The report said quoting ``highly classified'' intelligence reports that American government knew that China's Army was taking advantage of the Bush and Clinton administrations' decisions to encourage sales of technologies to Asian countries, the paper said.

The report may prove to be very embarrassing for President Bill Clinton, who is preparing for a visit to China later this month, amidst widespread criticism that it would help Chinese to project a good image of themselves and ignores their human rights violations.

China turned to the American-made satellites owned by Hong Kong companies, when its own communications network collapsed and replacement built with help from the German conglomerate Daimler did not work, the report said.

American administration officials explained it was impossibleto prevent China's Army from using American-made satellites sold abroad and that their long-term goal was to prevent China's military from obtaining the technology needed to make the equipment on its own.

They said if the US had barred American manufacturers from selling satellites in Asia, the Chinese would have eventually gained access to satellites produced in Europe or other countries that had fewer limits on trade.

``The arguments that we can block use of civilian satellites technology by the Chinese military is simply unrealistic, given the widespread availability options around the world,'' State Department spokesman James Rubin was quoted as saying. The reports, for which the Times quoted administrations officials, were recounted in a document last year complied by the Pentagon intelligence officials and sent to hundreds of senior policy makers at the White House and the State Department.

Reason for silence on M-11 deal

Secret United States intelligence ties with Beijing is onereason why America is not making a ``determination'' that China has sold 34 M-11 missiles to Pakistan, media reports said here today. If such a determination is made, the US will have to impose strict sanctions against China automatically. ``The Clinton administration, aiming to protect secret intelligence ties despite Chinese misdeeds in other areas, got Congress to pass a special amendment to the Intelligence Authorisation Bill in 1995. ``The amendment gave the President authority to delay imposition of sanctions on a foreign government if he believed such an action would compromise an ongoing criminal investigation or an intelligence source or method,'' The Washington Post reported quoting officials.