'US eased technology policy may benefit Chinese military'

Equally worrisome, the experts say, is the possibility that China could share the technology with Iran or Syria.

The ,New York Times said that six months ago, the US government quietly eased some restrictions on the export of sensitive technologies to China, which included advanced engine parts, navigation systems, telecommunication equipment and sophisticated composite materials.

The questions raised about the new policy, the paper said, are in a report to be released soon, possibly this week, by the Wisconsin Project on Nuclear Arms Control, an independent research foundation that opposes the spread of arms technologies.

The report, made available to the newspaper, asserts that two non-military Chinese companies designated as trustworthy, are in fact high risk because of links to the Chinese government, the Peoples Liberation Army and other Chinese entities accused in the past of ties to Syria and Iran.

The new approach was intended to help US companies increase sales of high-technology equipment to China, despite tight curbs on sharing technology that might have military applications.

But while imposing license requirements for the transfer of these technologies, the administration is also validating certain Chinese companies so that they can import these technologies without licenses.

Five such companies were designated in October, but as many as a dozen others are in the pipeline for possible future designation, it added.

However, Mario Mancuso, the under-secretary of commerce for security and industry, during an interview with the paper said, "We believe that the system we have set up ensures that we are protecting our national security consistent with our goal of promoting legitimate exports for civilian use."

One of the Chinese companies, BHA Aerocomposite Parts, is partly owned by two US companies: the aircraft manufacturer Boeing and the aerospace materials maker Hexcel, with each holding a 40 per cent stake. The remaining 20 percent is owned by a Chinese government-owned company, AVIC I, or China Aviation Industry Corp., the Times said.

The Wisconsin Project report, the paper says, also asserts that both Boeing and Hexcel have been cited for past lapses in obtaining proper licenses for exports.

Spokesmen for both Boeing and Hexcel told the paper that they were fully confident that BHA had no ties to the Chinese military and that its use of aircraft parts and materials were strictly for commercial and civilian ends.

Gary Milholin, the Washington director of the Wisconsin project, said that research by his staff had uncovered several links with the Chinese military, involving both BHA and another of the five companies, Shanghai Hua Hong NEC Electronics.