The US tightens up military exports to China

Despite protests from some major corporations, the US government tightened regulations on exports of aircraft engines, high-performance computers and other technologies that possible have military uses to China.

The Commerce Department of the US added 31 new products requiring special export licenses in hopes of keeping them out of the hands of China’s military, which is growing in a high rate. The licenses, which companies complain are complicated to obtain, try to assure that technology sold to civilian companies doesn’t end up being used to improve Chinese missiles and other weapons.

This move is because the US is trying to balance economic needs with growing concerns about the communist nation’s rapid military modernization and access to advanced Western technology. But the US corporations say the new rules, proposed last summer and sharply criticized since, won’t be effective because China can buy many of the so-called ‘dual-use’ products easily from other countries. What the regulations will do, companies fear, is drive away Chinese business at a time when the US trade deficit with the world’s most populous nation is towering.

The trade deficit reached a record high of $233 billion in 2006. The rules change further puts US companies at a disadvantage. The long-term impact will be people dropping out of the Chinese market and less trade. Because of the rapid growth of its economy and military, China is one of the largest foreign markets for exports that require licenses. In 2006, nearly 10 percent of all US export licenses were for sales to China, worth about $2.4 billion. US companies exported $55 billion in licensed and unlicensed goods, which include such wide-ranging products as iPods and soybeans, to the country last year. Federal officials listened to some of the criticism and trimmed the number of new products on the list by about a third.

The US government categorizes countries by their potential security threat, and then limits the export of products that can be used for purposes such as waging terrorism, building missiles or developing nuclear weapons. Dozens of products already are restricted for sale to China. In many cases, those items also have harmless civilian uses such as high-powered computers, for example, are used in advanced weather forecasting — and U.S. officials allow the exports if companies can prove the technology won’t end up in the wrong hands.

In July 2006, the Commerce Department’s Bureau of Industry and Security proposed requiring licenses for the sale of 47 additional products to China. Among them were types of computers, aircraft, semiconductor equipment, navigation systems and telecommunications components. To offset the effect, the bureau proposed a new program that would exempt sales to Chinese companies that undergo special clearance reviews validating they do not deal with the military.

The regulations affected companies such as The Boeing Co., Sun Microsystems Inc. and Applied Materials Inc. Companies submitted evidence about products on the new list that were easily available from other countries or even in China.