Order Code RL31555
China and Proliferation of Weapons of Mass
Destruction and Missiles: Policy Issues
Updated December 13, 2007
Shirley A. Kan
Specialist in Asian Security Affairs
Foreign Affairs, Defense, and Trade Division
China and Proliferation of Weapons of Mass
Destruction and Missiles: Policy Issues
Summary
Congress has long been concerned about whether U. S. policy advances the
national interest in reducing the role of the People’s Republic of China ( PRC) in the
proliferation of weapons of mass destruction ( WMD) and missiles that could deliver
them. Recipients of China’s technology reportedly include Pakistan and countries
that the State Department says support terrorism, such as Iran and North Korea. This
CRS Report, updated as warranted, discusses the security problem of China’s role in
weapons proliferation and issues related to the U. S. policy response since the mid-
1990s. China has taken some steps to mollify U. S. concerns about its role in
weapons proliferation. Nonetheless, supplies from China have aggravated trends that
result in ambiguous technical aid, more indigenous capabilities, longer- range
missiles, and secondary ( retransferred) proliferation. According to unclassified
reports to Congress by the intelligence community, China has been a “ key supplier”
of weapons technology, particularly missile or chemical technology.
Policy issues in seeking PRC cooperation have concerned summits, sanctions,
and satellite exports. On November 21, 2000, the Clinton Administration agreed to
waive missile proliferation sanctions, resume processing licenses to export satellites
to China, and discuss an extension of the bilateral space launch agreement, in return
for another promise from China on missile nonproliferation. However, ongoing PRC
proliferation activities again raised questions about sanctions. In contrast to the
Clinton Administration, the Bush Administration repeatedly has imposed sanctions
on PRC “ entities” for troublesome transfers. On 19 occasions, the Administration
has imposed sanctions on 32 different PRC “ entities” ( not the government) for
transfers ( related to missiles and chemical weapons) to Pakistan, Iran, or another
country, including repeated sanctions on some “ serial proliferators.” Among those
sanctions, in September 2001, the Administration imposed missile proliferation
sanctions that effectively denied satellite exports ( for two years), after a PRC
company transferred technology to Pakistan, despite the November 2000 promise.
In September 2003, the State Department imposed additional sanctions on
NORINCO, a defense industrial entity, effectively denying satellite exports to China.
However, for six times, the State Department waived this sanction for the ban on
imports of other PRC government products related to missiles, space systems,
electronics, and military aircraft, and then issued a permanent waiver in March 2007.
Skeptics question whether China’s cooperation in weapons nonproliferation has
warranted President Bush’s pursuit of closer bilateral ties. In this relationship, some
observers say that President Bush has not forcefully pressed China’s leaders on
weapons nonproliferation as a priority issue, even while imposing numerous U. S.
sanctions. Moreover, sanctions target “ entities” but not the PRC government. China
did not join the Proliferation Security Initiative ( PSI). The 110th Congress passed
H. R. 1 ( P. L. 110- 53) that included language to encourage China’s participation in
PSI. Since 2002, Bush has relied on China’s “ considerable influence” on North
Korea to dismantle its nuclear weapons, and Beijing has hosted the Six- Party Talks.
China has pursued balanced positions on North Korea and Iran, but also evolved to
vote for U. N. Security Council sanctions against nuclear proliferation.
Contents
Purpose and Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PRC Proliferation Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Partial Nonproliferation Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Continuing Concerns and Intelligence Report . . . . . . . . . . . . . . . . . . . . . . . . 2
Nuclear Technology Sales to Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Ring Magnets and Another Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Other Nuclear Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
A. Q. Khan’s Nuclear Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Missile Technology Sales to Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
M- 11 Missiles and Another Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Missile Plants and MRBMs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Nuclear Technology Sales to Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Canceled Nuclear Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1997 Promise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Uranium Enrichment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
UNSC Sanctions on Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Missile Technology Sales to Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Clinton Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Bush Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Chemical Sales to Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
North Korea’s Missile and Nuclear Weapons Programs . . . . . . . . . . . . . . . 19
Suspected Missile Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Secret Nuclear Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
PRC Ports and Airspace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Military Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Overview: Trilateral and Six- Party Talks in Beijing . . . . . . . . . . . . . . 23
Missile Technology Sales to Libya . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Missile Technology Sales to Syria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Missile Technology Sales to Iraq . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Policy Issues and Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Issues for Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Debate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
The PRC Government’s Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Foreign and Defense Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Summits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Counter- Terrorism Campaign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Missile Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Proliferation Security Initiative and 9/ 11 Commission . . . . . . . . . . . . 41
Export Control Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Linkage to the Taiwan Question . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Economic Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Satellite Exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Sanctions and the “ Helms Amendment” . . . . . . . . . . . . . . . . . . . . . . . 43
Capital Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Nuclear Cooperation and U. S. Export of Reactors . . . . . . . . . . . . . . . 45
U. S. Import Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
U. S. Export Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Nonproliferation and Arms Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Nonproliferation Regimes ( MTCR, NSG, etc.) . . . . . . . . . . . . . . . . . . 46
CTBT and Fissile Materials Production . . . . . . . . . . . . . . . . . . . . . . . 48
International Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
List of Tables
Table 1. PRC Entities Sanctioned for Weapons Proliferation . . . . . . . . . . . . . . 50
China and Proliferation of Weapons of Mass
Destruction and Missiles: Policy Issues
Purpose and Scope
Congress has long been concerned about whether U. S. policy advances U. S.
security interests in reducing the role of the People’s Republic of China ( PRC) in the
proliferation of weapons of mass destruction ( WMD) and missiles as well as
obtaining China’s cooperation in weapons nonproliferation. This problem refers to
the threat of nuclear, chemical, or biological weapons and missiles that could deliver
them. Some have argued that certain PRC transfers violated international treaties or
guidelines, and/ or have contravened various U. S. laws requiring sanctions to shore
up those international standards. Even if no laws or treaties are violated, many view
China’s transfers as threatening U. S. security interests. Using a variety of
unclassified consultations and sources, this CRS Report discusses the national
security problem of the PRC’s role in weapons proliferation and issues related to the
U. S. policy response, including legislation, since the mid- 1990s. Table 1, at the end
of this report, summarizes the U. S. sanctions imposed or waived on PRC entities or
the PRC government for weapons proliferation. For a discussion of the policy
problem in the 1980s to 1996, see CRS Report 96- 767, Chinese Proliferation of
Weapons of Mass Destruction: Background and Analysis, by Shirley Kan. See also,
by the same author, CRS Report 98- 485, China: Possible Missile Technology
Transfers Under U. S. Satellite Export Policy — Actions and Chronology.
PRC Proliferation Challenges
Partial Nonproliferation Commitments
Since 1991, Beijing has taken steps to address U. S. and other countries’
concerns by increasing its partial participation in international nonproliferation
regimes and issuing export control regulations. However, questions have remained.
China first promised tentatively to abide by the Missile Technology Control Regime
( MTCR) in November 1991 and February 1992 and later reaffirmed that commitment
in an October 4, 1994 joint statement with the United States. The MTCR, set up in
1987, is not an international agreement and has no legal authority, leaving issues
about U. S. sanctions to shore up the standards unresolved. It is a set of voluntary
guidelines that seeks to control the transfer of ballistic and cruise missiles that are
inherently capable of delivering at least a 500 kg ( 1,100 lb) payload to at least 300
km ( 186 mi), called “ Category I” or “ MTCR- class” missiles. It was unclear whether
China adhered to the revised MTCR guidelines of 1993 calling for the presumption
to deny transfers of any missiles capable of delivering any WMD ( not just nuclear
weapons). A 1996 State Department fact sheet said that China unilaterally
CRS- 2
committed to controlling exports “ consistent with the MTCR Guidelines and
Annex,” with the MTCR consisting of a common export control policy ( Guidelines)
applied to a common list of controlled items ( Annex). However, a Senate Foreign
Relations Committee report of September 11, 2000, said the State Department had
argued to Congress that China agreed to the MTCR Guidelines, but not the Annex.
On November 21, 2000, Beijing said that it has no intention of assisting any
other country in developing ballistic missiles that can be used to deliver nuclear
weapons ( missiles with payloads of at least 500 kg and ranges of at least 300 km) and
promised to issue missile- related export controls “ as soon as possible.” After a
contentious period that saw new U. S. sanctions, the PRC finally published those
regulations and the control list ( modeled on the MTCR) on August 25, 2002, as
Washington and Beijing prepared for a Bush- Jiang summit on October 25, 2002. In
2004, China applied to join the MTCR but has not been accepted as a member.
China acceded to the Nuclear Nonproliferation Treaty ( NPT) on March 9, 1992.
The NPT does not ban peaceful nuclear projects. On May 11, 1996, the PRC issued
a statement promising to make only safeguarded nuclear transfers. China, on July 30,
1996, began a moratorium on nuclear testing and signed the Comprehensive Test Ban
Treaty ( CTBT) in September 1996 but ( like the United States) has not ratified it.
Premier Li Peng issued nuclear export control regulations on September 10, 1997.
On October 16, 1997, China joined the Zangger Committee ( on nuclear trade). Also
in October 1997, China promised not to start new nuclear cooperation with Iran. On
June 6, 1998, the U. N. Security Council ( including China) adopted Resolution 1172,
asking states to prevent exports to India or Pakistan’s nuclear weapon or missile
programs. The PRC issued regulations on dual- use nuclear exports on June 17, 1998.
In May 2004, China applied to join the Nuclear Suppliers Group ( NSG), which
accepted China as a member after the Bush Administration decided to support China,
despite congressional concerns.
In November 1995, China issued its first public defense white paper, which
focused on arms control and disarmament. Also, China signed the Chemical
Weapons Convention ( CWC) in January 1993. On April 25, 1997, China deposited
its instrument of ratification of the CWC, before it entered into force on April 29,
1997. From 1993 to1998, the PRC issued export control regulations on chemicals.
On October 14, 2002, on the eve of a Bush- Jiang summit, the PRC issued regulations
for export controls over dual- use biological agents and related technology. On
December 3, 2003, China issued a white paper on nonproliferation, which stated that
its control lists are almost the same as those of the Zangger Committee, NSG, CWC,
Australia Group, and MTCR.
Continuing Concerns and Intelligence Report
Nevertheless, China is not a member of the MTCR or the Australia Group ( AG)
( on chemical and biological weapons). ( In June 2004, China expressed willingness
to join the MTCR.) China did not join the 93 countries in signing the International
Code of Conduct Against Ballistic Missile Proliferation in The Hague on November
25, 2002. China has not joined the Proliferation Security Initiative ( PSI) announced
by President Bush on May 31, 2003. PRC weapons proliferation has persisted,
aggravating trends that result in more ambiguous technical assistance ( vs. transfers
CRS- 3
1 Office of the Director of National Intelligence, “ Unclassified Report to Congress on the
Acquisition of Technology Relating to Weapons of Mass Destruction and Advanced
Conventional Munitions, 1 January- 31 December 2004,” May 2006.
of hardware), longer range missiles, more indigenous capabilities, and secondary
( i. e., retransferred) proliferation.
The Director of Central Intelligence ( DCI) noted that, for July- December 1996,
“ China was the most significant supplier of WMD- related goods and technology to
foreign countries.” As required by Section 721 of the FY1997 Intelligence
Authorization Act, P. L. 104- 293, the DCI’s report to Congress, “ Unclassified Report
to Congress on the Acquisition of Technology Relating to Weapons of Mass
Destruction and Advanced Conventional Munitions,” has named China ( plus North
Korea and Russia) as “ key suppliers” of dangerous technology. Subsequent
discussions of this required report refer to this “ Section 721 report.” Original
legislation required a semi- annual report. The FY2004 Intelligence Authorization
Act ( P. L. 108- 177) changed the requirement to an annual report. The Deputy
Director of National Intelligence for Analysis submitted the latest Section 721 report
to Congress in May 2006 to cover the year of 2004.1
Nuclear Technology Sales to Pakistan
Overview. In 1996, U. S. policymakers faced the issue of whether to impose
sanctions on the PRC for technology transfers to Pakistan’s nuclear program, and
Beijing issued another nuclear nonproliferation pledge. Since then, the United States
has maintained concerns — but at a lower level — about continued PRC nuclear
cooperation with Pakistan, particularly involving the construction of nuclear power
plants at Chashma. The PRC government is believed to know about some, if not all,
of the ongoing nuclear cooperation with Pakistan. Nonetheless, in 2004, the Bush
Administration supported China’s application to join the Nuclear Suppliers Group
( NSG), despite Congressional concerns about China’s failure to apply the NSG’s
“ full- scope safeguards” to its nuclear projects in Pakistan. ( Full- scope safeguards
apply IAEA inspections to all other declared nuclear facilities in addition to the
facility importing supplies in order to prevent diversions to any weapon programs.)
Ring Magnets and Another Pledge. In 1996, some in Congress called for
sanctions after reports disclosed that China sold unsafeguarded ring magnets to
Pakistan, apparently in violation of the NPT and in contradiction of U. S. laws,
including the Arms Export Control Act ( P. L. 90- 629) and Export- Import Bank Act
( P. L. 79- 173), as amended by the Nuclear Proliferation Prevention Act of 1994 ( Title
VIII of P. L. 103- 236). On February 5, 1996, the Washington Times disclosed
intelligence reports that the China National Nuclear Corporation, a state- owned
corporation, transferred to the A. Q. Khan Research Laboratory in Kahuta, Pakistan,
5,000 ring magnets that can be used in gas centrifuges to enrich uranium.
Reportedly, intelligence experts believed that the magnets provided to Pakistan were
to be used in special suspension bearings at the top of rotating cylinders in the
centrifuges. The New York Times, on May 12, 1996, reported that the shipment was
made after June 1994 and was worth $ 70,000. The PRC company involved was
China Nuclear Energy Industry Corporation, a subsidiary of the China National
CRS- 4
Nuclear Corporation. The State Department’s report on nonproliferation efforts in
South Asia ( issued on January 21, 1997) confirmed that “ between late 1994 and
mid- 1995, a Chinese entity transferred a large number of ring magnets to Pakistan for
use in its uranium enrichment program.”
The Clinton Administration’s decision- making was complicated by
considerations of U. S. corporations doing business in China. Officials reportedly
considered imposing then waiving sanctions or focusing sanctions only on the China
National Nuclear Corporation, rather than large- scale sanctions affecting the entire
PRC government and U. S. companies, such as Westinghouse Electric Corporation
( which had deals pending with China National Nuclear Corporation) and Boeing
Aircraft Company. At the end of February 1996, Secretary of State Warren
Christopher instructed the Export- Import Bank to suspend financing for commercial
deals in China for one month, reported the New York Times ( February 29, 1996).
Christopher reportedly required time to try to obtain more information to make a
determination of whether sanctions would be required. Meanwhile, DCI John
Deutch reportedly said at a White House meeting that PRC officials at some level
likely approved the sale of magnets. Defense Secretary William Perry supported this
view, but officials of the Commerce and Treasury Departments and the U. S. Trade
Representative argued there was lack of solid proof, according to the Washington
Post ( April 1, 1996).
On May 10, 1996, the State Department announced that China and Pakistan
would not be sanctioned, citing a new agreement with China. Clinton Administration
officials said that China promised to provide future assistance only to safeguarded
nuclear facilities, reaffirmed its commitment to nuclear nonproliferation, and agreed
to consultations on export control and proliferation issues. The Administration also
said that PRC leaders insisted they were not aware of the magnet transfer and that
there was no evidence that the PRC government had willfully aided or abetted
Pakistan’s nuclear weapon program through the magnet transfer. Thus, the State
Department announced that sanctions were not warranted, and Export- Import Bank
considerations of loans for U. S. exporters to China were returned to normal. On May
11, 1996, China’s foreign ministry issued a statement that “ China will not provide
assistance to unsafeguarded nuclear facilities.” In any case, since 1984, China has
declared a policy of nuclear nonproliferation and a requirement for recipients of its
transfers to accept IAEA safeguards, and China acceded to the NPT in 1992.
That year, Congress responded to the Administration’s determination not to
impose sanctions by adding language on “ persons” in the Export- Import Bank Act,
as amended by Section 1303 of the National Defense Authorization Act for FY1997
( P. L. 104- 201), enacted on September 23, 1996.
Other Nuclear Cooperation. On October 9, 1996, the Washington Times
reported that a CIA report dated September 14, 1996, said that China sold a “ special
industrial furnace” and “ high- tech diagnostic equipment” to unsafeguarded nuclear
facilities in Pakistan. In September 1996, PRC technicians in Pakistan reportedly
prepared to install the dual- use equipment. The deal was allegedly made by the
China Nuclear Energy Industry Corporation, the same firm which sold the ring
magnets. Those who suspected that the transfer was intended for Pakistan’s nuclear
weapons program said that high temperature furnaces are used to mold uranium or
CRS- 5
2 Mark Hibbs, “ CIA Knew About Khushab D2O Plant but Not Source, Officials Claim,”
Nucleonics Week, March 23, 2000; “ Pakistani Separation Plant Now Producing 8- 10 Kg
Plutonium/ Yr,” Nuclear Fuel, June 12, 2000.
plutonium. The CIA report was said to state that “ senior- level government approval
probably was needed” and that PRC officials planned to submit false documentation
on the final destination of the equipment. According to the press, the CIA report said
that the equipment was set to arrive in early September 1996. The Washington Post,
on October 10, 1996, further reported that the equipment was intended for a nuclear
reactor to be completed by 1998 at Khushab in Pakistan. On October 9, 1996, the
State Department said that it had not concluded that China violated its promise of
May 11, 1996. However, the State Department did not publicly address whether the
suspected transfers occurred before May 11, 1996, violated the NPT, or contradicted
U. S. laws ( including the Arms Export Control Act, Export- Import Bank Act, and the
Nuclear Proliferation Prevention Act).
Concerns have persisted about PRC assistance to Pakistan’s nuclear facilities.
As reported by Pakistani and PRC news sources in 1992, China began to build a
nuclear power plant at Chashma and was suspected in 1994 of helping Pakistan to
build an unsafeguarded, plutonium- producing reactor at Khushab, according to
Nucleonics Week ( June 19, 1997 and February 26, 1998). Operational since 2001,
the Chashma reactor has IAEA safeguards but not full scope safeguards ( Nucleonics
Week, April 26, 2001; and IAEA, Annual Report 2001).
Referring specifically to Pakistan’s efforts to acquire equipment, materials, and
technology for its nuclear weapons program, the DCI’s June 1997 “ Section 721
report” for the last half of 1996 ( after China’s May 1996 pledge) stated that China
was the “ principal supplier.” Then, on May 11 and 13, 1998, India conducted nuclear
tests, citing China’s nuclear ties to Pakistan, and Pakistan followed with nuclear tests
on May 28 and 30, 1998. China, as Pakistan’s principal military and nuclear
supplier, failed to avert the tests and did not cut off nuclear aid, but condemned the
tests at the U. N. The Arms Control and Disarmament Agency’s annual report on
arms control for 1998 stated that “ there continued to be some contacts between
Chinese entities and Pakistan’s unsafeguarded and nuclear weapons program.”
In 2000, news reports said that some former U. S. nonproliferation and
intelligence officials suspected that China provided equipment for Pakistan’s secret
heavy water production plant at Khushab, where an unsafeguarded reactor reportedly
started up in April 1998 and has generated weapons- grade plutonium. Clinton
Administration officials at the White House and State Department reportedly denied
China’s involvement but said that they did not know the origins of the plant. 2 The
DCI reported in November 2003 that, in the first half of 2003, continued contacts
between PRC entities and “ entities associated with Pakistan’s nuclear weapons
program” cannot be ruled out, despite the PRC’s 1996 promise not to assist
unsafeguarded nuclear facilities. The Director of the Defense Intelligence Agency
( DIA), Vice Admiral Lowell Jacoby, testified to the Senate Intelligence Committee
on February 24, 2004, that PRC entities “ remain involved with nuclear and missile
programs in Pakistan and Iran,” while “ in some cases,” the entities are involved
CRS- 6
3 “ Pakistan, China Agree on Second Chashma Unit,” Nucleonics Week, May 6, 2004.
4 David Sanger and William Broad, “ From Rogue Nuclear Programs, Web of Trails Leads
to Pakistan,” New York Times, January 4, 2004.
5 Barton Gellman and Dafna Linzer, “ Unprecedented Peril Forces Tough Calls,” Washington
Post, October 26, 2004.
6 Joby Warrick and Peter Slevin, “ Libyan Arms Designs Traced Back to China,” Washington
Post, February 15, 2004; William Broad and David Sanger, “ As Nuclear Secrets Emerge in
Khan Inquiry, More Are Suspected,” New York Times, December 26, 2004.
7 Senate Select Committee on Intelligence, hearing on “ Global Intelligence Challenges 2005:
Meeting Long- term Challenges with a Long- term Strategy,” February 16, 2005.
without the government’s knowledge, thus implying that there are cases in which the
PRC government has knowledge of the relationships.
On May 5, 2004, China signed a contract to build a second nuclear power
reactor ( Chashma- 2) in Pakistan. This contract raised questions because of
continuing PRC nuclear cooperation with Pakistan and its signing right before a
decision by the Nuclear Suppliers Group ( NSG) on China’s membership, with U. S.
support. With a pre- existing contract, Chashma- 2 would be exempted from the
NSG’s requirement for full- scope safeguards ( not just IAEA safeguards on the
reactor). 3 ( See Nonproliferation Regimes below for policy discussion.)
A. Q. Khan’s Nuclear Network. China’s past and persisting connections to
Pakistan’s nuclear program raised questions about whether China was involved in or
had knowledge about the long- time efforts, publicly confirmed in early 2004, of
Abdul Qadeer Khan, the former head of Pakistan’s nuclear weapon program, in
selling uranium enrichment technology to Iran, North Korea, and Libya. DCI George
Tenet confirmed A. Q. Khan’s network of nuclear trade in open testimony to the
Senate Intelligence Committee on February 24, 2004.
China’s association was raised particularly because China was an early recipient
of the uranium enrichment technology Khan acquired in Europe. 4 Also, there were
questions about whether China shared intelligence with the United States about
Khan’s nuclear technology transfers. With the troubling disclosures, China could be
more willing to cooperate on nonproliferation or could be reluctant to confirm its
involvement. A senior Pakistani diplomat was quoted as saying that, while in Beijing
in 2002, PRC officials said they knew “ A. Q. Khan was in China and bribing people,
and they wanted him out.” 5 Particularly troubling was the reported intelligence
finding in early 2004 that Khan sold Libya a nuclear bomb design that he received
from China in the early 1980s ( in return for giving China his centrifuge technology),
a design that China had already tested in 1966 and had developed as a compact
nuclear bomb for delivery on a missile. 6 That finding raised the additional question
of whether Khan also sold that bomb design to others, including Iran and North
Korea. DCI Porter Goss testified in February 2005 that the Bush Administration
continued to explore opportunities to learn about Khan’s nuclear trade, adding that
“ getting to the end of that trail is extremely important for us. It is a serious
proliferation question.” 7
CRS- 7
8 Office of the Secretary of Defense, Proliferation: Threat and Response, November 1997.
Missile Technology Sales to Pakistan
Overview. From the early 1990s to 2000, the George H. W. Bush and Clinton
Administrations faced the issue of whether to impose sanctions on PRC “ entities” for
transferring M- 11 short- range ballistic missiles or related technology to Pakistan.
The Clinton Administration took eight years to determine in 2000 that PRC entities
had transferred complete M- 11 missiles as well as technology to Pakistan, but waived
sanctions in return for another missile nonproliferation pledge from Beijing.
However, despite that promise of November 2000, the United States has continued
concerns about PRC technology transfers that have helped Pakistan to build domestic
missile programs, including development of medium- range ballistic missiles. In
September 2001, the George W. Bush Administration imposed sanctions for PRC
proliferation of missile technology to Pakistan, denying satellite exports to China.
M- 11 Missiles and Another Pledge. Transfers of the PRC’s M- 11 short
range ballistic missiles ( SRBMs) or related equipment exceed MTCR guidelines,
because the M- 11 has the inherent capability to deliver a 500 kg ( 1,100 lb) warhead
to 300 km ( 186 mi). Issues about U. S. sanctions have included the questions of
whether PRC transfers to Pakistan involved M- 11 missile- related technology
( Category II of the MTCR) or complete missiles ( Category I). Sanctions for missile-related
transfers are mandated under Section 73( a) of the Arms Export Control Act
( AECA) and Section 11B( b)( 1) of the Export Administration Act ( EAA) ( as
amended by the FY1991 National Defense Authorization Act).
In June 1991, the Bush Administration first imposed sanctions on entities in
China for transferring M- 11 technology to Pakistan. Sanctions affected exports of
supercomputers, satellites, and missile technology. The Administration later waived
the sanctions on March 23, 1992. On August 24, 1993, the Clinton Administration
determined that China had again transferred M- 11 equipment ( not whole missiles)
to Pakistan and imposed new sanctions ( affecting exports of some satellites). On
October 4, 1994, Secretary of State Warren Christopher and Foreign Minister Qian
Qichen signed a joint statement, saying that Washington would waive the August
1993 sanctions and Beijing would not export “ ground- to- ground missiles”
“ inherently capable” of delivering a 500 kg warhead 300 km. The Administration
waived the sanctions on November 1, 1994.
However, contentious policy questions about imposing sanctions for the 1992
transfer of complete M- 11 SRBMs ( not just components) persisted until 2000. The
Washington Times ( March 14, 1997) said “ numerous” intelligence reports indicated
that M- 11 missiles were “ operational” in Pakistan, but these findings were disputed
by some policymakers. Secretary of Defense William Cohen issued a Pentagon
report in 1997 stating that Pakistan acquired “ SRBMs” as well as related equipment
from China in the early 1990s. 8 In a 1998 report to Congress on nuclear
nonproliferation in South Asia, the State Department acknowledged its concerns
about “ reports that M- 11 missiles were transferred from China to Pakistan” but added
that it had not determined that such transfers occurred, “ which would be sanctionable
CRS- 8
9 Department of State, “ Report on Nuclear Nonproliferation in South Asia,” March 17, 1998.
10 Commission to Assess the Ballistic Missile Threat to the United States ( popularly known
as the Rumsfeld Commission), report, July 15, 1998.
11 Senate Foreign Relations Committee, “ Chairman’s Overview of China’s Proliferation
Track Record,” September 11, 2000.
12 National Intelligence Council, “ Foreign Missile Developments and the Ballistic Missile
Threat to the United States Through 2015,” September 1999.
under U. S. law.” 9 Gordon Oehler, former head of the CIA’s Nonproliferation Center,
testified on June 11, 1998, to the Senate Foreign Relations Committee that in
November 1992, “ the Chinese delivered 34 M- 11s to Pakistan.” In July 1998, the
Rumsfeld Commission said that China had transferred complete M- 11s to Pakistan. 10
Some said that sanctions were not imposed for transfers of complete M- 11s,
because the missiles remained inside crates at Sagodha Air Base, according to the
Wall Street Journal ( December 15, 1998). Critics in Congress said the Clinton
Administration avoided making determinations of whether to impose sanctions, by
delaying tactics, re- writing reports, and setting high evidentiary standards. The
Senate Foreign Relations Committee issued a report in September 2000, saying that
the Administration avoided such determinations by the use of “ bureaucratic
maneuvers” to delay the drafting of “ Statements/ Findings of Fact” by the intelligence
community and by not scheduling interagency meetings to consider those findings. 11
On September 9, 1999, the intelligence community publicly confirmed for the
first time that “ Pakistan has M- 11 SRBMs from China” and that they may have a
nuclear role. 12 However, the State Department argued on September 14, 1999, that
it required a “ high standard of evidence” and had not yet determined that Category
I sanctions were warranted, despite the intelligence judgment. ( Category I sanctions
would deny licenses for exports of Munitions List items, among other actions, and
Congress transferred satellites back to the Munitions List, effective March 15, 1999.)
The Far Eastern Economic Review reported on May 18, 2000, that the Clinton
Administration and Senator Helms of the Foreign Relations Committee struck a deal
in 1999 that required a decision on sanctions for the PRC’s M- 11 transfer to Pakistan
in exchange for the confirmation of Robert Einhorn as Assistant Secretary of State
for Nonproliferation ( approved on November 3, 1999). On November 21, 2000, the
Clinton Administration said it determined that PRC entities had transferred Category
I and Category II missile- related items to Pakistani entities, and sanctions would be
waived on the PRC for past transfers, given its new missile nonproliferation promise.
Missile Plants and MRBMs. While China promised not to transfer missiles,
it has reportedly helped Pakistan to achieve an indigenous missile capability. U. S.
intelligence reportedly concluded in a National Intelligence Estimate that China
provided blueprints and equipment to Pakistan to build a plant for making missiles
that would violate the MTCR, according to the Washington Post ( August 25, 1996).
Analysts disagreed, however, about whether the plant would manufacture some major
missile components or whole copies of the M- 11 missile. Construction of the plant
allegedly began in 1995. On August 25, 1996, Vice President Al Gore acknowledged
concerns about the plant. Time reported on June 30, 1997, that the Clinton
CRS- 9
Administration would not discuss possible sanctions based on intelligence on the
missile plant. The November 1997 report of the Secretary of Defense also confirmed
Pakistan’s facility “ for the production of a 300 kilometer range ballistic missile.” By
1998, the missile plant in Fatehjung was almost finished, awaiting delivery of crucial
equipment from China, reported the Wall Street Journal ( December 15, 1998).
On April 6, 1998, Pakistan first tested its nuclear- capable Ghauri ( Hatf- 5)
medium- range ballistic missile ( MRBM), which is based on the North Korean No
Dong missile. U. S. intelligence was said to suspect that China Poly Ventures
Company delivered, perhaps in 1999, U. S.- made specialized metal- working presses
and a special furnace to Pakistan’s National Development Center, a missile plant,
reported the Washington Times ( April 15, 1999). China reportedly was building a
second missile plant and providing specialty steel, guidance systems, and technical
aid, said the Far Eastern Economic Review ( June 22, 2000) and New York Times
( July 2, 2000). Apparently confirming these stories, the DCI’s “ Section 721 report”
wrote that in August 2000, besides North Korean help, PRC entities provided
“ increased assistance” to Pakistan’s ballistic missile program in the second half of
1999. Also, China has assisted Pakistan with development of the Shaheen- 2 two-stage,
solid- fuel MRBM, reported Jane’s Defense Weekly ( December 13, 2000). DCI
George Tenet confirmed U. S. concerns about such assistance in testimony on
February 7, 2001, before the Senate Intelligence Committee, and in his February
2001 report on proliferation.
Despite the PRC’s November 2000 missile nonproliferation pledge, in the first
several months of 2001, a PRC company reportedly delivered 12 shipments of
missile components to Pakistan’s Shaheen- 1 SRBM and Shaheen- 2 MRBM
programs, according to the Washington Times ( August 6, 2001). On September 1,
2001, the State Department imposed sanctions on China Metallurgical Equipment
Corporation ( CMEC) for proliferation of missile technology ( Category II items of the
MTCR) to Pakistan. In November 2004, the DCI told Congress in a “ Section 721
report” that, in the second half of 2003, PRC entities helped Pakistan to advance
toward serial production of solid- fuel SRBMs ( previously identified as the Shaheen-
1, Abdali, and Ghaznavi) and supported Pakistan’s development of solid- fuel
MRBMs ( previously noted as the Shaheen- 2 MRBM). The Director of National
Intelligence ( DNI)’ s “ Section 721 report” of May 2006 reported to Congress that
PRC entities continued in 2004 to work with Pakistan on ballistic missile programs.
Nuclear Technology Sales to Iran
Overview. In the mid- 1990s, the Clinton Administration urged China to
cancel ostensibly civilian nuclear projects in Iran. In negotiations leading up to the
1997 U. S.- PRC summit, China pledged to end nuclear cooperation with Iran. At the
summit, President Clinton promised to implement the 1985 U. S.- PRC nuclear
cooperation agreement ( to sell nuclear power reactors to China). However, the
United States has continued concerns about whether China has abided by its October
1997 promise. With new reports in 2002 about Iran’s uranium enrichment program,
the Bush Administration, since 2004, has sought PRC support for tough sanctions
imposed by the U. N. Security Council ( UNSC). The PRC’s position has evolved to
support some sanctions but not the use of force.
CRS- 10
13 Office of the Secretary of Defense, Proliferation: Threat and Response, April 1996.
Canceled Nuclear Projects. Suspecting that Iran uses nuclear technology
to build the technical infrastructure for its clandestine nuclear weapon program,
Washington urged Beijing ( and Moscow) not to transfer any nuclear technology to
Iran. In 1995, China suspended a sale of nuclear reactors to Iran. Indicating Israeli
influence, Prime Minister Benjamin Netanyahu publicly stated in August 1997 that
PRC Vice Premier Li Lanqing said that China canceled plans to build the reactors.
However, there were other controversial PRC nuclear deals with Iran pointing
to an Iranian nuclear weapon program. PRC technicians built a calutron, or
electromagnetic isotope separation system, for enriching uranium at the Karaj nuclear
research facility, according to “ confidential reports” submitted to Iranian President
Rafsanjani by his senior aides, according to the London Sunday Telegraph ( as
reported in the September 25, 1995 Washington Times). As reported, the PRC
system was similar to the one used in Iraq’s secret uranium enrichment program.
Secretary of Defense William Perry confirmed in an April 1996 report that “ the
Iranians have purchased an electromagnetic isotope separation unit from China.” 13
The China Nuclear Energy Industry Corporation had plans to sell Iran a facility
to convert uranium ore into uranium hexafluoride gas, which could be enriched to
weapons- grade material, according to the Washington Post ( April 17, 1995; June 20,
1996). Intelligence reports said that the deal proceeded with PRC nuclear experts
going to Iran to build the new uranium conversion plant near Isfahan, reported the
Washington Times ( April 17, 1996). However, PRC civilian nuclear officials later
indicated to the IAEA and U. S. officials that China would not transfer the uranium
conversion facility, ostensibly because of Iran’s inability to pay, reported the
Washington Post ( November 6, 1996). China’s role as nuclear supplier may have
been affected by Iran’s turn to Russian reactors. Also, China might have responded
to concerns of Israel ( after Russia, the secondary supplier to China’s military).
1997 Promise. China’s concern about its standing with the United States was
also important. State Department official Robert Einhorn told Congress that China
canceled the uranium conversion project but had provided Iran with a blueprint to
build the facility, reported the Washington Post ( September 18, 1997). On the eve
of a U. S.- China summit in Washington in October 1997, PRC Foreign Minister Qian
Qichen provided a secret letter to Secretary of State Madeleine Albright, promising
not to begin new nuclear cooperation with Iran, after building a small nuclear
research reactor and a factory to fabricate zirconium cladding to encase fuel rods in
nuclear reactors, according to the Washington Post ( October 30, 1997). U. S. officials
said the projects would not be significant for nuclear proliferation.
After President Clinton signed certifications in January 1998 to implement the
1985 bilateral nuclear cooperation agreement, as promised at the 1997 summit, the
Washington Post ( March 13, 1998) reported that at a closed hearing of the Senate
Foreign Relations Committee on March 12, 1998, Clinton Administration officials
disclosed negotiations in January 1998 between the China Nuclear Energy Industry
Corporation and Iran’s Isfahan Nuclear Research Center to provide “ a lifelong
supply” of hundreds of tons of anhydrous hydrogen fluoride ( AHF), or hydrofluoric
CRS- 11
14 Mehr News Agency, Tehran, December 10, 2004, via FBIS.
acid, under falsified documents about end- users. ( The AHF chemical could be used
to produce uranium hexafluoride used in uranium conversion facilities. AHF is also
a precursor for the chemical weapon agent Sarin.) According to the press, after
Washington protested, Beijing stopped the sale. The Administration argued that
Beijing responded positively and that the chemical is controlled by the Australia
Group and not on a nuclear control list. Later, an April 2, 1999 U. S. intelligence
report was said to suggest that the China Non- metallic Minerals Industrial
Import/ Export Corporation “ revived” negotiations with the Iranian Atomic Energy
Organization on the construction of a plant to produce graphite ( used as a moderator
in some reactors), reported the Washington Times ( April 15, 1999).
In a February 2001 “ Section 721 report” ( on the first half of 2000), the DCI
dropped an earlier observation that the 1997 pledge appeared to be holding. In
testimony before the Senate Governmental Affairs Subcommittee on International
Security, Proliferation, and Federal Services on June 6, 2002, Assistant Secretary of
State John Wolf stated concerns about possible PRC- Iranian interactions “ despite
China’s 1997 pledge to end its nuclear cooperation with Iran.”
Uranium Enrichment. In 2002, an Iranian opposition group revealed that
Iranian front companies procured materials from China ( and other countries) for
secret nuclear weapons facilities, while experts from China worked at a uranium
mine at Saghand and a centrifuge facility ( for uranium enrichment) near Isfahan,
reported the Washington Post ( December 19, 2002 and February 20, 2003).
Moreover, Nucleonics Week ( February 27 and March 6, 2003) reported that Iran,
since 2000, was building a secret uranium enrichment plant at Natanz with
technology for gas centrifuge enrichment from Pakistan ( Khan Research
Laboratories), a country that has received nuclear cooperation from China. Also, the
IAEA found out in 2003 that, in 1991, China supplied Iran with 1.8 metric tons of
natural uranium, reported Nucleonics Week ( June 12, 2003). The head of the Iranian
Atomic Organization reported an Iranian- PRC contract to extract uranium ore in
Yazd. 14 The DCI’s “ Section 721 report” ( issued in November 2004) confirmed that
the Iranian opposition group, “ beginning in August of 2002, revealed several
previously undisclosed Iranian nuclear facilities.”
In testimony to Congress on February 11, 2003, DCI George Tenet pointed to
China’s “ firms” ( rather than the government) and warned that they “ may be backing
away from Beijing’s 1997 bilateral commitment to forego any new nuclear
cooperation with Iran.” The DCI’s “ Section 721 report” of November 2003 reported
that “ some interactions of concern” between PRC and Iranian entities continued in
the first half of 2003. The Director of the Defense Intelligence Agency, Vice
Admiral Lowell Jacoby, testified to the Senate Intelligence Committee on February
24, 2004, that PRC entities “ remain involved with nuclear and missile programs in
Pakistan and Iran, while, “ in some cases,” the entities are involved without the PRC
government’s knowledge. Then, in April 2004, the Administration imposed
sanctions under the Iran Nonproliferation Act. Assistant Secretary of State John
Wolf testified to the House International Relations Committee on May 18, 2004, that
CRS- 12
15 “ Iran Using Chinese- made Feedstock for Enriched Uranium: Diplomats,” AFP, May 18,
2006; Iranian Students News Agency, May 19, 2006.
16 Wall Street Journal and Washington Post, February 17, 2006; China Daily, January 6,
2007; AFP, January 11 and 15, 2007; Fars News Agency, January 16, 2007; Global Trade
Atlas; Vision of the Islamic Republic of Iran Network, December 9, 2007; Reuters,
December 10, 2007.
“ most” of the sanctions related to non- nuclear transfers, but there were concerns in
the nuclear area as well.
In May 2006, diplomatic sources revealed that Iran had used uranium
hexafluoride gas ( UF6) from China to accelerate Iran’s uranium enrichment program.
An Iranian news agency acknowledged that hexafluoride from China was used in
initial uranium enrichment, after which domestic supplies were applied. 15
UNSC Sanctions on Iran. The United States has been concerned about how
China might use its voting power at the IAEA and U. N. to affect the U. S. objective
of containing Iran’s suspected nuclear weapon program by having the IAEA refer
Iran’s case to the U. N. Security Council ( UNSC) for sanctions in response to Iran’s
alleged violation of the NPT. While it might share U. S. concerns about nuclear
nonproliferation, China has expressed reservations about sanctions and the credibility
of some U. S. intelligence. Moreover, China’s own “ entities” have supplied sensitive
technology to Iran. Beijing might have interests in raising its leverage vis- a- vis
Washington, and some say those interests include checking U. S. influence. More
critical Russian cooperation with Iran has offered China maneuvering room.
Also, China has priorities that include economic ties with Iran to fuel continued
economic growth. There is a concern that China’s economic interests in Iran,
including multi- billion- dollar oil and gas deals, have undermined rising U. S. and
European pressure on and isolation of Iran. In October 2004, China and Iran signed
a memorandum of understanding for a deal in oil and gas sales initially worth $ 70
billion. Amid ongoing negotiations between China’s SINOPEC group and Iran, this
potential deal was valued at up to $ 100 billion in early 2006. In December 2007,
SINOPEC signed the contract for development of the Yadavaran oilfield, and the
State Department responded with “ disappointment.” In addition to SINOPEC,
CNOOC and an Iranian company signed a memorandum of understanding in
December 2006 involving an investment from China worth $ 16 billion to produce
liquified natural gas in Iran. In January 2007, China National Petroleum Corporation
( CNPC) announced negotiations in an offshore gas project in Iran worth $ 3.6 billion.
In 2006, Iran was the third largest foreign supplier of oil to China ( after Saudi Arabia
and Angola), an increase of 46% over imports from Iran in 2005 and the supply of
12% of China’s total imports. 16
Still, diplomatic impasses have raised the burden on China’s preferred dialogue
to produce results in support of nonproliferation and stability in the Middle East.
China likely fears greater instability or conflict in the Mideast, the source of about
50% of China’s oil imports. China has tried to maintain a balanced position in
support of Iran and U. S./ European concerns, but has evolved to support the
diplomatic track, the IAEA’s authority in Iran, and some UNSC sanctions on Iran.
CRS- 13
17 Zhongguo Wang, Beijing, October 31, 2004; Xinhua, Bejing, November 5, 2004; IRNA,
Tehran, November 6, 2004; Xinhua, Beijing, November 8, 2004 ( via FBIS).
18 New York Times, September 14, 2005; Wall Street Journal, September 14, 2005; AFP,
September 24, 2005; and Xinhua [ New China News Agency], September 24, 2005.
19 George Bush, interview with Phoenix TV, based in Hong Kong, November 9, 2005.
20 “ Permanent Five Say IAEA Must Report Iran to U. N.,” Reuters, January 31, 2006.
On November 5, 2004, China’s Foreign Minister Li Zhaoxing talked with
Secretary of State Powell, saying that the dispute over Iran’s nuclear program should
remain under the IAEA’s handling. On the next day, Li arrived in Tehran and
expressed opposition to referral of Iran’s case to the UNSC. 17 Then, at a meeting on
the sideline of a U. N. summit in New York on September 13, 2005, President Bush
tried to persuade PRC ruler Hu Jintao not to block the IAEA from referring Iran’s
case to the UNSC. Before the meeting, the Administration briefed China on U. S.
classified intelligence about Iran’s development of the Shahab- 3 missile that could
deliver a nuclear warhead. China ( and others) abstained when the IAEA passed a
resolution on September 24, 2005, declaring that Iran was not complying with the
NPT, and the PRC envoy in Vienna continued to call for dealing with Iran at the
IAEA. 18 In Beijing in November 2005, President Bush said that he had to repeat to
Hu Jintao the need to cooperate to prevent Iran from developing nuclear weapons. 19
The situation escalated on January 10, 2006, when Iran resumed work on
uranium enrichment, after allowing IAEA inspectors to place seals on equipment at
an enrichment plant at Natanz and starting negotiations with Britain, France, and
Germany two years before. Deputy Secretary of State Robert Zoellick visited Beijing
January 24- 25, 2006, to stress the importance of the Iran problem, continue the
“ Senior Dialogue” over the PRC’s role as a “ responsible stakeholder,” and discuss
a summit on April 20 between PRC leader Hu Jintao and President Bush in
Washington. At a news conference in Beijing on January 24, Zoellick acknowledged
differences with China over “ diplomatic tactics.” At a special meeting in London on
January 30, China, France, Germany, Russia, United Kingdom, and United States
announced their agreement to “ report” ( rather than “ refer”) Iran’s case to the UNSC
at the special IAEA meeting in early February but to wait until March to decide at the
Security Council on any actions to support the IAEA ( without mentioning
sanctions). 20 Still, on February 4, China was one of 27 countries that voted at the
IAEA to support a resolution to report Iran to the UNSC, showing some progress in
China’s cooperation since it abstained on a resolution on Iran in September 2005.
When the IAEA sent a report on Iran to the Security Council on March 8, 2006,
saying that it could not conclude that there are no undeclared nuclear materials or
activities in Iran, China continued to be less critical of Iran and to favor the handling
of this issue at the IAEA rather than the Security Council. On March 29, 2006, after
weeks of negotiations, the Security Council issued a statement through its president,
calling on Iran to suspend all nuclear enrichment and reprocessing activities to be
verified by the IAEA and requesting an IAEA report in 30 days to the IAEA Board
of Governors “ and in parallel” to the Security Council, with no mention of sanctions.
The Administration called for a UNSC resolution that invokes Chapter VII of the
CRS- 14
21 “ Nations Closer to Deal on Iran Sanctions,” AP, March 13, 2007; and Colum Lynch, “ 6
Powers Agree on Sanctions for Iran,” Washington Post, March 16, 2007.
22 Jim Wolf, “ U. S. Faults China on Shipments to Iran,” Reuters, July 12, 2007; Neil King
Jr., “ China- Iran Trade Surge Vexes U. S.,” Wall Street Journal, July 27, 2007.
U. N. Charter ( for sanctions or force), but the PRC argued against such action despite
the IAEA’s April 28 report on Iran’s non- compliance.
On May 31, 2006, Secretary of State Rice announced U. S. support for a new
approach to offer a package of incentives and costs for Iran’s compliance, agreed by
China and others on June 1. However to U. S. displeasure, on June 16, the PRC
hosted a summit of the Shanghai Cooperation Organization ( SCO), at which Iran
attended as an observer. PRC President Hu Jintao balanced his remarks to Iranian
President Ahmadinejad by saying that Iran has a right to nuclear energy and calling
for its response to the offer. But with no Iranian response, on July 12, China and the
other five countries issued a statement agreeing to a two- stage approach: to seek a
UNSC resolution to make it mandatory for Iran to suspend nuclear enrichment as
required by the IAEA; and if Iran refuses, to adopt measures under Article 41
( specifically for sanctions, vs. use of force) of Chapter VII.
After Iran announced that it would respond on August 22, 2006, China voted on
July 31 with other members of the UNSC ( except Qatar) for Resolution 1696,
demanding that Iran suspend nuclear enrichment; calling upon countries to prevent
technology transfers to Iran’s nuclear enrichment and missile programs; requesting
an IAEA report on Iran’s compliance by August 31; and warning of sanctions if Iran
does not comply. After negotiations over Russian and PRC objections to the first
U. S. and European draft resolution on sanctions, China voted with all other Security
Council members for Resolution 1737 on December 23, 2006, which invoked
Article 41 of Chapter VII to require Iran to suspend nuclear enrichment and
reprocessing activities, and heavy water- related projects. On January 5, 2007, in
Beijing, PRC President Hu Jintao stressed the “ unanimous” adoption of 1737 to
visiting Iranian nuclear official Ali Larijani. After negotiations on additional
sanctions on Iran ( during which China and Russia objected to a ban on Iran’s arms
imports and export credit guarantees for doing business in Iran), 21 China voted with
all other members of the U. N. Security Council for Resolution 1747, adopted
unanimously on March 24, 2007. Citing Article 41 of Chapter VII, the resolution
included a ban on Iran’s arms exports.
However, the United States has raised the issue with China of its violation of
UNSC Resolutions 1737 and 1747. In particular, U. S. officials reportedly said in
July 2007 that earlier in the year, a PRC “ entity” ( probably one under U. S. sanctions)
tried to ship a large amount of chemicals used to make solid fuel for ballistic
missiles. Cooperating with U. S. intelligence, Singapore intercepted the container
from China on its way to the Shahid Bagheri Industrial Group in Iran. 22 This Iranian
organization was listed in the Annex of UNSC Resolution 1737, but sanctions for
entities or people in the Annex involve restricting travel and freezing financial assets.
Still, Resolution 1737 decided that all States shall take the necessary measures to
prevent tranfers directly or indirectly from their territories that could contribute to
CRS- 15
23 Karen DeYoung, “ Iranian Defiance of U. N. Detailed,” Washington Post, May 24, 2007;
State Department, Daily Press Briefing, July 26, 2007.
Iran’s development of nuclear weapon delivery systems. Resolution 1747 called for
restraint in transfers related to arms and missiles to Iran.
After the IAEA reported on May 23, 2007, that Iran continued nuclear
enrichment activities, the Bush Administration has called for a third UNSC
resolution with tougher sanctions on Iran. 23 The process has become protracted. On
September 28, China joined with the United States, France, Germany, Russia, and
United Kingdom in issuing a foreign ministers’ statement in support of negotiations,
the IAEA, as well as a third UNSC resolution with sanctions, pending reports by the
IAEA and the European Union in November. On October 17, China refused to
attend a meeting in Berlin on Iran’s nuclear program citing “ technical” difficulties,
but U. S. officials say China showed displeasure over the award of the Congressional
Gold Medal to Tibet’s Dalai Lama. In addition to the three tracks supported by
China ( involving diplomacy, the IAEA, and current sanctions), the United States and
European allies have discussed sanctions ( separate from talks with China and Russia)
and possible use of force. ( On U. S. policy towards Iran, see CRS Report RL32048,
Iran: U. S. Concerns and Policy Responses, by Kenneth Katzman.)
Missile Technology Sales to Iran
Overview. During the Clinton Administration, PRC entities reportedly
transferred equipment and technology to Iran’s missile programs, including
development of medium- range ballistic missiles. In November 2000, the United
States determined that missile technology transfers took place but waived sanctions,
citing a new PRC promise on missile nonproliferation. However, PRC entities have
continued missile- related proliferation activities in Iran. In contrast to the previous
administration, the Bush Administration has stressed the use of sanctions against
PRC entities, including “ serial proliferators.” Nonetheless, this record has raised
questions about the effectiveness of this approach as well as the PRC’s commitment
and capability to control its missile- related sales.
Clinton Administration. Related to ballistic missile programs in Iran, the
CIA found that China delivered dozens or perhaps hundreds of missile guidance
systems and computerized machine tools to Iran sometime between mid- 1994 and
mid- 1995, reported the International Herald Tribune ( June 23, 1995). The
November 21, 1996 Washington Times cited a CIA report as saying that China agreed
in August 1996 to sell to Iran’s Defense Industries Organization gyroscopes,
accelerometers, and test equipment, which could be used to build and test
components for missile guidance. On the same day, the State Department would only
say publicly that “ we believe at this stage that, in fact, the Chinese are operating
within the assurances they have given us.”
The Washington Times ( September 10, 1997) cited Israeli and U. S. intelligence
sources as saying that China Great Wall Industry Corp. ( which markets satellite
launches) was providing telemetry equipment used in flight- tests to Iran for its
development of the Shahab- 3 and Shahab- 4 MRBMs ( with ranges, respectively, of
CRS- 16
24 President Clinton declared the national emergency with respect to the proliferation of
weapons of mass destruction in Executive Order 12938 on November 14, 1994. President
George W. Bush, Report to Congress on the Emergency Regarding Proliferation of
Weapons of Mass Destruction, June 18, 2002.
about 800 mi. and 1,250 mi.). Over 100 PRC and North Korean experts worked
there, reported the Washington Times ( November 23, 1997) and Washington Post
( December 31, 1997). Citing a May 27, 1998 intelligence report, the June 16, 1998
Washington Times reported that, in May 1998, China discussed selling telemetry
equipment ( for testing missiles) to Iran. On July 22, 1998, Iran first tested the mobile
Shahab- 3 missile, which the Pentagon, on the next day, confirmed to be based on a
North Korean Nodong MRBM. In Beijing in November 1998, Acting Under
Secretary of State John Holum protested continuing PRC missile technology aid to
Iran, including a reported shipment of telemetry equipment in November 1998,
according to the Washington Post ( November 13, 1998) and Washington Times
( December 7, 1998). U. S. intelligence suspected continued PRC sales of missile
technology to Iran in 1999, including specialty steel, telemetry equipment, and
training on inertial guidance, reported the Washington Times ( April 15, 1999).
On November 21, 2000, under the AECA and EAA, the Clinton Administration
announced it determined that PRC entities had transferred Category II items ( missile
components) to Iranian entities and U. S. sanctions would be waived on China given
its new missile nonproliferation promise.
Bush Administration. Still, the Washington Times ( January 26, 2001) said
that NORINCO ( a PRC defense industrial conglomerate) shipped specialty metals
and chemicals used in missile production to Iran. On the national emergency
regarding weapons proliferation, President Bush continued to report to Congress in
June 2002 that PRC ( and North Korean and Russian) entities “ have continued to
supply Iran with a wide variety of missile- related goods, technology, and expertise.” 24
The report confirmed that the May 2002 sanctions under the Iran Nonproliferation
Act of 2000 ( P. L. 106- 178) were imposed on three PRC entities for conventional
transfers to Iran related to unspecified missiles. It also noted that the Administration
did not impose new missile proliferation sanctions ( under the AECA and EAA)
between November 2001 and May 2002. ( The Iran Nonproliferation Act authorizes
sanctions on a foreign person based on “ credible information” of a transfer to Iran
( not necessarily a weapons program) of technology controlled by multilateral
nonproliferation regimes. The AECA and EAA require sanctions based on a
Presidential determination that a foreign entity “ knowingly” transferred any MTCR
missile equipment or technology to a program for an MTCR Category I missile.)
On May 23, 2003, the Administration imposed sanctions on NORINCO and
Iran’s Shahid Hemmat Industrial Group, under Executive Order ( E. O.) 12938 ( as
amended by E. O. 13094). According to U. S. officials, the Administration banned
imports from NORINCO for two years ( worth over $ 100 million annually), because
it transferred missile technology to Iran, even after the PRC issued missile technology
export controls in August 2002, that would assist the development of medium- or
long- range ballistic missiles, reported Reuters ( May 22) and Wall Street Journal
( May 23, 2003). ( E. O. 12938 requires sanctions if the Secretary of State determines
CRS- 17
25 John Bolton, Under Secretary of State for Arms Control and International Security,
“ Coordinated Allied Approaches to China,” Tokyo, Japan, February 7, 2005.
26 Bill Gertz, “ U. S. Puts Sanctions on Chinese Firms for Aiding Tehran,” Washington Times,
December 27, 2005.
that a foreign person has “ materially contributed or attempted to contribute
materially” to WMD or missile proliferation.)
Again on June 26, 2003, the Administration imposed sanctions under the Iran
Nonproliferation Act on five PRC entities ( including NORINCO) and one North
Korean entity. The State Department noted that it added in the Act’s required report
to Congress ( a classified report was submitted on June 25) transfers of items that
have the potential to make a “ material contribution” to WMD, cruise missiles, or
ballistic missiles, even if the items fall below the parameters of multilateral export
control lists.
The Director of National Intelligence ( DNI)’ s “ Section 721 report” ( of May
2006) reported that PRC “ entities” continued through 2004 to supply ballistic
missile- related equipment, technology, and expertise to Iran. The report also said
that PRC entities, over the years, have provided missile- related assistance to Iran that
helped it to advance toward self- sufficient production of ballistic missiles. On April
1, 2004, the Bush Administration imposed sanctions under the Iran Nonproliferation
Act based on “ credible information” that five PRC entities ( along with other foreign
entities) transferred unspecified prohibited items to Iran. Assistant Secretary of State
John Wolf testified to the House International Relations Committee on May 18,
2004, that “ most” of the sanctions related to non- nuclear transfers, but there were
concerns in the nuclear area as well. The Washington Times reported on August 23,
2004, that the U. S. government detected several weeks before that a PRC company
supplied missile technology to Iran within the past six months. On September 20,
2004, under E. O. 12938 ( amended by E. O. 13094), the State Department imposed
sanctions on Xinshidai ( New Era Company), a defense- industrial conglomerate, for
material contributions to missile technology proliferation in a publicly unnamed
country. The Bush Administration again imposed sanctions on PRC entities under
the Iran Nonproliferation Act, in September, November, and December 2004.
Under Secretary of State John Bolton said in a speech in Tokyo in February
2005 that the PRC government still had not taken action to stop NORINCO’s missile
proliferation activities in Iran, despite repeated sanctions on this “ serial proliferator”
costing NORINCO hundreds of millions of dollars in banned exports to the United
States. 25 On December 23, 2005, the Administration again imposed sanctions for
missile and chemical weapon ( CW)- related proliferation in Iran by NORINCO and
five other PRC entities, although the State Department reportedly had considered the
sanctions since April 2005.26 New sanctions were imposed on previously sanctioned
PRC entities on June 13, 2006. ( See Table 1 for the full list of sanctions.)
Chemical Sales to Iran
Concerning chemical weapons, the Washington Post of March 8, 1996, reported
that U. S. intelligence, for over one year, was monitoring transfers of precursor
CRS- 18
chemicals and chemical- related equipment from China to Iranian organizations
affiliated with the military or the Revolutionary Guards. According to the report, the
equipment included glass- lined vessels for mixing the caustic precursors and special
air filtration equipment to prevent poison gas leaks. Iran was also reportedly buying
PRC technology for indigenous and independent production.
Confirming long- suspected PRC transfers, on May 21, 1997, the Clinton
Administration imposed sanctions on two PRC companies, five PRC citizens, and
a Hong Kong company for transfers to Iran contributing to chemical weapon
proliferation. U. S. sanctions, banning U. S. government procurement and imports,
were imposed under the AECA and EAA, as amended by the Chemical and
Biological Weapons Control and Warfare Elimination Act of 1991 ( P. L. 102- 182).
However, the Administration did not impose sanctions under the Iran- Iraq Arms
Nonproliferation Act of 1992 ( affecting “ persons” or “ countries”), because the
transfers apparently occurred before February 10, 1996, the date when provisions on
WMD proliferation took effect, as amended by the FY1996 National Defense
Authorization Act ( P. L. 104- 106). Also, the State Department said that it had no
evidence that the PRC or Hong Kong governments were involved.
An intelligence report was said to allege that China completed in June 1997 a
plant in Iran for making glass- lined equipment used in producing chemical weapons,
reported the Washington Times ( October 30, 1997). The Nanjing Chemical and
Industrial Group built the factory, and North Chemical Industries Corporation
( NOCINCO) brokered the deal. ( NOCINCO is affiliated with NORINCO, a defense-industrial
firm.) However, the PRC government reportedly held up supplies of raw
materials. The London Daily Telegraph ( May 24, 1998) reported that SinoChem
Corp.’ s branch in Tianjin, China, supplied to Iran 500 tons of phosphorus
pentasulphide ( controlled by the AG for making nerve agents).
On June 14, 2001, the Bush Administration imposed sanctions under the Iran
Nonproliferation Act of 2000 on Jiangsu Yongli Chemicals and Technology Import
and Export Corporation ( one of the two PRC companies sanctioned in 1997) for
proliferation of chemical weapons- related materials or equipment to Iran. According
to the Washington Times ( June 28, 2001), the PRC company helped Iran to build a
factory to manufacture dual- use equipment applicable to chemical weapons. Again,
on January 16, 2002, the Administration imposed similar sanctions ( for transfers of
chemical and/ or biological items controlled by the Australia Group) on Liyang
Chemical Equipment Company, China Machinery and Electric Equipment Import
and Export Company, and a PRC citizen ( Chen Qingchang, or Q. C. Chen). Chen
was also sanctioned in 1997. Sanctions were imposed for two years, but there was
no economic effect because of the absence of U. S. government contracts, assistance,
arms sales, or dual- use exports with/ to such “ persons.”
With those actions, the State Department did not impose sanctions under the
AECA, EAA, or the Iran- Iraq Arms Nonproliferation Act, apparently because unlike
those laws, the Iran Nonproliferation Act requires semi- annual reports to Congress
and authorizes sanctions based on “ credible information” that a person, since 1999,
transferred to Iran items controlled by multilateral export control lists ( NSG, MTCR,
AG, CWC, or Wassenaar Arrangement). The Administration again imposed
sanctions under the Iran Nonproliferation Act on May 9, 2002, and a Presidential
CRS- 19
27 President George W. Bush, Report to Congress on the Emergency Regarding
Proliferation of Weapons of Mass Destruction, June 18, 2002.
28 Bill Gertz, “ U. S. Puts Sanctions on Chinese Firms for Aiding Tehran,” Washington Times,
December 27, 2005.
report to Congress in June 2002 confirmed that five of the eight PRC entities were
sanctioned for transferring AG- controlled items to Iran. 27 The Washington Times
( May 20, 2002) said that the transfers involved anti- corrosive glass- lined equipment
to make chemical weapons and that NORINCO was sanctioned but not listed among
the eight publicly named PRC entities.
On July 9, 2002, the Bush Administration imposed sanctions under the Iran- Iraq
Arms Nonproliferation Act of 1992 ( in the first use of this law), as well as the AECA
and EAA ( as amended by the Chemical and Biological Weapons Control and
Warfare Elimination Act of 1991), on eight PRC entities ( including those previously
sanctioned) for “ knowingly and materially” contributing to Iran’s chemical weapons
program, according to the State Department. The Administration did not impose
sanctions under the Iran- Iraq Act on the PRC government. The Washington Times
( July 19, 2002) reported that the transfers took place between September 2000 and
October 2001.
The Director of National Intelligence ( DNI)’ s “ Section 721 report” told
Congress in 2006 that PRC “ firms” continued in 2004 to provide dual- use chemical
production equipment and technology to Iran. On November 24, 2004, the Bush
Administration again imposed sanctions under the Iran Nonproliferation Act that
affected four PRC entities, including Q. C. Chen, likely related to chemical weapons.
On December 23, 2005, the Administration again imposed sanctions for missile and
chemical weapon ( CW)- related proliferation in Iran by NORINCO and five other
PRC entities, although the State Department reportedly had considered the sanctions
since April 2005.28 ( See Table 1 for a full list of sanctioned entities.)
North Korea’s Missile and Nuclear Weapons Programs
Suspected Missile Supplies. Since 1998, there have been public reports
about and U. S. government confirmation of PRC assistance to North Korea’s missile
program. There are questions about whether the PRC has interests in North Korea’s
missile advances. Lieutenant General Xiong Guangkai, a Deputy Chief of General
Staff of the People’s Liberation Army ( PLA), visited North Korea in early August
1998, just before the surprising launch of a medium- range Taepo Dong- 1 missile on
August 31, 1998. However, increased worries about North Korea’s missile program
spurred U. S. and Japanese support for missile defenses opposed by China. Some say
PRC entities acted on their own.
The National Security Agency ( NSA) reportedly suspected in late 1998 that the
China Academy of Launch Vehicle Technology ( CALT) was working with North
Korea on its space program ( closely related to missiles) to develop satellites, but that
cooperation was not confirmed to be linked to the Taepo Dong- 1 MRBM program,
said the Washington Times ( February 23, 1999). An NSA report dated March 8,
1999, suggested that China sold specialty steel for use in North Korea’s missile
CRS- 20
program, reported the Washington Times ( April 15, 1999). In June 1999, U. S.
intelligence reportedly found that PRC entities transferred accelerometers,
gyroscopes, and precision grinding machinery to North Korea, according to the
Washington Times ( July 20, 1999). An October 20, 1999 classified report was said
to say that China’s Changda Corp. sought to buy Russian gyroscopes that were more
of the same that China supplied to the North Korean missile program earlier that
year, reported the Washington Times ( November 19, 1999). In December 1999, the
NSA discovered an alleged PRC deal to supply unspecified PRC- made missile-related
items to North Korea through a Hong Kong company, said the Washington
Times ( January 1, 2000).
The DCI first publicly confirmed PRC supplies to North Korea in July 1999.
The DCI’s April 2003 “ Section 721 report” said that, in the first half of 2002, North
Korea continued to procure missile- related raw materials and components from
foreign sources, but it dropped a previous reference about those foreign supplies as
especially going through North Korean firms in China. There are direct implications
for U. S. national security, because of North Korea’s nuclear weapons and nuclear
programs as well as delivery systems. PRC technology transfers have further
implications for secondary, or retransferred, proliferation, since North Korea
reportedly has supplied technology to Iran, Syria, Pakistan, Egypt, Libya, and Yemen.
The Director of National Intelligence ( DNI)’ s “ Section 721 report” told Congress in
2006 that “ firms” in China continued in 2004 to provide dual- use missile- related
items, raw materials, or assistance to North Korea.
Secret Nuclear Programs. A serious case of such secondary proliferation
involves North Korea’s secret program to enrich uranium to develop nuclear
weapons, a program that U. S. officials said was surprisingly acknowledged by North
Korea to visiting Assistant Secretary of State James Kelly during talks in Pyongyang
on October 4, 2002. This acknowledgment was not publicly disclosed by the Bush
Administration until October 16, 2002, at a time when President Bush sought
congressional authorization for the war against Iraq. By early 2007, however, U. S.
officials restated the assessment of the highly enriched uranium ( HEU) program.
The DCI’s April 2003 “ Section 721 report” stated that the United States was
suspicious of an uranium enrichment program in North Korea for “ several years” but
did not obtain “ clear evidence indicating that North Korea had begun constructing
a centrifuge facility until recently.” While the DCI previously reported that North
Korea has another program using plutonium that produced one or two nuclear
weapons, the Washington Post reported on April 28, 2004, that U. S. intelligence
newly estimated that North Korea has at least eight nuclear weapons.
DCI George Tenet testified to the Senate Intelligence Committee on February
24, 2004, that U. S. intelligence judged in the mid- 1990s that North Korea had
produced “ one, possibly two, nuclear weapons” and the 8,000 fuel rods that North
Korea claims to have reprocessed into plutonium metal would provide enough
plutonium for “ several more.” On February 16, 2005, the Director of the Defense
Intelligence Agency, Vice Admiral Lowell Jacoby, testified that North Korea’s Taepo
Dong 2 intercontinental ballistic missile, which might be ready for testing, “ could
deliver a nuclear warhead to parts of the United States in a two- stage variant and
target all of North America with a three- stage variant.”
CRS- 21
29 Joby Warrick and Peter Slevin, “ Libyan Arms Designs Traced Back to China,”
Washington Post, February 15, 2004; William Broad and David Sanger, “ As Nuclear Secrets
Emerge in Khan Inquiry, More Are Suspected,” New York Times, December 26, 2004.
This case raises a question about whether China’s nuclear technology has
indirectly contributed to North Korea’s nuclear weapons program through Pakistan,
since China was the “ principal supplier” to Pakistan’s nuclear weapons program.
There are also questions about China’s knowledge about the Pakistani- North Korean
trade and whether Beijing has shared useful intelligence with the United States.
The New York Times and Washington Post reported on October 18, 2002, that
U. S. officials believed Pakistan provided equipment, including gas centrifuges, for
the North Korean uranium enrichment program, in return for North Korea’s supply
of Nodong MRBMs to Pakistan by 1998. Another Washington Post report added on
November 13, 2002, that the Bush Administration had knowledge that Pakistan
continued to provide nuclear technology to North Korea through the summer of 2002.
Henry Sokolski of the Nonproliferation Policy Education Center wrote in National
Review Online ( November 19, 2002) that “ one might call on Pakistan, Russia, and
China to detail what nuclear technology and hardware they allowed North Korea to
import.” John Tkacik of the Heritage Foundation wrote in the Asian Wall Street
Journal ( December 2, 2002) that most in the U. S. intelligence community doubt
China was “ completely in the dark,” as PRC President Jiang Zemin claimed at his
summit with President Bush at Crawford, TX, on October 25, 2002.
The New York Times reported on January 4, 2004, about a history of nuclear
technology proliferating from Pakistan’s Khan Research Laboratories headed by
Abdul Qadeer Khan and disclosed that he had transferred designs for uranium-enrichment
centrifuges to China first. DCI George Tenet publicly testified to the
Senate Intelligence Committee on February 24, 2004, that North Korea has pursued
a “ production- scale uranium enrichment program based on technology provided by
A. Q. Khan.” Particularly troubling has been the reported intelligence finding in early
2004 that Khan sold Libya a nuclear bomb design that he received from China in the
early 1980s ( in return for giving China centrifuge technology), a design that China
had already tested in 1966 and had developed as a compact nuclear bomb for delivery
on a missile. 29 That finding raised an additional question of whether Khan also sold
that bomb design to others, including Iran and North Korea.
Moreover, there might be PRC firms directly or indirectly involved in North
Korea’s nuclear weapons programs or weapons proliferation to other countries. In
June 1999, authorities in India inspected the North Korean freighter Kuwolsan and
found an assembly line for Scud ballistic missiles intended for Libya, including many
parts and machines from China or Japan, according to the Washington Post ( August
14, 2003). The Washington Times reported on December 9 and 17, 2002, that a PRC
company in the northeastern coastal city of Dalian sold to North Korea 20 tons of
tributyl phosphate ( TBP), a dual- use chemical that U. S. intelligence reportedly
believed would be used in the North Korean nuclear weapons program.
PRC Ports and Airspace. Questions have arisen about China’s role in
allowing Pakistani, North Korean, and Iranian ships and planes to use PRC ports and
CRS- 22
30 Defense Department, “ Report on PRC Military Power,” May 29, 2004.
airspace ( and perhaps military airfields). China’s possible cooperation in
interdiction, restrictions in the use of its ports and airfields, law- enforcement, and
intelligence- sharing has become a salient question in light of the Bush
Administration’s Proliferation Security Initiative ( PSI) announced in May 2003
( which China did not join). As part of the military trade between Pakistan and North
Korea, in July 2002, Pakistan flew a C- 130 transport aircraft to pick up missile parts
in North Korea, reported the New York Times ( November 24, 2002). In December
2002, the Spanish and U. S. navies interdicted a North Korean ship ( So San) with
Scud missiles bound for Yemen, and the Spanish Defense Minister reported that the
ship’s last port of call was in China. In addition, an Iranian ship stopped at the
Tianjin port in China and picked up missile components before sailing on to North
Korea to take delivery of missiles and rocket fuel in February and November 2002,
reported the South Korean newspaper, Joong Ang Ilbo ( December 19, 2002). From
April to July 2003, China reportedly gave overflight rights to Iranian Il- 76 cargo
planes that flew to North Korea at least six times to pick up wooden crates suspected
of containing cruise missiles, and the Bush Administration lodged a diplomatic
protest with Beijing, reported Time ( Asian edition) on July 14, 2003. At a hearing
held by the Senate Foreign Relations Committee on September 11, 2003, on U. S.-
China relations, Assistant Secretary of State James Kelly confirmed to Senator
Russell Feingold that the State Department raised with China the issue of North
Korean planes flying through PRC airspace or making refueling stops in China. In
June 2005, China ( and a Central Asian country) agreed to deny over- flight rights to
an Iranian cargo plane that had landed in North Korea to allegedly pick up missile
components, according to the New York Times ( October 24, 2005).
Military Relations. Questions also have arisen about the PRC’s military
relationship with the DPRK. Nonetheless, this relationship appears to have
weakened during the crisis. In mid- August 2003, Wen Wei Po ( a PRC- owned
newspaper in Hong Kong) published an article questioning whether the PRC- North
Korean alliance under the 1961 Treaty of Friendship, Cooperation, and Mutual
Assistance continued to serve China’s interest. China took steps that appeared to
pressure North Korea, including using the PLA. In early September 2003, China
replaced paramilitary People’s Armed Police ( PAP) troops with PLA soldiers along
its border with North Korea, as confirmed by the PRC Foreign Ministry and the
official People’s Daily ( September 16, 2003), apparently to warn North Korea
against provocations to raise tensions. Numerous reports in 2006 confirm the PLA’s
construction of fencing along the border, construction that reportedly started in 2003.
The Defense Department’s 2004 report to Congress on PRC military power
skeptically critiqued that China “ has avoided taking real steps to pressure North
Korea.” Nonetheless, the report confirmed that “ as a potential hedge against
uncertainty, the PLA assumed responsibility for border security along the northeast
frontier in fall 2003, increasing security along the porous border with North Korea
and strengthening China’s ability to stem refugee flows or respond to a breakdown
of the North Korean regime.” 30
A key question has been about the PLA’s knowledge of the DPRK’s missile
program. As discussed elsewhere in this report, the PRC and DPRK militaries had
CRS- 23
31 Wen Wei Po, October 13, 2006.
32 South China Morning Post, October 17, 2006.
high- level contact just before both the missile tests of August 1998 and July 2006.
The PLA has denied information about and leverage over those tests.
China has pursued a resumption of high- level military contacts with the United
States ( Secretary of Defense Donald Rumsfeld visited Beijing in October 2005), even
as China’s traditional military friendship with North Korea has weakened. When
PRC ruler Hu Jintao visited Pyongyang in October 2005 and Kim Jong- il visited
China in January 2006, Hu’s third position as Chairman of the Central Military
Commission was downplayed by PRC press ( in addition to other positions as
Communist Party General- Secretary and PRC President). On March 9, 2006,
General B. B. Bell, Commander of U. S. Forces Korea, testified to the House Armed
Services Committee that PRC- North Korean military engagement is “ quite low” and
that despite the friendship treaty, “ the amount of military support that the PRC
provides to the North is minimal.” The PLA hosted the May 2006 visit of Admiral
William Fallon, Commander of the Pacific Command, to the Shenyang Military
Region ( close to the border with North Korea). When the top PLA officer, General
Guo Boxiong, visited Washington in July 2006, he criticized North Korea’s July 4
missile tests, even citing the UNSC’s Resolution that condemned the tests.
Further indicating strains, on the day after the DPRK’s nuclear test on October
9, 2006, the PRC Foreign Ministry publicly said that the test had a “ negative impact”
on PRC- DPRK ties and denied that China is North Korea’s “ ally.” A PRC- owned
newspaper in Hong Kong reported that PLA and People’s Armed Police troops were
on high alert at the PRC- DPRK border. 31 On October 16, the PLA commemorated
the death of a PLA soldier who was killed by North Korean soldiers a year earlier. 32
Overview: Trilateral and Six- Party Talks in Beijing. Since the Bush
Administration’s October 2002 disclosure about North Korea’s ongoing nuclear
weapons programs, it has sought a multilateral effort ( not just bilateral negotiations)
to achieve the complete, verifiable, and irreversible dismantlement ( CVID) ( not just
a freeze) of North Korea’s nuclear weapons programs ( uranium and plutonium
programs) as well as nuclear weapons. The Administration’s strategy has relied on
securing China’s cooperation. At the October 25, 2002, summit in Crawford, TX,
top PRC ruler Jiang Zemin agreed with Bush on the goal of a nuclear- free Korean
peninsula achieved through a peaceful resolution, although Jiang claimed to be
“ completely in the dark” about North Korea’s nuclear weapons.
However, some have questioned whether China has been helpful in using its
leverage with North Korea and whether its role warrants strengthening the U. S.- PRC
relationship. China has its own concerns that include: ( 1) sustainment of a “ friendly”
U. S. approach toward China; ( 2) U. S. security policies ( suspected of provoking
instability and collapse of the North Korean regime, with loss of a perceived buffer
between PLA and U. S. forces); ( 3) diminished global standing in any appearances of
isolated PRC influence; ( 4) questions about whether Beijing’s support for
Washington would result — directly or indirectly — in limits to U. S. support for
CRS- 24
33 Department of State, “ Secretary Colin L. Powell’s press conference,” Beijing, China,
February 24, 2003.
34 Department of State, “ Secretary of State Colin L. Powell’s Remarks at Conference on
China- U. S. Relations,” College Station, Texas, November 5, 2003.
Taiwan, including arms sales; ( 5) U. S. alliances with Japan and South Korea; and ( 6)
a stronger Japan ( with missile defense and even possibly nuclear weapons).
China initially did not respond to multilateral cooperation with the urgency and
to the extent sought by the United States. Then, North Korea further escalated the
situation by expelling IAEA inspectors and reactivating its nuclear reactor at
Yongbyon in December 2002, and by withdrawing from the NPT in January 2003.
On February 7, 2003, Bush said he had to “ remind” Jiang of “ joint responsibilities”
in achieving common objectives concerning North Korea. Two days later, Secretary
of State Colin Powell said in an interview on Fox News Sunday that China has
“ considerable influence with North Korea.” Powell reported that North Korea
depends on China for 80 percent of its energy and economic activity, and urged
China to play an active role in the dispute. While in Beijing on February 24, 2003,
Secretary Powell noted that “ the United States and China share the goal of a
diplomatic and peaceful resolution to this problem. It cannot simply be treated,
however, as a bilateral matter between the United States and North Korea.” 33 Later,
in November, Powell said that after he had pressed the need for China to “ rise to its
responsibilities in dealing with this regional problem,” PRC Vice Premier Qian
Qichen made an “ important contribution” in March 2003 by delivering the message
in North Korea that “ there would be no alternative to multilateral talks” that involved
China and other countries. 34
Since 2003, as North Korea further exacerbated the situation, China’s position
has evolved to sponsor multilateral talks to denuclearize the Korean peninsula, to be
openly critical of North Korea, and to support tough UNSC resolutions that
condemned the July 2006 missile firings and that imposed sanctions for the October
2006 nuclear test by the DPRK. However, the PRC also has seen the United States
gradually agree to provide aid to North Korea, to lift sanctions, and to hold bilateral
U. S.- DPRK talks by 2007 ( even outside of Beijing), as China urged U. S. flexibility.
While skeptics have pointed to progress limited to the process of the Beijing-sponsored
talks, by the summer of 2007, there appeared initial progress in results,
with the shutdown of North Korea’s Yongbyon nuclear reactor.
Trilateral Talks ( April 2003). Thus, on April 23- 25, 2003, China hosted the
Trilateral Talks among China, the Democratic People’s Republic of Korea ( DPRK),
and the United States. Secretary Powell noted positively that “ China has stepped
up.” However, the DCI’s “ Section 721 report” ( of November 2004) confirmed that,
at the meeting, North Korea threatened to “ transfer” or “ demonstrate” its nuclear
weapons. On June 9, 2003, in Tokyo, Deputy Secretary of State Richard Armitage
“ saluted” China’s cooperation on the problem of North Korea and declared “ a new
phase of our relationship with China.” In mid- July 2003, PRC President Hu Jintao
dispatched Deputy Foreign Minister Dai Bingguo to Pyongyang with a letter for Kim
Jong- il that proposed a multilateral meeting with U. S.- North Korean talks on the
sidelines, reported the New York Times ( July 16, 2003).
CRS- 25
35 Kyodo News, November 24, 2003.
1st Round of Six- Party Talks ( August 2003). Responding to U. S.
insistence on expanded multilateral talks, China hosted the first round of the Six-
Party Talks ( also including South Korea, Japan, and Russia) on August 27- 29, 2003.
However, North Korea again threatened to transfer or test a nuclear weapon, as
confirmed by the DCI’s “ Section 721 report” of November 2004.
China seized a shipment of tributyl phosphate ( TBP), a material used for nuclear
weapons, suspected by the CIA on a train bound for North Korea in the summer of
2003, reported Asahi Shimbun ( February 22, 2004). The DCI’s “ Section 721 report”
confirmed that, in September 2003, at the border with North Korea, China stopped
a shipment of chemicals that could have been used in the DPRK’s nuclear program.
2nd Round ( February 2004). The Administration sought another round of
multilateral talks before the end of 2003, with a tentative date set by November for
around December 17,35 but the talks were not held then. When PRC Premier Wen
Jiabao visited President Bush at the White House on December 9, 2003, the Taiwan
question eclipsed the issue of North Korea. The Washington Post disclosed on
January 7, 2004, that at a meeting in Seoul the week before, a PRC diplomat, Fu
Ying, questioned the credibility of U. S. intelligence that Pyongyang has a highly
enriched uranium program.
China then hosted the second round of Six- Party Talks on February 25- 28, 2004,
for which Assistant Secretary of State James Kelly expressed appreciation. However,
North Korea reportedly denied the suspected uranium enrichment program. The
State Department’s statement at the end of the talks did not report any progress in
either freezing or dismantling North Korea’s nuclear weapons programs, but rather
pointed to “ progress on a regularized process” for peacefully resolving this issue.
3rd Round ( June 2004). Before China hosted another round of Six- Party
Talks, PRC Deputy Foreign Minister Zhou Wenzhong publicly questioned the
credibility of U. S. intelligence about North Korea’s uranium enrichment program and
expressed support for North Korea’s arguments ( in an interview with the New York
Times, June 9, 2004). China hosted the third round of Six- Party Talks on June 23- 26,
2004. The DPRK again threatened to test a nuclear weapon. Afterward, National
Security Adviser Condoleezza Rice traveled to Beijing and told Central Military
Commission ( CMC) Chairman Jiang Zemin and President Hu Jintao that “ A. Q. Khan
was not engaged in academic research” and that “ North Korea has a highly enriched
uranium program,” reported the Washington Times on July 14, 2004. Also visiting
Beijing in July 2004, North Korea’s National Defense Commission Member and
Defense Minister Kim Il- chol met with CMC Vice Chairman and Defense Minister
Cao Gangchuan, and they could have discussed the PLA’s provision of aid.
Despite the lack of any breakthrough in the Trilateral Talks and three rounds of
Six- Party Talks held since April 2003, Assistant Secretary of State James Kelly
contended at a hearing of the Senate Foreign Relations Committee in July 2004 that
multilateral diplomacy has been useful and that the talks held in Beijing have yielded
CRS- 26
36 Senate Foreign Relations Committee, hearing, A Report on Latest Round of Six- Way Talks
Regarding Nuclear Weapons in North Korea, July 15, 2004.
37 David Sanger and William Broad, “ Tests Said to Tie Deal on Uranium to North Korea”
and “ U. S. Asking China to Press North Korea to End its Nuclear Program,” New York
Times, February 2 and 9, 2005.
38 Glenn Kessler and Dafna Linzer, “ Nuclear Evidence Could Point to Pakistan,”
Washington Post, February 3, 2005; Dafna Linzer, “ U. S. Misled Allies About Nuclear
Export,” Washington Post, March 20, 2005.
39 Chosun Ilbo, Seoul, February 18, 2005, via FBIS.
progress in dealing with the threat of North Korean nuclear weapons. 36 In answer to
Senator Chuck Hagel, Kelly acknowledged that “ there could be and probably should
be a role for the United Nations Security Council ( UNSC),” but reported that China
likely will not be interested in dealing with the threat at the UNSC. In answer to
Senator Lincoln Chaffee, Kelly also denied that China has linked its cooperation on
North Korea to U. S. concessions on Taiwan ( including arms sales), by saying that
China has not posed Taiwan “ as a tactical issue” in discussions about North Korea.
Kelly also acknowledged to Senator Bill Nelson that it remained unclear as to
whether China’s preference for positive incentives ( over pressure) will work.
The six countries had agreed to convene a fourth round of talks by the end of
September 2004, but that time period passed without another such meeting. As
indicated in his press conference in Beijing on October 25, 2004, Secretary of State
Powell continued to count on China’s “ considerable influence with North Korea.”
In early February 2005, President Bush sent Michael Green, the National
Security Council’s Senior Director for Asian Affairs to Beijing, Tokyo, and Seoul to
intensify diplomatic pressure on Pyongyang. In Beijing, Green met with President
Hu Jintao and presented urgent U. S. intelligence findings that North Korea had
processed several tons of uranium hexafluoride ( which could be enriched to make
nuclear bombs) and sold some to Libya perhaps in early 2003.37 Other reports,
however, pointed to intelligence findings that the material originated in North Korea
but that Pakistan bought the uranium hexafluoride and supplied it to Libya. 38
Suspension of Six- Party Talks. On February 10, 2005, North Korea again
escalated tensions by announcing that it would indefinitely suspend its participation
in the Six- Party Talks and that it had manufactured nuclear weapons. North Korea’s
announcement further called into question China’s preference for positive
inducements and raised the issue of using sanctions to pressure Pyongyang, including
consideration of action by the UNSC. A week after North Korea’s announcement,
South Korea’s ambassador to Beijing urged China to use its leverage, pointing out
that in addition to economic assistance ( food, fuel, and investments), North Korea
imports 70- 80 percent of its foreign goods from China and that China permits several
railways and 15 roads to operate at the North Korean border. 39 Instead, China’s
Foreign Ministry contended at a news conference on February 17 that sanctions and
pressure would only complicate and destabilize the situation ( a position that Foreign
Minister Li Zhaoxing argued to Secretary of State Condoleezza Rice on February 12).
CRS- 27
40 Department of State, “ Joint Statement of the U. S.- Japan Security Consultative
Committee,” February 19, 2005.
41 Secretary Condoleezza Rice, “ Remarks to the Press in China,” Beijing, March 21, 2005.
42 Glenn Kessler, “ China Rejected U. S. Suggestion to Cut Off Oil to Pressure North Korea,
Washington Post, May 7, 2005.
43 Joseph Kahn, “ China Says U. S. Impeded North Korea Arms Talks,” New York Times,
May 13, 2005.
44 House International Relations Subcommittee on Asia and the Pacific, hearing on
Northeast Asia, May 26, 2005.
45 Department of State, Daily Press Briefing, April 8, 2005; Deputy Secretary of State
( continued...)
China also pointed to North Korea and the United States as the two key parties to
hold bilateral talks.
Wang Jiarui, Director of the International Liaison Department of the Communist
Party of China, visited Pyongyang on February 19- 22, 2005, and personally passed
a plea from Hu Jintao to Kim Jong- il about resuming the Six- Party Talks. At the
same time, to China’s great displeasure, the U. S. Secretaries of Defense and State
issued a Joint Statement (“ 2+ 2 Statement”) along with the visiting Japanese
Ministers of Defense and Foreign Affairs that included “ the peaceful resolution of
issues concerning the Taiwan Strait through dialogue” as a common strategic
objective. 40 At a press conference on March 6, 2005, Foreign Minister Li Zhaoxing
characterized China’s role as just “ facilitating” the Six- Party Talks.
The Administration then stepped up pressure on the PRC to use its leverage to
bring North Korea back to the talks. On March 21, 2005, Secretary of State Rice met
with top PRC officials including President Hu in Beijing, after visiting other Asian
capitals. She urged China in particular to help restart the Six- Party Talks, publicly
saying that “ China has the closest relationship with North Korea,” that “ it is not a
U. S.- North Korean issue,” and that “ there are other options in the international
system.” 41 In Beijing on April 26, 2005, Assistant Secretary of State Chris Hill
reportedly raised the idea of an interruption of oil flows from China to North Korea,
but China refused. 42 At a news conference on April 28, President Bush reminded
China about his agreement with Jiang Zemin and mentioned Secretary Rice’s option
of going to the U. N. Security Council ( where China has veto power). A PRC Foreign
Ministry official, Yang Xiyu, publicly blamed Washington for a “ lack of
cooperation” and Bush for calling Kim Jong- il a “ tyrant” at the news conference. 43
Chris Hill, at a congressional hearing on May 26, said that China has “ enough
influence” to convince North Korea to return to the talks but has not done it. He also
made China accountable for any failure of the Six- Party Talks if it fails to get its
“ very close friend” back to the talks. 44
Meanwhile, Secretary Rice also offered a strengthened U. S.- PRC relationship
and agreed that Deputy Secretary of State Robert Zoellick would hold the first
“ Senior Dialogue” with his PRC counterpart, a meeting which was scheduled for
early August 2005. PRC ruler Hu Jintao had requested what China calls “ strategic
talks” when he met with President Bush in November 2004.45 One day after North
CRS- 28
45 (... continued)
Robert Zoellick, “ Remarks at U. S. Embassy Beijing,” August 2, 2005; and Glenn Kessler,
“ Zoellick Details Discussions With China on Future of the Korean Peninsula,” Washington
Post, September 7, 2005.
46 Secretary Condoleezza Rice, Press Availability in Beijing, July 10, 2005.
47 BBC, August 24, 2005; and New York Times, September 13, 2005.
48 Xinhua [ New China News Agency], September 17, 2005; and Joseph Khan and David
Sanger, “ U. S.- Korean Deal On Arms Leaves Key Points Open,” New York Times,
September 20, 2005.
49 Department of State, “ Joint Statement of the Fourth Round of the Six- Party Talks,”
Beijing, and “ North Korea — U. S. Statement,” New York City, September 19, 2005.
Korea announced on July 9 that it would return to the talks, Secretary Rice visited
China, but this time before visiting U. S. allies ( Thailand, Japan, and South Korea). 46
4th Round and Joint Statement ( July- September 2005). After a period
of 13 months without talks, China announced the start of the fourth round of the Six-
Party Talks in Beijing on July 26, 2005, and described China’s role as both a “ host”
to “ facilitate” the talks and a “ participant.” The inconclusive first phase of this round
ended on August 7, 2005, when the countries agreed to recess and resume talks on
August 29. Pakistani President Pervez Musharraf provided support for U. S. reports
of North Korea’s uranium enrichment program, when he said that A. Q. Khan
supplied North Korea with centrifuges and their designs. 47 North Korea did not
return to the talks as agreed but returned later on September 13. Meanwhile,
President Bush agreed to a meeting at the White House with PRC ruler Hu Jintao in
early September but had to postpone it because of Bush’s response to Hurricane
Katrina. Bush then met with Hu in New York on September 13.
China proposed a joint statement that recognized North Korea’s insistence on
a light water reactor and had no explicit mention of a uranium program. On
September 17, PRC Vice Foreign Minister Dai Bingguo presented China’s draft as
the “ most realistic” and put pressure on the United States to agree to it. 48 Along with
other countries, the United States agreed to sign the joint statement of principles ( not
an agreement) on September 19, 2005, in which North Korea committed to abandon
“ all nuclear weapons” and “ existing nuclear programs” and to return to the NPT and
IAEA safeguards; and the other countries agreed “ to discuss, at an appropriate time,
the subject of the provision of a light water reactor.” The United States issued a
statement to clarify that dismantlement of nuclear weapons must be verifiable; that
nuclear programs included plutonium and uranium programs; and that an
“ appropriate time” for “ discussion” of a light water reactor is when North Korea has
verifiably eliminated all nuclear weapons and all nuclear programs. 49
At a hearing of the House International Relations Committee on October 6,
2005, Representative Ileana Ros- Lehtinen asked about PRC pressure to accept the
deal. Assistant Secretary of State Chris Hill did not deny that Beijing exerted
pressure and noted that there were earlier PRC drafts that were “ absolutely
unacceptable,” while the mention of a light water reactor was “ not welcomed.” He
said publicly, nonetheless, that the United States benefitted from China’s strong
CRS- 29
desire to reach a deal and “ we can work well with the Chinese.” He also described
China’s role as that of a “ secretariat” ( producing drafts), seemingly a neutral role.
5th Round ( November 2005). After the joint statement was signed, PRC
Vice Premier Wu Yi traveled to North Korea on October 8- 11, 2005, promising new
economic cooperation. Top PRC leader Hu Jintao then followed with a visit on
October 28- 30 and attended a ceremony to sign economic agreements. On November
1, China announced that the next round would start on November 9. While there was
progress in the process, when the meeting for the 5th round of the Six- Party Talks
ended on November 11, no progress in results was announced for the implementation
of the joint statement to dismantle North Korea’s nuclear weapons. Moreover, there
continued to be differences between the U. S. and PRC approaches in continuing the
Six- Party Talks. While President Bush called for “ firm resolve” in a speech given
in Kyoto, Japan, on November 16, 2005, the PRC’s Hu Jintao called for “ greater
flexibility” in a speech in Seoul the next day.
PRC Communist Party General- Secretary Hu Jintao hosted North Korean ruler
Kim Jong- il in China on January 10- 18, 2006, and Hu expressed support for
continuing the Six- Party Talks. The PRC then proposed a meeting on January 18 in
Beijing between Assistant Secretary of State Chris Hill and North Korean negotiator
Kim Kye- gwan. China’s media said that PRC diplomat Wu Dawei “ also joined” an
implied U. S.- DPRK bilateral meeting ( vs. the U. S. view of a three- nation meeting).
On February 3, 2006, Senators Harry Reid ( Democratic Leader), Carl Levin
( Ranking Democrat of the Armed Services Committee), Joseph Biden ( Ranking
Democrat of the Foreign Relations Committee), and John Rockefeller ( Vice
Chairman of the Intelligence Committee) wrote a letter to President Bush, saying that
U. S. policy “ still has not resulted in an elimination, freeze, or even a slowing of
North Korea’s nuclear and ballistic missile activities.” At a hearing of the House
International Relations Subcommittee on Asia and the Pacific on March 8, 2006,
Chairman James Leach critiqued President Bush’s “ reactive” approach to the Six-
Party Talks that “ appear moribund,” calling for U. S. leadership, “ initiative” for more
dialogue, “ greater flexibility” for diplomacy, sending Assistant Secretary of State
Chris Hill ( the witness) to Pyongyang, negotiation of a permanent peace on the
peninsula at a separate forum, direct contacts with North Koreans, and liaison offices
to solve a “ problem of communication.” Leach argued against continuing to
“ transfer the initiative to others, indebting us to the diplomacy of countries that may
have different interests or simply ensconcing the status quo.”
Indeed, despite its considerable influence, China’s balanced role placed its
stance as more neutral than supportive of the United States and Japan. However, as
Beijing pursued the “ process” of the talks, results remained elusive. The burden
increased on China’s preferred diplomacy to achieve the DPRK’s nuclear
disarmament. The impasse also threatened to strain U. S.- PRC ties.
Missile Firings ( July 2006). The impasse continued into the summer of
2006, when China failed to prevent North Korea from test- firing seven ballistic
missiles, including the first test of a Taepo Dong- 2 ICBM under development with
CRS- 30
50 In a radio interview on July 8, 2006, Secretary of Defense Donald Rumsfeld said that
North Korea announced it has nuclear weapons and ballistic missiles, but it is uncertain
whether North Korea has the ability to mate a nuclear weapon with a ballistic missile. Also,
he said that North Korea has 3- 5 more “ Taepodong- 2 airframes.”
51 The official China Daily, July 7, 2006.
a range ( perhaps 3,700 miles) that could reach Alaska. 50 After the DPRK began
preparations in May, Congress expressed concerns, including in a letter from
Senators Carl Levin and Hillary Rodham Clinton to President Bush on June 15. At
a hearing of the House Armed Services Committee on June 22, some Members asked
about China’s role. Brigadier General John Allen, Principal Director for Asian and
Pacific Affairs at the Office of the Secretary of Defense, testified that the PRC tried
to dissuade North Korea from steps that would be destabilizing and run counter to
the Six- Party Talks. However, the PRC’s use of leverage, including the PLA’s
opposition or acquiescence to the DPRK’s missile program, was unclear. Indeed,
there was high- level contact between the militaries of the PRC and DPRK shortly
before the July 2006 missile tests, similar to that before the August 1998 missile
firing. On June 21, 2006, the PLA Chief of General Staff, General Liang Guanglie,
told a DPRK military visitor that the PLA will “ expand cooperation” with the Korean
People’s Army.
On July 4, 2006 ( Washington time), North Korea fired a Taepo Dong- 2 ICBM
that failed in less than 40 seconds after launch and several short- range Scuds and
medium- range Nodongs, bringing Washington’s condemnation for this “ provocative
act.” Threatened by the missiles, Japan called for Security Council action. The
PRC’s less forceful reaction was to express “ grave concern” about the “ situation” and
to call for “ restraint” from all countries. On July 5, Senator John McCain stated that
China and Russia have the most leverage over North Korea and warned that their
posture will have a heavy impact on our relations.
In a phone call with President Bush on July 6, PRC President Hu Jintao
expressed “ deep concerns” about the “ situation” but also opposition to actions that
might “ aggravate the situation.” 51 On July 7, with U. S. support, Japan sponsored a
UNSC resolution that invoked Chapter VII of the U. N. Charter ( language for
sanctions and/ or force), but China countered with a non- binding statement by the
president of the Security Council with no mention of Chapter VII. China’s draft
statement of July 10 called for resuming the Six- Party Talks, preventing technology
and financial transfers to North Korea’s missile and WMD programs, and other
voluntary measures. Faced with this resistance from Beijing, Tokyo and Washington
agreed on July 10 to postpone a vote on their draft resolution to give China time for
a diplomatic mission.
China sent a previously- scheduled delegation led by Vice Premier Hui Liangyu
to Pyongyang on July 10- 15 to commemorate the 45th anniversary of the bilateral
friendship treaty, and Hui reportedly signed a new agreement on economic
cooperation. But Kim Jong- il snubbed the PRC visitors. While China was given
time for diplomacy, Beijing intensified its criticism of Tokyo on July 11, calling its
resolution an “ overreaction.” Assistant Secretary of State Chris Hill reported from
CRS- 31
52 Yonhap News, July 24, 2006; Reuters and Zhongguo Tongxun She, July 26, 2006.
Beijing on July 12 that China’s diplomatic mission did not achieve progress in
getting Pyongyang back to the talks.
On July 12, China ( and Russia) reportedly dropped their pursuit of a draft
statement to sponsor a draft UNSC resolution that countered Japan’s resolution
primarily by withholding authority under Chapter VII ( for sanctions or use of force).
Still, China’s resolution called for nations to resume the Six- Party Talks and refrain
from supplying technology or funds to the DPRK’s missile program. Despite similar
goals, Beijing’s envoy threatened to veto Japan’s resolution.
Ultimately, negotiations led to UNSC Resolution 1695 that was adopted
unanimously on July 15, 2006, condemning the DPRK’s missile launches,
demanding that it suspend its missile program, requiring all countries to prevent
technology transfers to its missile or WMD programs, requiring countries to prevent
missile proliferation from the DPRK and financial transfers to its missile or WMD
programs, as well as urging the DPRK in particular to show restraint and return to the
Six- Party Talks ( with implementation of the September 2005 Joint Statement and
abandonment of all nuclear weapons and nuclear programs). However, China’s
statement on the resolution urged all countries to practice restraint. Still, in her
public reaction the next day, Secretary of State Rice maintained that North Korea was
“ isolated” and singled out China for voting “ affirmatively” for the resolution,
stressing that it requires countries to prevent dangerous technology transfers to North
Korea. While in St. Petersburg, Russia, the next day, for the Group of Eight summit,
President Bush thanked Hu Jintao for his “ leadership” on the resolution. Also, on
July 26, 2006, the White House confirmed reports that in late 2005, China had frozen
North Korean assets in the Bank of China for counterfeiting the PRC currency. 52
Nonetheless, at a hearing of the Senate Foreign Relations Committee on July 20,
2006, Chairman Richard Lugar pointed out that China facilitated talks on the DPRK
while continuing to supply key energy and lifelines into North Korea. He warned
that although China wanted to avoid regional instability, the missiles tests were
destabilizing; China’s ability to secure global benefits for its high economic growth
rates depended on continued cooperation with the West; and “ Beijing must reassess
its regional priorities.” It remained unclear whether China supported use of Chapter
VII, although Assistant Secretary Hill testified that the resolution’s language on
“ international peace and security” was a reference to Chapter VII. Despite the UNSC
resolution, China criticized Japan’s sanctions on September 19 and refused to attend
a meeting of eight countries to discuss the DPRK at the U. N. two days later.
Meanwhile, in late September, the House and Senate passed the conference
report for the National Defense Authorization Act for FY2007 ( enacted as P. L. 109-
364) that included Section 1211 to require the President to appoint a North Korea
Policy Coordinator who shall conduct a complete policy review and report to
Congress. The deadline to appoint the Coordinator was December 16, 2006.
Nuclear Test ( October 2006). On October 3, 2006, North Korea warned
that it would conduct a nuclear test, and China reacted the next day by singling out
CRS- 32
53 Ta Kung Pao, October 10, 2006.
54 China likely has concerns about any military action by Japan, including logistical support
for U. S. naval ships conducting inspection and interdiction at sea. Also, China became
highly sensitive to U. S. inspection or interdiction at sea in 1993, when China was the target
of U. S. inspection of a cargo ship called Yinhe, which was suspected of supplying chemicals
to Iran. See CRS Report 96- 767, Chinese Proliferation of Weapons of Mass Destruction:
Background and Analysis, September 13, 1996, by Shirley Kan.
55 Secretary Condoleezza Rice, “ Briefing on Upcoming Trip to Asia,” October 16, 2006.
North Korea to use restraint. On October 9, North Korea conducted a nuclear test.
On the same day, even as President Bush reacted with no confirmation of the test,
China confidently expressed its “ opposition” to North Korea for “ flagrantly”
conducting a nuclear test. The next day, a PRC- owned newspaper in Hong Kong
specifically reported that North Korea conducted a nuclear test 300 meters
underground with an explosion of 800 tons. 53 China’s strongly negative reaction to
this nuclear test reflected a heighten fear of instability on its periphery and frustration
at North Korea’s defiance of China’s leaders. ( On October 16, 2006, the Director of
National Intelligence publicly confirmed this nuclear test of “ less than a kiloton.”
President Bush issued a formal determination on December 7, 2006, declaring that
North Korea detonated a nuclear explosive device on October 9, 2006.)
The PRC Foreign Ministry denied that the Six- Party Talks failed and still urged
a resumption of those talks, particularly between the United States and the DPRK.
China also agreed to sanctions imposed by the U. N. Security Council, but China
opposed the use of force and applying the Proliferation Security Initiative ( PSI), of
which China is not a member. 54 While the United States and Japan urged tough
sanctions, they compromised over days of negotiations with China and Russia, which
urged “ balance” ( with a targeted arms embargo, no ban on ships and aircraft,
restrictive language for “ measures under Article 41” ( sanctions) of Chapter VII,
“ cooperative” action including cargo “ inspections” to prevent weapons proliferation).
On October 14, 2006, China voted with all other members of the Security
Council for Resolution 1718, imposing sanctions to prevent the supply of major
weapons as well as items that could contribute to the DPRK’s nuclear, missile, or
other WMD programs; luxury goods; transfers of funds for those programs; travel by
people responsible for those programs; and inspection of cargo to prevent WMD
proliferation. Secretary of State Rice praised China for its “ remarkable evolution.”
On October 17, Rice left for Japan and South Korea ( allies first), China, and Russia,
saying she expected every country to “ fully implement all aspects” of Resolution
1718. She also defended the Administration’s approach, saying “ what the President
has done in putting together this coalition, with China at the center of it willing to go
along with Chapter 7, is quite remarkable.” 55 In Beijing, Rice boasted to traveling
reporters on October 20 that “ China is now committed to the denuclearization of the
Korean peninsula,” rather than Washington dealing bilaterally with Pyongyang.
However, China’s enforcement of the resolution was questionable, as it called
for “ cooperative action” in “ inspection” ( and not interception or interdiction) of
cargo. Also, while any PRC sanctions under its strict interpretation of Resolution
1718 might seek to counter the DPRK’s weapons- related activities, they might not
CRS- 33
56 Gordon Fairclough, “ Close- out Sale: North Korea’s Elite Shop While They Can,” Wall
Street Journal, December 18, 2006.
57 AP, October 16, 2006; Yonhap, October 17, 2006; China Daily, October 19, 2006.
58 JijiWeb, Tokyo, October 25, 2006; a State Department official, November 13, 2006;
JijiWeb, November 26, 2006; Nihon Keizai Shimbun, November 28, 2006. The PRC foreign
ministry denied on October 24 that the government ordered the banks to stop “ normal”
commercial transactions with North Korea but did not deny the suspension of transactions.
59 Wen Wei Po, October 17, 2006; Huanqiu Shibao, October 19, 2006; New York Times,
October 27, 2006.
60 Zhongguo Jingying Bao, October 16, 2006.
61 Liaoning Jingwang, Shenyang, October 22, 2006; Chosun Ilbo, Seoul, October 24, 2006.
62 New York Times, October 31, 2006.
63 Yonhap, Seoul, November 8, 2006.
be sufficiently broad or effective in achieving the ultimate, unrealized goal of the
dismantlement of North Korea’s nuclear weapons and programs. China’s agreement
to ban luxury goods might have indicated its disapproval of the defiance of Kim’s
regime, but “ luxury goods” were not defined and North Korean elites reportedly
continued to enjoy shopping sprees in Dandong, China. 56
Immediately after voting for the resolution, the PRC ambassador stated his
reservations that “ China does not approve of the practice of inspecting cargo” to and
from the DPRK. After imposition of sanctions, China’s customs agents reportedly
carried out more stringent inspections of cross- border traffic, perhaps to prevent
dangerous transfers. 57 China seemed to have tightened “ inspections” ( to the letter of
the resolution), without participation in military inspection or interdiction at sea.
Also, after the nuclear test, China’s major state- owned banks suspended financial
transactions with North Korea and then relaxed restrictions around mid- November. 58
Other than these actions, PRC and foreign reports portrayed business as usual
in PRC trade with North Korea. 59 The PRC Foreign Ministry also declared on
October 17 that the “ China- DPRK border is normal.” China had numerous other
options, including limiting its exports to and imports from North Korea, valued at
$ 1.6 billion in 2005.60 Limiting investments there and cracking down on smuggling
were other PRC options. On October 22, PRC media reported the arrest of two
people for smuggling uranium, possibly from North Korea, but that arrest took place
in September 2006, before the nuclear test. 61 China also could have cut crude oil
supplies ( up to 90% of the DPRK’s supplies). Some stoppage of supplies ( in
February 2005, February 2006, and September 2006) was reported, but that took
place before the DPRK’s nuclear test and not as implementation of sanctions. 62 In
addition, PRC provision of diesel fuel as assistance to North Korea continued. 63
Continued 5th Round and February 2007 Statement. On October 31,
2006, the PRC announced a meeting among PRC, DPRK, and U. S. officials in
Beijing, at which they agreed to resume the Six- Party Talks “ soon.” Meeting
reporters in the Oval Office, President Bush personally thanked China for this bit of
news. What China called the “ second phase” of the fifth round took place in Beijing
CRS- 34
64 State Department, Christopher Hill’s briefing, Berlin, Germany, January 17, 2007.
65 Christopher Hill, “ Update on the Six- Party Talks,” remarks to the Brookings Institution,
Korea Economic Institute, and Asia Society, February 22, 2007.
66 Senate Armed Services Committee, hearing on the “ Annual Threat Assessment of the
Director of National Intelligence,” February 27, 2007.
on December 18- 22, 2006. China proposed “ working groups” — including bilateral
ones — and issued a statement citing “ useful” talks on how to implement the
September 2005 Joint Statement. Assistant Secretary Hill reported no breakthrough.
Significantly, on January 16- 17, 2007, separately from the Six- Party Talks and
for the first time outside of Beijing, Hill traveled to Berlin and met bilatera