it has struggled to obtain the uranium purity and low costs that the United States and particularly France have achieved, according to nuclear fuel experts.
Even a passive Chinese government stake in USEC could draw attention in Washington for its strategic and diplomatic implications. USEC, the parent of the United States Enrichment Corporation, is a cornerstone of America’s nuclear establishment, with classified operations that date back to the initial development of the atomic bomb during the Manhattan Project in World War II. Yet there would appear to be no direct role for the Chinese government in the Noble-USEC relationship. China’s sovereign wealth fund, the China Investment Corporation, bought 15 percent of Noble for $850 million last September. But it has no seats on the board and has said that it wants to be a passive investor. And Mr. Elman, who is British, said that he had not told anyone in the Chinese government about the purchase.
“They know nothing about it,” he said in an interview Friday. “I run the business and always have, I don’t need any agreement from anyone.” Mr. Elman said that he saw the investment in USEC as a commercial transaction. He emphasized that he had no interest in weapons-grade uranium — a business in which USEC is not involved.
He said that nuclear energy was becoming an ever more attractive investment, and that the Gulf of Mexico oil spill could only help make nuclear power seem a safer and less-polluting alternative to oil than before.
Steven Wingfield, the investor relations director at USEC, said that the company had notified the Nuclear Regulatory Commission about Noble’s stock purchase and had held initial discussions with Noble on nuclear fuel marketing in Asia. He declined to specify when USEC became aware of Noble’s stock purchases, citing a company policy of not discussing communications with investors.
With $2 billion a year in sales, USEC holds about 30 percent of the worldwide uranium enrichment market for commercial reactors. And it has been at the center of an Energy Department-administered program to take highly enriched uranium from former Soviet military stockpiles and dilute it for USEC to sell as fuel in civilian nuclear reactors, the so-called megatons-to-megawatts program. It may now do the same for the United States military after President Obama and President Dmitri A. Medvedev of Russia signed an agreement in April calling for deep cuts in nuclear weapons.
USEC’s enrichment complex in Paducah, Ky., is the single largest user of electricity in the United States, spending $700 million a year on electricity. That plant’s contributions to weaponry, though, are largely a thing of the past. It performed the first of two stages of production for highly enriched uranium for nuclear weapons until 1964, when the United States halted production for that purpose because the military had accumulated a huge stockpile.
A separate USEC-operated factory in Piketon, Ohio, performed the second stage. It was mothballed in 2001, after the United States also stopped the production of highly enriched uranium for reactors to propel submarines and aircraft carriers, and for research reactors used to make medical isotopes. The Energy Department is now taking proposals to decontaminate and dismantle the Ohio factory.
Mr. Elman said that he had no immediate plans to buy further shares of USEC. But he declined to rule out future purchases, saying only that, “Time will tell.”
Mr. Elman owns 25 percent of Noble and was ranked by Forbes in March at No. 437 among the world’s billionaires, with a fortune of $2.2 billion.
The Committee on Foreign Investment in the United States, an interagency panel coordinated by Treasury, has the authority to examine foreign purchases of stakes in American companies and block deals that threaten national security. A Treasury spokeswoman declined to comment on whether the committee was aware of the Noble transaction or would examine it, citing a secrecy provision in the committee’s rules.
Mr. Elman said that he was well aware of the nationalistic reaction in the United States Congress five years ago that prompted the state-controlled China National Offshore Oil Corporation to withdraw its bid for the American oil company Unocal. But he said he hoped that the USEC investment would prove less controversial because Noble had initially acquired only 5.1 percent of the company.
The Chinese government’s sovereign wealth fund’s role as a passive investor with a minority stake in Noble might raise fewer concerns in Congress than if, for example, a Chinese nuclear technology company were to seek a direct investment in USEC.
Noble paid just $30.2 million for the stake, as its purchases went little noticed in the market and USEC’s stock has been severely depressed. It fell more than 80 percent from its peak in 2008 as commodity prices crashed, and has shown little sign of recovery since then. The shares closed Friday at $5.13 — about where they were a year ago. USEC has long relied on an older, electricity-intensive technique, known as gaseous diffusion, that involves pushing uranium gas through membranes. The company has been struggling to adopt lower-cost centrifuge technology, which involves spinning uranium isotopes to separate them by weight — an approach already used by European rivals moving to open factories in the United States.
USEC was part of the Energy Department until 1998, when it was privatized with a requirement for majority American ownership to retain its Nuclear Regulatory Commission license.
Mr. Elman said that the “final trigger” for Noble to begin buying shares in USEC came on May 25. That was when Toshiba of Japan and Babcock & Wilcox, an American engineering company, announced a deal to buy $200 million of convertible preferred stock in USEC and warrants for its common stock, helping the company raise money to expand its uranium-enrichment capacity.
Toshiba owns Westinghouse Nuclear, and it has already been thoroughly screened by American government agencies for foreign ownership of American nuclear technology. With Toshiba setting a precedent for a foreign stake in USEC, Noble began buying up the company’s shares the same day, Mr. Elman said. Matthew L. Wald contributed reporting from Washington.