CHINESE ARMS EXPORTS:

POLICY, PLAYERS, AND PROCESS

Evan S. Medeiros

Bates Gill

August 2000
*****

The views expressed in this report are those of the authors an

necessarily reflect the official policy or position of the Department of th

the Department of Defense, or the U.S. Government. This report is cle

public release; distribution is unlimited.

*****

The authors would like to thank Richard Bitzinger, Monte Bullard

Mulvenon, Phillip Saunders, and Jing dong Yuan for their review 

commentary on earlier drafts of this paper. Kevin Pollpeter, a graduate 

assistant at the Monterey Institute’s Center for Nonproliferation Studie

special thanks for helping with much of the background research for thi

and—particularly—for his help with the production of charts and grap

Burns at the Center for Nonproliferation Studies provided extensive 

assistance in all phases of the project and graciously helped with the tra

of many Chinese language sources. Several U.S. and Chinese gov

officials and experts also provided key insights for this paper but have 

remain anonymous. Financial assistance was provided by the Ce

Nonproliferation Studies at the Monterey Institute of International Stu

are grateful for the support and input we have received, but t

responsibility for any deficiencies that may remain in this study.

*****

Comments pertaining to this report are invited and should be forw

Director, Strategic Studies Institute, U.S. Army War College, 122 Forb

Carlisle, PA 17013-5244. Copies of this report may be obtained f

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ii
CONTENTS

Foreword ........................

Summary ........................

Chapter 1

 Background Trends in Chinese Arms Exports ...

Chapter 2

 Chinese Arms Exports: Policy, Players, Process ..

Chapter 3

 Conclusions ......................

Appendix I

 Acronyms .......................

Appendix II

 People’s Republic of China Regulations on Export

 Control of Military Items ...............

Appendix III

 Principal Organizations in China’s

 Nonproliferation and Arms Control Community ..

Appendix IV

 English-Chinese Glossary of Chinese

 Organizations .....................

Appendix V

 China’s Export Control System

 for Military Items ..................

Appendix VI

 Internet Sites for Chinese Organizations Involved

 in Military Exports and Export Controls ......

About the Authors .................... 

iii
FIGURES

Bibliographic Note ................

Figure 1.

 U.S. Congressional Research Service Data

 for China’s Arms Deliveries, 1990-1998. ...

Figure 2.

 SIPRI Data for China’s Arms Deliveries,

 1990-1998....................

Figure 3.

 U.S. Congressional Research Service Data

 for Total World Arms Deliveries to Developing

 Nations, 1990-1998 ..............

Figure 4.

 SIPRI Data for Total World Arms Deliveries

 to Developing Nations, 1990-1998. ......

Figure 5.

 CRS and SIPRI Data on China’s Percentage

 of World Arms Transfers (based upon current

 U.S. Dollars). ..................

iv
FOREWORD

Global arms proliferation continues to be a key co

for the United States, particularly the export role 

People’s Republic of China (PRC). Clearly, the PRC is 

player in the world’s arms bazaar. Although C

experienced a significant decline in its arms exports 

1990s (down from the boom times of the 1980s), the 

provides a significant array of lethal weapons and sen

defense technologies to states around the world. 

exports provide an invaluable means by which to asse

progress and performance of China’s military-indu

complex. Moreover, these products may represent th

systems and technological know-how that the United S

and allied forces will encounter in a future conflict.

Authored by two of the world’s foremost exper

Chinese arms proliferation, this monograph provide

most up-to-date, comprehensive, and authoritative 

source treatment of the subject available anywhere

Strategic Studies Institute is proud to publish it.

DOUGLAS C. LOVELACE, JR

Director

Strategic Studies Institute

v
SUMMARY

It has been nearly 10 years since a comprehensive 

has been undertaken to fully assess the trends, proc

and implications of China’s arms exports. For a num

reasons the time is ripe for the present study to take u

subject.

First, over the course of the 1990s, questions of Ch

arms proliferation emerged as a central proble

U.S.-China relations. Second, in spite of this 

continuing concern for U.S. interests, encouraging o

trends in Chinese arms exports principles and pra

have resulted in more concrete Chinese unila

bilateral, and international commitments to ste

transfers of weapons and technologies on the one 

coupled with market forces causing a steep overall d

in its major conventional weapons exports over the p

years on the other.

Third, far more data, information, and documenta

available today from China on a host of questions rel

to this issue through access to officials, newspapers, 

documents, published regulations, and official statem

These sources—some of which are provided to a 

audience for the first time in this study—offer new in

into the players and process involved in Chinese 

export policy, China’s military-technical relation

abroad, the internal bureaucratic and institut

pressures bearing on arms transfers, the strength

weaknesses of China’s export control system, and the e

to which Chinese decisionmakers have emb

international nonproliferation principles. Fourth, sinc

1997 and early 1998, the Chinese arms production and 

export system has undergone a sweeping reorganiz

and restructuring process. While the basic outlines o

shake-up are discernible, its implications for future 

exports are less clear and require careful analysis.

vii
Finally, the upshot of these trends points to end

and legitimate U.S. concerns over Chinese arms expor

proliferation activities. At the very least, this issu

remain a contentious one and will impede progress 

broader effort of the two countries to stabilize 

relationship. In addition, in spite of a relative decline 

arms exports overall, China continues to provide sen

weapons and technology to a range of recip

Washington views with concern: Iran, Myanmar (Bu

North Korea, Pakistan, and others. There is little doub

China will employ these types of transfers as a fo

leverage in its discussions with U.S. officials on other 

related to areas of concern for China, such as U.S. 

sales to Taiwan. More importantly, it remains highly 

that U.S. security interests and military forces oversea

continue to confront—both diplomatically 

militarily—the challenge posed by Chinese weapo

sensitive regions across Asia and the Middle East.

As a result, it is imperative to gain greater insigh

Chinese arms export policies, players, and processe

their implications for U.S. interests. This study ta

these issues in two principal parts. First, in order to s

context of the study, we assess past, present, and f

quantitative and qualitative trends in Chinese conven

arms transfers. The second part of the study exa

Chinese arms export policy, players, and process in 

Charts and documents attached as appendices fu

supplement the work of the study.

Drawing from this research, the study reache

following principal findings:

BACKGROUND TRENDS

• Arms Exports in Decline. All available ev

indicates that China’s arms exports have contr

considerably since 1990. This trend will likely continu

the next decade. Total Chinese arms exports declin

percent from 1990-98. China’s share of the world 

viii
market also declined significantly, especially in expo

developing countries.

• Market Conditions Worsening. The major r

for this decline is a shift in the global arms market tow

advanced, high-technology weapons which China is la

unable to provide. China has only a limited abil

produce high-technology weapons, while the United S

Russia, and Western European countries have been w

to export advanced weapons to developing coun

China’s remaining customers are unable to purchase 

the West due to political constraints and are unable to 

Western weapons. China has also accepted arms-c

and nonproliferation commitments which restrict its a

to export its most competitive weapons—ballistic and 

missile systems.

• Market Share Shifting. Over the 1990s, C

customer base contracted significantly and shifted fro

Middle East to Asia. Chinese arms exporters recruite

new buyers for conventional weapons, relying main

modest transfers to traditional clients like Iran, Pak

Myanmar (Burma), Sri Lanka, and a few African coun

None of these are likely major growth markets, and 

demand for Chinese arms may contract if Western we

systems become available. Some former customer

Thailand and Saudi Arabia simply stopped buying Ch

arms in favor of Western systems. Indeed, tech

problems caused several countries to remove Ch

weapons from their inventories.

• Limited New Markets. China’s active search fo

markets for conventional arms has produced only li

results. In recent years, China has concluded some s

mostly one-time deals with new customers su

Armenia, Turkey, Kuwait, Croatia, and possibly S

China’s military exports to Croatia could be the beginn

sustained arms transfer relationships, possibly incl

production technologies. Recent visits by Chinese mi

ix
leaders to Latin America suggest an attempt to exp

meager market share in that region.

• Export Composition Changing. The composi

China’s weapons exports has changed in the last se

years. Suggestions in the early 1990s that China 

increase arms sales by specializing in low-end aircra

various types of anti-ship missiles and medium-

surface-to-surface missiles (SSMs) did not come to fru

China has sustained its arms export business th

minor transfers of diverse weapons systems. However

specialization in low-end, short-range SSMs 

surface-to-air missiles (SAMs) may be developin

particular, China’s sales of SAMs, especially po

versions, represent one of the few growth areas in the 1

POLICY CHARACTERISTICS

• Flexible Arms Export Principles. China’s f

arms sales policy is shaped around three pillars: e

principles, export regulations, and participati

international arms transfer control regimes. These 

sufficient flexibility to justify a variety of arms ex

China supports the broad aims of the United Na

Register on Conventional Arms (UNROCA) an

Wassenaar Arrangement, but its limited participat

the former and reluctance to join the latter revea

ambivalent approach to restraint and transparency in 

exporting.

• New Export Regulations. In 1997, China issu

first publicly available export control regulations cov

military products. These new regulations represent a 

advance compared with China’s previous export con

which were suited to a centralized, planned economy. 

regulations legally codify China’s export principles, 

some international export control standards, r

confusion in the export control process, and are 

transparent than previous laws. The new regulation

facilitate better export control management by spec

x
procedures for license application, consideration

approval. 

• Weaknesses of Regulations. China’s 1997 

control law exhibits certain weaknesses which 

complicate effective implementation. Most notably

regulations do not include a list of specific military 

controlled under the regulations, resulting in uncer

about what items are covered under this law. It is not 

whether China has an informal internal control l

whether it references an international one.

PLAYERS

• Government Reorganization. The Ch

government underwent a major reorganization in M

1998 which downsized and restructured much o

government bureaucracy, including the defense indu

sector. The structural changes raise uncertainties i

short- to medium-term about the proper function

export controls on military items and other sen

technologies. In the long-term, however, these chang

properly implemented—may create a more organize

rational system for controlling military exports.

• Organizational Uncertainties. As a result 

ongoing government reorganization, the agency orig

responsible for controlling arms exports was abolished

its successor has not been formally identified. 

uncertainty blurs lines of authority and increases the r

illicit military transfers. The newly civilia

Commission on Science, Technology, and Industr

National Defense (COSTIND) may have ass

coordinating responsibility for military exports 

imports. COSTIND has already been given 

administrative and regulatory responsibility for C

defense industry, while the Research and Develop

(R&D) and production functions have been left to 10 

formed defense industrial enterprise groups.

xi
• The People’s Liberation Army (PLA) and 

Exports. The impact of the Chinese military’s r

exodus from commercial business activities on China’s 

exports is unclear. In the past, trading companies ope

by Chinese military officers, such as Poly Technol

actively participated in China’s arms trade. The 

divestiture from business activities could give 

independent firms incentives for illegal arms expo

order to generate lost income. On the other hand

transfer of ownership may have weakened bureau

linkages and personal relationships which could limit 

ability to export arms illegally.

CONCLUSIONS

• Continuing Concerns. Despite the declining v

of Chinese arms exports combined with China’s shri

market share, Chinese arms transfers will continue to 

issue of concern for U.S. policymakers. China’s willin

to sell certain types of weapons to nations of U.S. co

indicates that Chinese arms sales will remain an a

interest to U.S. officials and analysts. Many of 

objectionable sales do not violate international la

multilateral export control regimes and, thus, will h

be dealt with bilaterally. Moreover, China continues t

its arms exports to other sensitive issues, such as 

military sales to Taiwan. China may use arms expo

particular countries as leverage in bilateral debates 

the United States. Thus, U.S. concerns about specific 

will likely be a periodic source of tension in U.S.-

relations. 

• Possible Future Exports. China’s strong oppo

to U.S. plans to provide theater missile defense (

technology to East Asia partners, especially to Ta

could trigger a new round of arms exports from Be

Chinese officials state TMD sales to Taiwan are a vio

of the Missile Technology Control Regime (MTCR) 

form of missile proliferation which may lead Beiji

xii
reconsider its existing missile nonprolifer

commitments. In retaliation for U.S. exports of 

systems to Taiwan, China may lift its unilateral b

cruise missile sales to Iran, considering it was adop

response to significant U.S. pressure and is not p

China’s international nonproliferation commitments

xiii
CHAPTER 1

BACKGROUND TRENDS IN CHINESE AR

EXPORTS

FROM IDEOLOGY TO PRAGMATISM

Beginning in the mid to late 1980s, Chinese 

transfers increasingly became an issue of concern fo

policymakers. Of greatest concern were China’s expo

particular types of weapons (especially ballistic mi

cruise missiles, and nuclear-related transfers) to part

regimes (such as Iran, Iraq, North Korea, Pakistan, 

Arabia, and Syria). Starting in the late years of the R

Administration, these concerns and the ens

confrontations with the Chinese have forme

foundation for reoccurring and contentious Sino

discussions over arms exports and nonproliferation.

A brief review of the historical context to Chinese 

transfers will provide a greater understanding o

current and likely future trends for China’s arms e

activities and related policies.

1

 The greatest single s

Chinese arms export policy occurred in the mid t

1970s when, in terms of quantity, quality, clientele

payment arrangements, China adopted a more “pragm

approach to its arms export policies. In doing 

abandoned much of the Mao-era rhetoric and motiv

which drove its arms exports throughout much of the 1

1960s, and early 1970s. These arms export policies inv

supporting nascent communist or socialist regimes, fu

revolutionary unrest, generating anti-American and (

anti-Soviet support, providing mostly basic, small arm

light weaponry, and doing so in the form of cost-free mi

aid. China then shifted in the mid-1970s to dramat

increase the quantity and quality of weapons expor

1
supply a diverse cross-section of importers, and to do 

payment. In many respects these changes in Ch

policies reflected larger trends in international securit

arms export markets.

In terms of quantity, while China had consis

ranked among the top five arms exporters to the devel

world since the early 1950s, it steadily augment

market share especially beginning in the late 1970

early 1980s with the onset of the Cambodian civil wa

war in Afghanistan, and the Iran-Iraq war. Accord

data compiled by the Stockholm International 

Research Institute (SIPRI), China quadrupled its sh

exports to the developing world, rising from a 1.8 pe

share over the period 1970 to 1979 to gain nearly 8.0 pe

of the market by 1990. If measured in terms of contr

value (rather than actual transfers), China had by 

risen to become the world’s third largest exporter 

developing world.

2

 In reaching these heights, C

paralleled the spectacular increase overall in arms ex

to the developing world from the mid-1970s to th

1980s.

Qualitatively, Chinese arms exports also beg

improve by the mid-1970s. Indeed, by the mid-1980s C

began to develop made-for-export weapons w

represented the highest quality military R&D 

production it had to offer. In addition, China shifted 

the provision of mostly small arms and light weapo

sales of complete major weapon platforms, and did 

levels unseen since the provision of weapons to North 

in the 1950s. For example, with the exception of 

anti-aircraft missile batteries transferred to Albania 

mid-1960s, virtually all of Chinese missile-re

exports—anti-air, anti-ship, anti-tank and ba

missiles—took place from 1978 onwards. Again

reflects broader trends in the international system, 

saw the proliferation of far more sophisticated weapo

the developing world, especially as the United State

2
the Soviet Union provided their Cold War proxies 

increasingly advanced military means.

Perhaps most importantly, Chinese “pragmatism” 

arms export policies can be seen in the diversification 

client list to include “non-traditional” recipients of Ch

military hardware, including recipients with which C

did not have formal diplomatic ties, or toward which 

been openly hostile in the past. In the 1960s and 

1970s, China was particularly active in supp

revolutionary governments and movements, especia

Asia and Africa. However, from the mid-1970s, C

diversified its recipients to include Israel and Saudi A

(neither had diplomatic relations with China at the 

Chile, Iran, Iraq, Myanmar, Oman, Sri Lanka, 

Thailand, and even the United States (some 24 F-6 an

aircraft were provided to the United States for tra

purposes in 1988 and 1989). Partially rooted 

“independent” foreign policy line of the mid-1980s, C

broke from Cold War divisions to provide regional con

with ready access to significant amounts of cheap weap

Finally, the decision to begin charging for mi

exports—rather than offering them as military aid—

signaled a greater pragmatism for Chinese arms e

policies. This decision was an especially lucrative one 

regard to the Iran-Iraq War, in which China supplied 

sides and garnered some $8 billion in arms exports to 

countries over the course of the 1980s. In seeking p

not only was the Chinese defense industrial base ea

seek more clients, but the People’s Liberation Army 

itself began to sell off its excess inventory as well. In 

cases, such as in the CSS-2 ballistic missile sales to 

Arabia, such profit-seeking “pragmatism” may 

outweighed more fundamental foreign policy calculat

Throughout this period of greater pragmatism, Ch

leaders never lost sight of the practical strategic, pol

and economic benefits which could accrue from 

transfers. In many respects, the shifts in Chinese 

3
export policies not only reflected changes in 

international arms market, but also reflected chang

China’s international security situation. Chinese 

exports in the 1980s, for example, especially tho

Afghanistan, Cambodia, Pakistan, Sri Lanka, Tha

and possibly even to Iran and Saudi Arabia, were int

to shore up Chinese influence in the face of encroachm

by the Soviet Union and its client states along C

periphery during this period.

Thus, by the end of the 1980s, a more pragmatic an

ideological set of arms export policies propelled China 

openly, and at times more contentiously, into the for

of the international arms market. These trends

especially Chinese arms exports to such recipients as 

Iraq, Myanmar, Saudi Arabia, and Syria, set the to

increased tensions between the United States and Ch

questions of Beijing’s proliferation policies which con

today.

Furthermore, the “pragmatism” of China’s arms e

activities since the mid-1970s resulted in several ling

consequences which have a direct impact on U.S. inte

First, China’s arms export policies of the 1980s foster

rise of both the PLA and China’s military industries as 

significant stakeholders in the development 

implementation of the country’s arms export 

nonproliferation policies. PLA leaders and defense ind

specialists are now actively involved in China’s arms 

decisionmaking process as well as China’s br

nonproliferation diplomacy. Second, China’s arms e

activities of the 1980s strengthened certain 

military-technical relationships for Beijing—such as 

Iran and Pakistan—which have outlasted and expa

their original strategic foundations.

Third, even by the mid-1980s, an impo

supplier-recipient pattern was emerging for Chinese 

transfers, characterized in the main by two prom

facets: one, China was seen as a “supplier of last reso

4
which “rogue” nations could turn when, because o

nature of the regime, access to weapons from other sup

was circumscribed; two, China was seen as the “supp

last resort” of certain systems—such as ballistic mi

cruise missiles, and fighter aircraft—which other sup

were unwilling to provide. In the following sections, w

examine these trends and their implications more clo

THE 1990s AND BEYOND

With the end of the Iran-Iraq War in 1988, the S

withdrawal from Afghanistan in 1989, and the begin

of the Cambodian peace process in Southeast Asia, Ch

arms exports—like those for many other suppliers

precipitously. Beginning in the 1990s and throughou

decade, China’s arms exports experienced gradua

sustained shifts in volume, recipients, and the typ

weapons sold.

Some shifts in the 1990s were so significant they 

serious doubts about China’s continued viability as a 

exporter of conventional weapons. During the last se

years, China’s arms exports generated a fraction 

income compared to previous years and China’s share 

developing world arms market declined. China signe

new contracts for major weapons systems and the de

did sign were with its traditional clients, sugge

difficulties in penetrating new markets. China 

cancelled some large and lucrative deals in respon

Western (mainly U.S.) opposition. Moreover, specializ

in exports of “mid-tech” missile and aircraft sy

appears unlikely. Thus, China’s role as a major player 

global arms market is increasingly tenuous but poten

troublesome, and deserves further examination.

To examine this situation, this analysis of China’s 

exports in the 1990s is divided into four parts. The fir

analyzes the overall quantitative trends in Chinese 

transfers in the past decade. The second se

disaggregates the information presented in the first s

5
in order to better understand the broad trends. It ana

the changes and shifts in Chinese arms exports to sp

regions, with particular attention to changes in m

share and recipients, shifts in the types of we

exported, and the distribution of weapons among reg

customers. A third section discusses China’s attem

find new markets for its arms exports; a final section 

conclusions about the future directions of Chinese we

sales.

Quantitative Trends.

3

China’s position as a major exporter of conven

weapons is being increasingly called into question a

volume and quality of its weapons exports and the nu

of recipients have declined since the beginning of the 1

While there are several methods to numerically eva

the trends in China’s arms exports, the most illust

indicator of this decline is the shrinking volume of 

transfers as measured in total arms deliveries. In 

China sold $2 billion worth of arms (in current U.S. do

In 1995 China’s arms exports had declined to $600 m

and by 1998 this number had further diminished to 

million (Fig. 1). Thus, over the course of 8 years, Ch

arms exports have declined 75 percent.

4

 Data fro

Stockholm International Peace Research Institute (S

similarly indicate that in 1997 and 1998 the volu

Chinese arms sales further declined to $339 millio

$157 million, respectively (Fig. 2). In addition, this o

decline in Chinese arms exports occurred durin

expansion of the developing world arms market to 

China sells nearly 100 percent of its arms (Figs. 3 a

Given these numbers, it is not surprising that the decl

Chinese arms exports is also reflected in its market s

From 1990 to 1998, China’s share of the developing 

arms market shrank from 4.90 percent to 2.01 pe

according to CRS data; SIPRI data suggest an even 

dramatic decline in market share to below 1.0 percen

5). Thus, in terms of both delivery volume and market s

6
the trend-line for China’s arms exports in the 1990

experienced a sharp decline.

Regional Distribution.

The Middle East. During the 1990s, Chinese m

exports to the Middle East underwent significant ch

in volume and the types of weapons exported, with 

changes in the regional recipients of Chinese arms. 

the early to mid-1990s, the Middle East was Be

largest and most lucrative weapons export ma

accounting for over 50 percent of China’s deliveries. C

principal recipient in the Middle East was Iran, 

substantially smaller amounts went to Israel 

million), Libya ($100 million), Saudi Arabia ($800 mi

and Iraq ($200 million). Moreover, during this period C

sold a wide variety of weapons to Middle Eastern cou

including artillery, supersonic aircraft, surface-

missiles (SAMs), anti-ship missiles (ASMs), and 

surface-to-surface missiles (SSMs).

The amount and character of China’s arms exports 

Middle East changed dramatically in the latter half 

1990s. First and foremost, the Chinese share shrank 

Asia replacing the Middle East as the principal destin

for Chinese arms. This change reflected a major decl

the volume of China’s arms transfers to Iran, and a l

customers like Iraq, Saudi Arabia, Israel, and L

Moreover, the character of China’s arms transfers 

Middle East changed dramatically as well. The 

significant changes were the reduction in numb

artillery, supersonic aircraft, SAMs, and SSMs sold, an

large increase in the number of guided missile boat

ASMs exported. In fact, Iran emerged as the single la

buyer of China’s ASMs. The data further indicate 

despite earlier projections, exports of light combat ai

to the Middle East did not emerge as a growth mark

China.

5

7
Several factors help to explain these shifts throu

the 1990s. First, Iran—China’s largest client i

region—had become increasingly displeased wit

quality of China’s conventional weapons systems. A

same time the Chinese became uncomfortable 

Tehran’s erratic payment arrangements which 

normally provided in the form of barter trade in oil. Ir

military leaders reportedly canceled a major deal in 

because of mutual concerns and frustrations.

6

 Mor

Iraq’s poor performance during the Gulf War in the f

high-tech U.S. weapons further underscored I

apprehensions about the quality of Chinese we

systems. The Gulf War demonstrated that low-tech mi

weapons (even well maintained ones) could eas

defeated by high-tech systems.

Furthermore, Beijing’s nonproliferation commit

significantly affected China’s arms exports to the M

East, especially to Iran. Beijing’s various pledges, wh

appears to take increasingly seriously, have curbed th

of various ballistic and cruise missile systems to the M

East. China’s SSM sales to the Middle East went from 

early 1980s to zero in the latter part of the decade. 

early 1990s, U.S. pressure on China to adhere to M

Technology Control Regime (MTCR) guidelines pla

role in convincing Beijing to cancel the projected sale o

missiles to Syria and Iran. Also, in September 1997 U.S

Chinese negotiators reached an agreement on e

further sales of C-801 and C-802 anti-ship cruise m

(and associated production technologies) to Iran d

meetings in New York City between Secretary of 

Madeleine Albright and Chinese Foreign Minister 

Qichen.

7

 China’s cancellation of these missile de

response to U.S. pressure has also reduced the likelih

future Sino-Iranian military cooperation becaus

Chinese are increasingly viewed as unreliable 

capricious suppliers in Tehran.

These three factors collectively explain the reduct

China’s arms exports to the Middle East in the late 1

8
They also represent real constraints on fu

Sino-Iranian military cooperation which will have 

surmounted for future deals to come to fruition.

Asia. The pattern of China’s weapons transfe

countries in East Asia, South Asia, and Southeast Asi

changed significantly in terms of both volume and cha

over the course of the 1990s. In the early part of the de

Asia was China’s second most important market aft

Middle East. During this period Beijing transferred a 

variety of military equipment (almost every type, exce

submarines and helicopters) to a variety of Asian na

The principal Asian recipients of Chinese weapons 

Pakistan, Myanmar, Thailand, Bangladesh, an

Lanka.

8

In the second half of the 1990s, the value of China’s 

sales to Asia gradually declined but not near

dramatically as in the Middle East. Asia quickly emerg

China’s most significant market for weapons expor

terms of China’s customers, Pakistan and Mya

remained faithful clients whereas exports to Tha

Bangladesh, and Sri Lanka declined sharply. The cha

of China’s weapons exports underwent an equally dra

change. China’s exports of armored personnel ca

(APCs), SAMs, helicopters, and, most notably, supe

aircraft grew significantly whereas transfers of t

artillery, minor surface weapons, and SSMs sh

considerably. Exports of entire classes of weapons, su

SSMs, simply stopped. Congressional Research S

(CRS) statistics indicated that Asia emerged in the 

part of the 1990s as China’s most important market fo

supersonic aircraft and SAMs; the Asian market acco

for over 80 percent of supersonic aircraft and abo

percent of the SAMs China transferred to devel

countries from 1994 to 1998.

In broad terms, shifts in the key factors of accessi

price, and regional politics help to explain the t

outlined above. First, Pakistan purchased large amou

9
Chinese weapons in the 1990s, especially fighter air

for the dual reasons of accessibility and price. Beginn

1990, the U.S. arms market was closed to Islamabad 

the Bush Administration’s imposition of the Pr

Amendment, and Moscow’s strong ties with India prec

the sale by Russia of sophisticated systems to Pakista

addition, Pakistan considered European weapon

expensive. In 1995, for example, Pakistan b

negotiations with France on the purchase of M

aircraft, but their high price prevented the conclusio

deal.

10

Despite Pakistan’s extensive purchases of Chinese 

in the 1990s, military cooperation with China has not 

trouble free. Pakistan has experienced technical pro

with the transmission and the gun accuracy of the 

tank. Pakistani military officials also began to view C

as an unreliable partner for co-production agreeme

The Sino-Pakistani effort to jointly develop the K

trainer for mass production and large international 

produced meager results due to the use of low-q

engine technology and the overall poor construction 

aircraft. Similarly, the joint program to produce the Su

fighter was delayed in part because of resource const

which prevented Beijing from meeting the project’s 

R&D costs.

12

 These factors collectively suggest 

Pakistan could conceivably change suppliers, assu

market dynamics changed. If Pakistan’s access to U

Russian weapons suddenly increased or prices of Eur

arms declined, then Pakistan might diversify or comp

shift suppliers due to the vastly superior quality of 

weapons, particularly supersonic aircraft.

Second, changes in regional politics coupled 

increasing competition in the global arms marke

explains the contraction in China’s client base in 

Initially, Thailand perceived the threat from Vietnam 

Cambodia to be sufficiently serious to warrant a defe

military buildup which was facilitated by purchas

Chinese weapons offered at “friendship prices.” Afte

10
Vietnamese withdrawal from Cambodia, how

Thailand no longer felt the same security imperativ

arms imports from China dropped off accordi

Additionally, Thailand experienced a host of tech

difficulties with Chinese weapons and had conside

trouble acquiring spare parts for Chinese sys

purchased during the Cambodian civil war. As a resu

the mid-1990s Thailand expanded arms im

relationships with the West and currently relies a

exclusively on U.S. and European suppliers.

Third, despite the range of Chinese clients in Asia

worth highlighting that China exported few, if 

weapons to East Asian countries, with the except

secret transfers to North Korea.

13

 Many East Asian n

such as Japan, Taiwan, and South Korea 

long-standing security concerns about China’s mi

modernization efforts. The relative wealth of 

countries and their own indigenous defense produ

capacity also allowed them to purchase and produce 

expensive and technologically advanced weapons.

Such conditions in Asia suggest a questionable futu

Chinese arms exports to the region. Of China’s two pri

arms recipients in Asia, Myanmar will almost assu

remain a faithful customer of Chinese weapons due 

relative international isolation combined with its gr

political, economic, and strategic ties with Beijing

other main recipient, Pakistan, may become less will

purchase large amounts of Chinese weaponry, as 

above. Given that Asia accounts for a very large sh

China’s supersonic aircraft exports and, within 

Pakistan is the principal recipient of such system

Islamabad shifted suppliers then China’s overall 

export business would suffer a severe blow.

Sub-Saharan Africa. In contrast to Asia and the M

East, China’s arms transfers to Sub-Saharan A

experienced noticeable increases in volume and sh

character during the 1990s. In the early part of the de

11
Africa was a low-priority market for China, accounti

less than one tenth of Chinese exports. Yet, from 19

1998, China’s exports to Africa increased in terms o

volume and market share. China exported $600 m

worth of arms to Africa during these 4 years, a 500 pe

increase from the early 1990s. These increases 

massively expanded China’s share of the African m

from 4.6 percent in 1991-94 to almost 22 percent in 199

Indeed, China in the latter half of the 1990s emerged 

single greatest exporter of arms to Africa followed by R

with an 18 percent market share.

However, the actual composition and distribut

these transfers suggest that China’s role in the A

arms market may not be as significant or sustaina

statistics indicate. CRS data show that in the latter h

the 1990s China transferred 10 supersonic combat air

3 minor surface weapons, and 10 “other aircraft” to A

countries. While these exports of moderately large sy

were sufficient to augment China’s role in the African 

market, it is unclear whether China will be able to ma

its current position over time.

Latin America. Throughout the 1990s, China’s 

exports to Latin America remained relatively insignif

China transferred approximately $100 million wo

artillery and supply aircraft to countries in Latin Am

from 1990 to 1998. Interestingly, in the latter part 

1990s Latin America emerged as an important mark

Chinese SAMs. China’s major export to the region wa

surface-to-air missiles, making Latin America C

second largest market (after Asia) for SAM exports. In 

these two regions alone accounted for all of China SAM 

in the 1994-98 period. Chinese military officials, incl

senior Air Force and Navy leaders, recently visited va

Latin American countries and, in October 1998, Chief 

PLA’s General Staff Fu Quanyou took a 13-day tour of 

America. Yet, whether these burgeoning military tie

evolve into arms transfers remains an open question

12
Possible New Markets for Chinese Arms.

In the latter part of the 1990s, China had some li

success recruiting new buyers for its weapons. Most 

new deals have been relatively small in scale and repr

China’s traditional export categories. Also, it appears 

contracts represent one-time deals. In 1997, C

reportedly signed a $150 million agreement with Turk

the WS-1 artillery rocket. This deal represents China

known export of this artillery system. China will s

Turkey with one battery of complete missiles an

materials, equipment, and technology to produce five 

batteries.

14

 In a similar deal, a Chinese firm sold 

unidentified artillery rockets (possibly like the WS

Armenia in May 1999. However, the deal was cancelle

the missiles returned when Azerbaijan filed an o

protest with Beijing because some of the missiles 

deployed in the disputed Nagorno-Kababakh region.

In a similar move, China is reportedly expandi

military cooperation with Croatia. During a June 199

to Beijing by a Croatian Defense Ministry deleg

Chinese and Croatian defense officials sign

memorandum of understanding (MOU) to in

cooperation between China North Industries Corpo

(NORINCO) and Republika Hrvatska-Alan, the Cro

state agency responsible for arms production. The exte

MOU outlined the general parameters of cooperatio

“envisaged the development of technologies for 

markets, cooperation in the manufacturing of explo

and rocket missiles.”

16

 Also in the Balkans, senior Se

authorities reportedly signed an agreement 

NORINCO in late 1997 for the purchase of Red Ar

anti-tank missiles, and, as payment for the arms, Se

officials agreed to invest $5.8 million to build a 

processing factory outside Beijing.

1 7

 Long

Sino-Serbian military technical cooperation ma

particularly appealing to both nations. In recent year

before NATO action against Belgrade in 1999, Serbi

13
begun renovating many of its military production faci

such as the one owned by Crvena Zvezda locat

Kraguljvack, which produced T-72 style tanks and art

Chinese companies—in particular NORINCO—hav

extensive experience producing similar types of mi

goods; Chinese companies could also serve as a sou

spare parts for Serbian tanks and aircraft given 

similarity to Soviet-designed Chinese models.

In the Middle East, China has reached deals with 

Kuwait and Egypt. Beijing recently began participat

Kuwait’s effort to rebuild its military after the Gulf W

mid-1997, Kuwait placed an order for 18 self-propelled 

from NORINCO; this was the first time that K

purchased any weapons from China. This deal, alth

small, is expected to be followed by subsequent ones s

Kuwait can outfit two more battalions with these sys

Also, China’s deal with Kuwait triumphed over comp

bids from South African, British, and American firms 

had all gone through extensive trials in Kuwait.

18

recently, in December 1999, China signed a $347.4 m

contract with Egypt to jointly manufacture 80 K-8

trainers which China initially co-produced with Pak

China plans to sell Egypt an entire assembly line fo

aircraft as well as provide Egypt with parts and mate

maintenance support, and extensive technical tra

(including the establishment of five aircraft R&D insti

for the K-8E jet trainer.

19

 This represents China’

major military deal with Egypt since the export o

fighters in the late 1970s and early 1980s. While its siz

scope are quite large for China, it is unclear whethe

agreement represents the beginning of a sustained 

transfer relationship given Egypt’s heavy relian

Western military systems.

In addition to finding new customers, Chinese 

have attempted to reestablish arms cooperation wi

clients like Thailand. Bangkok in the late 1

increasingly turned to the West due to the superior q

of the weapons. Yet, in 1997 Thailand expressed an in

14
in purchasing a few hundred APCs from NORINCO (a

deal with France fell apart), and the same year its mi

authorities began negotiating the purchase of 30 H

portable air-defense systems from a Chinese comp

More recently, in 1998, Chinese officials courted 

military buyers by offering numerous incentives. A 

general noted that, during a June 1998 meeting, 

offered free spare parts for T-59 tanks, APC-85 pers

carriers, 37mm anti-aircraft guns, and 122mm ar

rockets, in addition to other cheaply priced weapon

further sweeten the deal, Chi Haotian reportedly offer

to devalue the Thai currency in calculating payme

arms purchases from Thailand. The decline in Thai

economy may help explain its willingness to turn once 

to the “friendly prices” offered by the Chinese.

CONCLUSIONS

In all, China’s role in the global arms market will 

continue to decline in the coming years. With past tren

an indication, China faces significant barriers to expa

its arms export business. First, China’s overall cus

base has contracted. In the latter half of the 1990s, C

recruited few new buyers for its conventional weapons 

continuing to rely on transfers to traditional client

Iran, Pakistan, Myanmar, and a few African countri

addition, many former customers like Thailand, Egyp

Saudi Arabia simply stopped buying Chinese arm

augmented their military technical relations with 

suppliers. Indeed, many even completely stopped 

Chinese weapons in their armed forces.

These trends help explain the steep declines in C

market share in regions like the Middle East. Mor

prospects for China’s arms export business are worsen

the fact that sustained exports to its traditional clien

an open question. Although Iran remained China’s 

largest Middle East customer throughout the 1990s

has become concerned about the quality of Ch

15
weapons. In addition, due to Beijing’s va

nonproliferation commitments, China can no longer e

the military systems Iran covets most. Without acc

China’s cruise missiles and only limited access to ba

missile technologies, it is unclear which Chinese mi

goods, if any, Iran will purchase in the future. Simila

Pakistan gains access to U.S. or Russian arms (su

strike aircraft), then its reliance on Chinese system

probably be replaced with a much smaller level of im

used to supplement its armed forces.

A second and equally significant barrier China fa

the continued poor quality and increasing uncompetiti

of its arms exports. Beijing continues to market much 

same low-tech, antiquated, Soviet-designed goods tha

sold during the 1980s. While these systems will always 

the appeal of low prices, availability, simplicity

ruggedness, China cannot remain a significant 

exporter by exclusively relying on sales of such mi

goods in an increasingly competitive global arms m

Even China’s naval exports, once an appealing opt

many countries for coastal defense, are based on Sovi

vessels which exhibit basic design and construction fla

addition to lacking modern naval electronics and we

suites crucial to warfighting. The number of nation

shifted suppliers away from China during the 

testifies to the challenge it faces in exporting higher q

systems. 

Moreover, earlier suggestions that China m

reinvigorate its arms sales business in the 199

specializing in sales of low-end aircraft and various ty

anti-shipping and surface-to-surface missiles did not 

to fruition. In the latter part of the decade, China’s ex

of combat aircraft to developing countries declined ov

particularly in the Middle East where no countries b

Chinese aircraft. Rather, Asian countries emerged a

principal customers of China’s fighters but even the

majority of Asian deals were with countries which d

western fighters but were precluded from buying them 

16
host of political and financial reasons. Even if China 

to actively specialize in exports of low-cost, light co

aircraft, it is unclear what systems it would sell, consid

that China has not yet developed a light fighter signific

more advanced than the F-7 series. The K-8’s overal

quality has compromised its international prospects. 

the Super 7 remains in the design phase, will not r

Pakistan’s full support, and thus may not have its first 

test for at least 2 to 3 years. In addition, the Chine

Force does not want the aircraft, and Pakistan is cur

the only known customer. Other Chinese made-for-e

aircraft, such as the FB-7, remain relatively unteste

have few international prospects.

In terms of missile exports, China’s nonprolife

commitments combined with external pressure from 

United States represent real barriers to transfers of ce

ballistic and cruise missiles systems to countries i

Middle East and South Asia. Assuming that B

continues to adhere to its promises, and there is reaso

evidence that it will, China is precluded from exp

many of these items. These Chinese weapons, in parti

are the ones most coveted by many developing count

To be sure, some specialization in low-end, short-

SSMs and SAMs may still occur. China continues to e

non-MTCR ballistic missiles such as the 8610 

ship-to-air missiles such as the LY-60N, but the 

capable and desirable systems such as the M-9, M-1

C-802, and follow-on, next-generation cruise m

systems, will have continued restrictions on their e

largely due to U.S. pressures. Beijing may also con

exporting missile-related equipment, materials

technologies used in guidance and propulsion systems

exports circumvent China’s nonproliferation commitm

while helping countries to self-sufficiently pro

medium-range missiles.

China’s sales of SAMs, especially portable version

one of the few categories of exports that experi

17
significant growth in the 1990s, suggesting a possible 

of specialization. China sold several hundred 

shoulder-fired QW-1 SAMs to Pakistan. The C

Precision Machinery Import & Export Corpor

(CPMIEC) recently developed a more advanced versio

QW-2, with improved targeting and cou

countermeasures. This new SAM may enter the e

market in 1-2 years. Chinese defense firms have 

developed two new ground-based SAM systems, the F

and FT-2000, to be fielded by the PLA. Both systems 

be put on the export market as well.

21

Such specialization, however, is unlikely to compe

for China’s heavy reliance on traditional buyer

contracting client base, Beijing’s continued expo

low-tech, unreliable weapons, and the politica

technical barriers to specializing in “mid-tech” weapon

ballistic and cruise missiles. Thus, China’s prospec

remaining a major arms exporter to the developing 

appear bleak. China will continue to provide mod

amounts of low-end equipment to its longtime clie

Asia, Africa, and the Middle East, but it is unlik

maintain the position it held during the 1980s and 19

one of the world’s top five arms exporters. However, as 

in the following section, in spite of these quanti

declines, concerns persist about the potentially spo

and volatile nature of China’s arms exports in the f

given the ongoing reorganization and restructuri

China’s bureaucracy.

ENDNOTES - CHAPTER 1

1. For more complete background discussion, see K

Eikenberry, Explaining and Influencing Chinese Arms Tr

McNair Papers 36, Washington, DC: National Defense Uni

February 1995; R. Bates Gill, Chinese Arms Transfers: Pu

Patterns and Prospects in the New World Order,Westport, CT: 

Publishers, 1992; Richard Bitzinger, “Arms To Go: Chinese Arm

to the Third World,” International Security, Fall 1992; John W

Hua Di, and Xue Litai, “Beijing’s Defense Establishment: Solv

Arms-Export Enigma,” International Security, Spring 1991.

18
2. “U.S. Ranked No. 1 in Weapons Sales,” New York Times, 

1, 1991.

3. Unless otherwise indicated, the figures used througho

paper are taken from two sources: Richard F. Grimmett, Conve

Arms Transfers to Developing Nations, 1991-1998, U.S. Congre

Research Service, Washington, DC: Library of Congress, Au

1999; and Richard F. Grimmett, Conventional Arms Tran

Developing Nations, 1990-1997, U.S. Congressional Research S

Washington, DC: Library of Congress, July 31, 1998. All the figu

expressed in current U.S. dollars to generally reflect the exchan

that prevailed during that specific year. The figures also refle

deliveries and not arms transfer agreements signed during a 

year.

4. To be sure, data from the Congressional Research Servic

indicate that Chinese arms exports in 1997 increased to $1 billi

this abrupt change is likely an anomaly and not an indicati

broader trend. CRS analysts have indicated that this sharp incre

be accounted for by the coincidental convergence in 1997 of sever

contracts and re-supply agreements with traditional c

Conversation with Richard Grimmett, Washington, DC, June 1

5. See, for example, Bitzinger, “Arms To Go,” pp. 84-111.

6. Robert Karniol, “China’s $4.5b Deal with Iran Cools as 

Fail,” Jane’s Defence Weekly, August 6, 1997, p. 14.

7. Barton Gellman, “Reappraisal Led to New China Polic

Washington Post, June 22, 1988, p. 1; Barton Gellman, “U.S. and 

Nearly Came to Blows in 1996,” The Washington Post, June 21, 

1. 

8. China also exported small quantities of arms to Afgha

Cambodia, the Khmer Rouge, and Laos during the early part o

See SIPRI Yearbook 1991.

9. “Collaboration Planned with China on Jet Productio

Frontier Post, March 17, 1995, p. 1, as translated in Foreign Br

Information Service (FBIS)-NES-95-056, March 23, 1995, p. 56

10. “The Production of the Super-7,” Jang, March 20, 1995, p

translated in FBIS-NES-95-060, March 29, 1995, pp. 82-83.

19
11. Kaleem Omar, “Army to Decide Between Polish, PRC 

The News, August 17, 1993, pp. 1, 10, as transla

FBIS-NES-93-162, August 24, 1993, p. 67.

12. For information on the K-8, see Bates Gill and Taeh

China’s Arms Acquisition’s from Abroad: A Quest for Superb an

Weapons, Stockholm International Peace Research Institut

York: Oxford University Press, 1995, p. 129. For information 

Super-7, see Aroosa Alam, “Report on Problems with Super 7 Effo

China,” The Muslim, December 11, 1995, as transla

FBIS-NES-95-242, December 13, 1994, p. 97.

13. Some Korean reports indicate that China sold North 

$2.78 million worth of tanks, engines, and blankets. “Defense M

Report on DPRK Imports of Weapons,” The Korea Times, In

version, September 28, 1999.

14. “Turkey Gets Chinese Help With Artillery System,” 

Intelligence Review, February 2, 1998, p. 50.

15. The exact artillery rocket sold to Armenia is unclear. 

indicate that it had a range of 50-60 kilometers. Chinese rockets 

range include the WS-1 MRL sold by the China Precision Ma

Import Export Corporation and the 273mm WM-80 marketed by 

North Industries Corporation. Both are for export. David C

“China Sells Artillery Rockets to Armenia,” Jane’s Missile and R

November 1999, p. 6.

16. “Military Delegation Agrees with China, Returns,” HIN

21, 1998, as noted in FBIS, June 21, 1998. The Croatian Delegat

headed by Assistant Defense Minister Major General Vladimir 

and met with Lieutenant General Zuo Jianchang who is a 

Director of the General Logistics Department and a member of th

National Defense Mobilization Committee. See Directory 

Military Personalities, SEROLD Hawaii Inc., June 1998.

17. “Sources Allege FRY-China Deal on Ballistic Missiles,” N

Telegraf, in Serbo-Croation, November 19, 1997, p. 2, as trans

FBIS, November 1997. This source also claims that China agree

a 600-kilometer-range missile to Serbia.

18. Ed Blanche and Christopher F. Foss, “Kuwait Launch Cu

for Chinese 155mm Gun,” Jane’s Defence Weekly, May 28, 1997

19. Xu Dashen, “K-8 Aircraft Export Prospects Sour,” Chin

Business Weekly, March 26-April 1, 2000, p. 1; Lester J. Ge

20
“China Sells Military Aircraft Technology to Egypt,” China 

January 5, 2000.

20. “APC Seized by Customs Said Being Returned from Th

The South China Morning Post, August 31, 1997, p. 4; Robert K

“MANPADS May Help to Revive Sino-Thai Trade,” Jane’s 

Weekly, January 22, 1997, p. 13.

21. “New Chinese SAM Offers Improved EECM,” Jane’s M

and Rockets, October 1998, p. 11; “China Develops FM-90 SAM,

Missiles and Rockets, October 1998, p. 8.

21
CHAPTER 2

CHINESE ARMS EXPORTS:

POLICY, PLAYERS, PROCESS

China’s official policies, its decisionmaking proc

and the government institutions involved in conven

arms exports have long been the subject of interna

concern, especially since the 1980s when China emerg

a significant, second-tier supplier of conventional we

and missiles to developing countries. China has expo

variety of weapons to an eclectic mix of recipients in vo

regions which have caused many countries to qu

Beijing’s official positions and decisionmaking proc

related to arms sales. Most notably, China sold signi

amounts of arms to both Iran and Iraq during their le

conflict. This two-handed approach raised questions 

the nature of China’s formal government policy rega

weapons exports, and whether such a uniform po

existed at all. These concerns were further heighten

China’s exports of cruise and ballistic missiles to cou

in the Middle East and South Asia because such expor

uniquely destabilizing. In response to Western critic

many of these arms deals, the Chinese government 

formally denied that such weapons exports 

place—even when presented with evidence to the con

These denials raised new questions about institu

involvement in the arms export review process an

extent to which these entities are accountable t

government. 

Furthermore, China’s recent efforts to restructu

defense industrial complex combined with 

de-commercialization of the PLA have created even 

questions about the policy, process, and players involv

Chinese arms exports. These structural changes 

23
generated confusion about the authority and respons

of different government agencies involved in arms 

decisionmaking and the extent to which coordin

occurs. Furthermore, the restructuring is taking pla

the context of worsening economic conditions in C

industrial and banking sectors, while foreign trad

foreign investment stagnates. Amid this au

uncertainty and organizational confusion, the prospe

the illicit export of proscribed military items may inc

However, over the long term this restructuring effort 

also create a more rational and institutionalized syste

overseeing China’s arms exports, as the responsibili

differing agencies are further delineated and clarified

Regardless of the possible positive or neg

consequences, these structural shifts have dir

influenced the policy, process, and players involv

China’s weapons exports. In an effort to elucidate so

these trends, this section examines China’s ex

policies, the government and commercial institu

involved in arms exporting, and the decisionm

processes with a particular focus on the impact of r

structural changes.

CHINESE ARMS EXPORTS: THE POLICY

China structures its conventional arms export 

around three pillars: export principles, export regula

and participation in international arms transfer c

regimes. Each will be examined in this section.

Export Principles.

First, the Chinese government has outlined in 

government documents and official statements a num

principles which inform its arms sales decisions. In the 

white paper called China’s National Defense (Zhong

Guofang), Beijing stated it “respects the right of 

country to independent or collective self-defense a

acquisition of weapons for this purpose in accordance 

24
the principles contained in the Charter of the U

Nations.”

1

 Yet China’s commitment to a nation’s ri

protect its security through arms sales is not absolut

does not exist in a vacuum. The Chinese govern

qualifies its previous commitment by noting that “[Ch

[also] concerned about the adverse effects on world se

and regional stability arising from excessive accumula

of weaponry.” In an attempt to balance national defens

regional stability, China has consistently stated t

observes three principles in its arms dealing. First, its 

sales must help the recipient nation enhance its capa

for legitimate (zhengdang de) self-defense.

2

 Secon

weapons exports must not impair the peace, security

stability of the relevant region and the world as a w

Third, China argues that its arms exports mus

interfere in the recipient state’s internal affairs.

3

While these military exports principles are cons

with international norms and are intended to pr

international security, China’s interpretation 

application of them has been the source of signi

controversy in the past decade, especially in U.S.-C

relations. Applying the principles to potential arms 

requires a Chinese official judgement which is often a

with Western interpretations. Some examples of dif

judgements include China’s export of C-801 and 

advanced cruise missiles to Iran, the sale of M-11 miss

Pakistan in the early 1990s, and ongoing expo

missile-related technologies to Iran and Pakistan. In 

three instances, the United States argued that m

exports would undermine regional stability and v

China’s previous nonproliferation commitments. Chi

contrast, defended these deals by citing the self-de

requirements of the recipients. Indeed, in respon

almost every claim (usually from Western sources

China exported dangerous weapons, government of

tout the three principles as an explanation for Ch

practices when, in fact, it is merely describing the o

policy. Moreover, Beijing’s responses to Western con

25
suggest a further ambiguity with Beijing’s interpretat

its three export principles: how are the principles prior

and which one takes precedence over the other t

determining export decisions? Collectively these lay

confusion regarding China’s interpretation and applic

of its military export principles suggest that Chin

flexibly employ these guidelines in order to justify e

decisions. 

Export Control Regulations.

The second pillar of China’s arms sales policy 

export control regulations covering sales of mi

products and related technologies. China’s only publ

covering conventional military exports is the Regulati

Export Control of Military Items (see Appendix II), 

the State Council and the Central Military Comm

issued in October 1997; it became effective on Janu

1998. The regulations are aimed at “strengthenin

unified management of arms export and maintainin

normal export order” and cover commercial expo

military purpose equipment, specialized produ

facilities, and other materials, technologies, and re

services. The new regulations represent a major ad

compared with China’s previous export control mea

In the past, when China operated a planned eco

export controls took the form of executive decrees. Y

China opened up to the world and rapidly began to dev

“socialist market economy,” it sought to change its e

control laws “in order to meet the requirements of th

situation and as a concrete step towards the rule of l

The 1997 regulations have several key features. 

these regulations codify the principles which guide C

arms export decisions. The Chinese governmen

Chinese companies are now legally obligated to adh

the three principles discussed above. Given tha

regulations constitute Chinese law, both the govern

and Chinese companies can be held to the legal restri

26
and penalties outlined in the regulations. Second

regulations represent one of China’s first public effo

adopt international export control standards and prac

The regulations require the adoption of an export lice

system (based on international practices) and refe

internationally proscribed weapons and re

technologies. Third, the regulations help to r

confusion in export control decisionmaking by deline

the rights and responsibilities of various govern

organizations in determining which export

permissible. According to this law, the State Administ

Committee on Military Product Trade (SACMPT)—

joint control of the State Council and the Central Mi

Commission(CMC)—had authority over all of Ch

conventional military exports. This commission poss

an administrative office called the State Bureau of Mi

Products Trade which is charged with supervising 

administering all of China’s conventional military ex

Both organizations were abolished in 1998 follow

major bureaucratic reorganization effort and 

respective responsibilities are currently b

redistributed. The law has not yet been revised to r

these organizational changes.

Fourth, compared with China’s past export c

procedures, these regulations are more transparen

will facilitate better export control management th

the adoption of distinct procedures for license applic

consideration, and approval. According to the 

regulations, an export license will most often be autho

by the State Bureau of Military Products Trade alone 

consultation with other government agencies; in the c

“major” military exports, contracts and export license

be reviewed by the SACMPT as well as by the State Co

and the CMC. In an effort to further tighten the lice

system, the 1997 regulations stipulate that only comp

authorized by the SACMPT can export military pro

Lastly, the new law spells out criminal penaltie

violations.

5

27
International Regimes.

The third pillar of China’s arms export policy is Be

participation in international arms transfer co

regimes. China has been a member of the UN Regis

Conventional Arms (UNROCA) since its creation i

early 1990s, and China participated in the P-5 talks on 

control in the Middle East. China’s participation i

former was stronger than in the latter, even though B

remains skeptical of all arms transparency reg

Beginning with the UNROCA’s creation in 1991 th

1997, China has consistently contributed an

submissions of its arms imports and exports, and Chin

participated in subsequent reviews of the UNR

process.

6

 This information is all publicly available fro

UN and can be retrieved from the UN’s website.

7

Yet China has not fully supported the developmen

expansion of the UNROCA. China did not participate 

unanimous vote which created the Register. In add

China opposed measures to expand the scope of the Re

such as proposals calling for states to provide 

information on their annual submissions and the ado

of measures to include procurement from nat

production; also between 1992-95 China provided on

basic information, not background or addit

information, on its annual submissions.

8

 In some 

Chinese submissions to the UNROCA have om

transfers that other countries have listed as imports fr

exports to China, or which appear in other open-s

registers such as the SIPRI Yearbook.

9

Furthermore, in June 1997 China oppose

establishment of the Ad Hoc Committee on Transpare

Armaments (TIA). Noting that the UNROCA was alre

place and functioning, the Chinese ambassador t

Conference on Disarmament (CD) said, “if the CD cont

to seek or explore some abstract or sweeping TIA mea

my delegation does not see any practical meaning in 

My delegation is not against transparency as a mat

28
principle. We only feel that all transparency measur

in fact treaty-specific.”

10

 In another case of mi

transparency—the United Nations register of mi

budgets which was established in 1980—China has 

file a return as of the end of 1997.

11

China’s recent participation in the UNROCA 

further questions. In 1998, it failed to submit an accou

of its arms exports and imports for 1997, breaki

previous record of annual submissions since the reg

inception. Beijing took this move to protest the U.S. l

of its military exports to Taiwan in the U.S. declar

China argued that because Taiwan is not a UN me

state (or a sovereign country in China’s eyes), it h

business being listed in the register. While the ult

resolution of this dispute is unclear, the fact that 

chose to use its submissions to the UNROCA as a me

protest further signals China’s general lack of inter

the register as an arms transparency measure.

In 1991 China participated in the U.S.-led effort a

the P-5 countries to negotiate guidelines covering 

export to the Middle East. The negotiations, also calle

Arms Control in the Middle East (ACME) talks, 

intended to develop restraints on the export of weap

mass destruction and missiles to the Middle East. C

joined the talks from the beginning and participated 

three rounds of senior level meetings held from 1991 to 

in London, Paris, and Washington. During the negotia

China expressed several reservations and op

proposals for the prior notification of arms transfers 

Middle East and for the inclusion of missiles in the cat

of “weapons of mass destruction” unless advanced 

aircraft and certain types of naval ships were also cov

In September 1992, China abruptly halted its particip

in the P-5 talks when the Bush Administration anno

the sale of 150 F-16s to Taiwan. The talks have effec

been suspended since late 1992, and there is no indic

they will be resumed.

12

29
China’s formal participation in internat

conventional arms transfer control regimes is limited 

two forums mentioned above. China is not a member 

Wassenaar Arrangement, COCOM’s successor, which 

to promote transparency and greater responsibility 

transfer of conventional arms and dual-use good

technologies. The 33 states currently participati

Wassenaar have agreed to control all items set forth i

lists (a munitions list and a “core list” of dual-use good

technologies) with the objective of preventing unautho

transfers or re-transfers of these items.

13

 China d

participate in the original negotiation of the Wass

Arrangement and has not been invited to joi

agreement either, mainly due to its inability to meet a

of the membership criteria.

14

China supports the broad goals of the Wass

Arrangement but has taken an ambiguous positi

joining the accord. During the discussions o

establishment of the Wassenaar Arrangement, the Ch

Foreign Ministry stated that,

COCOM is a product of the Cold War and should have b

disbanded earlier. Whatever the new organization will be

must be beneficial to the development of economic and tr

relations, and the cooperation and exchange of science 

technology between all countries.

15

More recently, in a February 1999 interview, Sha Zu

the Director General of the Chinese Foreign Min

Arms Control and Disarmament Department, expr

China’s general interest in joining the arrangemen

noted:

It is our understanding the Arrangement is a collective exp

control regime designed to promote regional and internatio

security by requiring its members to take a cautious attitude 

their relevant exports. This is not at odds with Chin

nonproliferation policies.

30
As a state capable of manufacturing and exporting weapo

and industrial equipment, China is following this issue. If t

lacunae such as lack of universality can be redressed, Chi

will be able to play a more active role in this process. Howev

on the question of membership, China will consider this o

when all Arrangement members have reached a consens

and unconditionally invite China to join the regime. We a

not in a hurry.

16

One positive step China took in this direction wa

issuance in November 1998 of export control regula

covering 183 dual-use technologies, some of whic

covered in Wassenaar’s “core list” of dua

technologies.

17

 China’s Ministry of Foreign Trad

Economic Cooperation (MOFTEC) also releas

“Catalogue of Technologies which are Restricted or Ba

in China.” These documents may represent a further 

to integrate international standards on military 

dual-use items into China’s existing export control 

and, in broader terms, a move toward China’s eve

membership in Wassenaar. Yet, it is unclear wheth

new regulations cover all of the items in the 

subcategories (basic, intermediate, and sensitiv

Wassenaar’s dual-use list or in the munitions list of mi

products. In addition, China’s perennial reservations 

arms transfer control regimes as articulated during th

talks may preclude it from becoming an official mem

Wassenaar. The arrangement mandates that all mem

require end-use certificates for each category of techn

and engage in pre-delivery consultations for expo

controlled items to certain volatile regions, even th

such exports are not subject to a veto. Thus, China 

simply incorporate Wassenaar’s export controls in

national laws without participating in the multil

review mechanism so as to not reveal pending arms 

and thus open itself to international criticism.

China’s position on the international regime cov

missile exports, the MTCR, is somewhat similar t

slightly more formal than, its stance on the Wass

31
Arrangement. China is not a full member of the MTC

agreed in writing in 1992 to adhere to the regime’s or

guidelines and parameters. Yet, the nature of C

commitment to the MTCR and its subseq

interpretations of that commitment remain a pere

source of controversy in Sino-U.S. relations. The 

principal ambiguities within China’s position on the M

are outlined below.

First, China’s original commitment to adhere t

MTCR is unclear. Although the 1992 letter stating Be

commitment remains classified, Secretary James 

noted in his memoirs that during 1991 negotiations Ch

objected to language saying that China “will observe” the MT

guidelines, demanding that it be changed to “intends 

observe.” By arguing forcefully for a less categorical pledge

seemed as though Qian Qichen was tactfully acknowledging 

possibility that some entity in China’s defense commun

might cheat on this commitment.

18

While Baker’s assessment may be pessimistic, it 

questions about China’s fundamental commitme

missile nonproliferation and the MTCR. Further

China’s original MTCR pledge is doubly unclear be

Beijing states that it has agreed to adhere to only 

guidelines and parameters” of the MTCR and no

agreement’s annex. The MTCR’s annex specifies a

technologies controlled under the guidelines 

parameters and informs a member or adherent h

interpret the MTCR guidelines and paramete

determining whether an export is allowable. Wi

acceptance of it, a meaningful and restrictive interpre

of the MTCR becomes much more difficult to achieve

China has not yet adopted any export control regula

that mirror its MTCR commitments and has not pub

any laws which control the export of technologies lis

the MTCR Annex.

Second, China has only agreed to adhere to the or

MTCR guidelines developed in 1987 and not the re

32
guidelines. In January 1993, the MTCR’s mem

expanded the existing guidelines to cover all sy

intended for the delivery of weapons of mass destr

regardless of range or payload. Adoption of this sta

would go a long way toward promoting stability 

signaling China’s commitment to using the MTCR 

nonproliferation tool.

Third, aside from China’s actual commitments, Be

interpretation of its commitment to the MTCR and m

nonproliferation represents an additional sour

confusion. China appears to adhere to the letter but n

spirit of the MTCR. Chinese missile sales to Pakista

missile technology exports to Iran are the most com

examples of this interpretation. For example, in the v

many analysts, China has argued that sales of com

M-11 missiles to Pakistan do not breach the MTCR be

the M-11’s operational parameters (290 km/800 kg) d

strictly conform to the MTCR’s original prohibitio

which China agreed to adhere. Yet, this position is a

with the underlying goals of the MTCR, and it appe

run counter to China’s 1992 commitment not to tra

missile systems that would “undermine the peace, sec

or stability of the regions involved.”

19

 In addition, C

continued missile technology sales to Iran, alth

possibly consistent with the original MTCR guidelines

help Iran build longer range, non MTCR-compliant sy

and, thus, could further undermine regional stability 

Middle East. One positive sign regarding China’s po

on the MTCR came in the June 1998 Joint Stateme

South Asia which was issued during the U.S.-China su

meetings in Beijing. In this document, China pledg

prevent the export of equipment, materials or techn

that could in any way assist programs in India or Pak

for nuclear weapons or for ballistic missiles capa

delivering such weapons, and that, to this end, w

strengthen our national export control systems.” 

commitment appears to resolve some uncertainty 

China’s willingness to halt further missile assistan

33
Pakistan (including MTCR Category II technologies

signals China’s commitment to begin developing l

based export controls on MTCR controlled technologi

Lastly, many of China’s nonproliferation pledges a

publicly available, which complicates a fair and bal

evaluation of them. As noted above, Beijing’s 1992 let

the MTCR is a classified document. In addition, C

recent assurances to halt cruise missile and nu

assistance to Iran were made privately and are not op

evaluation. Indeed, subsequent statements (both on a

the record) by Chinese officials call the U.S. interpre

of these commitments into some question. Chinese st

improve the transparency of its nonprolifer

commitments would go a long way toward bolstering 

credibility. 

CHINESE ARMS EXPORTS: THE PLAYERS

20

The “players” involved in China’s arms exports c

divided into two categories: (1) government agencies—

and old—which participate in the export review pr

and (2) China’s military and defense industrial enter

which export military products. This section profiles 

institutions and their roles and seeks to assess their re

influence. Much of this analysis is necessarily specu

given the extensive and continuing changes withi

State Council bureaucracy, the PLA, and China’s de

industrial complex.

Government Agencies.

Principal Actors. The main organizations consis

involved in either or both arms export policymakin

export control decisions are detailed below (see App

III). The relative influence of any one of these organiza

is difficult to determine and can only be surmised bas

an accounting of their formal roles in past policy deba

export control decisions.

34
• The State Administrative Committee on Mi

Products Trade (SACMPT). Abolished in mid-1998

SACMPT used to be the main government organiz

responsible for overseeing controls on exports of mi

products and related technologies. It was principally t

with drafting laws and policies governing arms tran

According to China’s 1995 white paper, the SAC

reported to both the State Council and the Central Mi

Commission (CMC) and was comprised of “le

personnel” from the MFA, COSTIND, the headquart

the General Staff, MOFTEC, and “other rele

departments.” In this sense, the SACMPT functioned 

interagency mechanism. The day-to-day administ

responsibilities of the SACMPT were handled by the 

Bureau of Military Products Trade (SBMPT). Comp

were required to register with the SACMPT and 

contracts and export license applications had to be app

before military goods could be legally exported. The 

white paper explained that the SACMPT only rev

applications for “major military transfers” and would 

forward them to the State Council and the CM

consideration. The new State Commission on Sc

Technology and Industry for National Defense has 

assumed the responsibilities of the former SACMPT an

SBMPT. 

• The State Commission on Science, Technology

Industry for National Defense (COSTIND). In March 

COSTIND was formally abolished as a quasi-mi

organization and then reconstituted under the 

Council during the organizational reforms announced 

9th National People’s Congress. COSTIND, which u

oversee the defense industrial base and was head

military personnel, was thus “civilianized” unde

reforms. The “new” COSTIND is headed by civilian le

and was formed by combining three parts o

bureaucracy: the national defense departments o

Ministry of Finance and the State Planning Comm

and the administrative offices of the former five de

35
industrial ministries (aviation, aerospace, shipbui

nuclear, and ordnance.) The new COSTIND appears 

tasked with implementing defense production dire

and continuing to oversee and enhance the civ

production output of China’s defense plants. COSTIN

become the administrative and regulatory point of co

for China’s ten newly formed defense industrial ente

groups (jungong jituan gongsi). In other words, COS

has assumed many of the government related functi

the defense enterprises (e.g., formulating produ

directives) while allowing the enterprises to ma

themselves by giving them authority to 

microeconomic decisions such as those concerning p

and losses.

21

As an extension of these new responsibilities, COS

may have assumed an important coordinating ro

export control decisions covering conventional mi

products as well as other sensitive items such as nu

and missile-related technologies. Its export co

responsibilities stem from two recent changes. First, 

responsibilities of the former SACMPT and SBMPT 

reportedly been transferred to the Arms Trade Di

(Jun Mao Qu) within COSTIND’s Internat

Cooperation Department (Guoji Hezuo Si)(see Appen

for English-Chinese glossary of Chinese organizat

This organization, in consultation with the PLA an

Ministry of Foreign Affairs, will determine which mi

goods are permissible for export. Second, COS

inherited the China Atomic Energy Agency (CAEA) 

used to serve as the regulatory arm of the China Na

Nuclear Corporation (CNNC) and was responsib

reviewing pending nuclear exports.

22

 Thus, COSTIN

likely take the lead on some export control issues but 

not possess ultimate authority on exports of mi

products and related technologies because these dec

are the result of an inter-agency review process. 

process is detailed below.)

23

36
• The General Armaments Department (GAD).

General Armaments Department was formed in Apri

as part of the restructuring of China’s military indu

complex initiated at the 9th National People’s Con

The GAD, one of four general staff level departments 

the control of the Central Military Commission, ass

many of the military-related responsibilities of the f

COSTIND such as control over China’s military testin

evaluation bases. Specifically, the GAD’s role in 

control, nonproliferation, and export co

decisionmaking stems from three main activities.

First, the GAD now controls the “old” COSTIND’s 

control division (within the Foreign Affairs Office) 

tracks for PLA the full spectrum of arms contro

nonproliferation issues including nuclear, chemica

biological weapons proliferation, exports controls

nuclear testing issues. In addition, the China De

Science and Technology Information Center (CDS

which among other tasks conducts research on arms c

and nonproliferation topics, now reports to the 

Formerly under the control of COSTIND, the CDSTIC 

of the military’s leading centers for expertise and res

on arms control issues. Presumably, its resear

furnished to the office of the Chief of the General St

use in interagency discussions and to PLA represent

in the field at overseas embassies and at multil

disarmament organizations such as within the U

Nations.

Second, the GAD plays an active role in the e

control process. The GAD is believed to have a ha

vetting pending exports of military products and ce

missile systems in conjunction with COSTIND an

Foreign Ministry. In terms of nuclear exports, the GA

responsibility for controlling exports of nuclear mate

Third, the GAD will have key inputs into Chinese 

control and nonproliferation policies owing to the infl

of certain individuals. The GAD is led by Genera

37
Gangchuan who headed the former COSTIND un

“civilianization” in March 1998. Cao was previously d

chief of the General Staff and has played an importan

in some of China’s more well-known arms export cases

as the transfer of DF-3 intermediate range ballistic m

to Saudi Arabia in 1988. He was also appointed t

Central Military Commission in October 1998

military’s highest policymaking body. General 

Shaojun, a nuclear physicist and senior member o

GAD’s Science and Technology Committee, is the mili

leading voice on arms control issues. According to Ch

experts, Qian is one of the most knowledgeable 

influential arms control experts in China. Zhu Gua

another prominent physicist closely associated with C

nuclear weapons program, continues to head the G

Science and Technology Committee, but given his ag

position is largely ceremonial.

Despite the influence of the GAD in arms e

decisions, the GAD may also have to coordinate wit

Foreign Affairs Office in the Ministry of National De

(MND). The MND’s FAO is responsible for all of the 

interactions with the international community 

military-to-military relations) and as such it likely has 

role in Chinese military exports, especially if weapon

drawn from PLA stocks. The MND’s Foreign Affairs Of

reportedly trying to assert its authority over the 

created GAD, and the FAO’s participation in arms e

decisionmaking could be one manifestation of this tre

• The Ministry of Foreign Affairs (MFA). The MFA

in China’s arms control and nonproliferation affair

become much more formal in the past few years, an

has augmented its influence in arms sales policym

and export control decisions. In September 1997, the 

established an Arms Control and Disarma

Department which is one of the principal government a

involved in formulating, articulating, and defe

China’s arms export policies. The Department has 

divisions, and the “Third Division” is exclusively devo

38
covering conventional weapons issues such as C

position on anti-personnel landmines (APLs), m

exports, and the MTCR, and China’s position o

Wassenaar Arrangement. Its main responsibilities in

providing policy guidance on these issues, and this div

participates in interagency consultations only on pe

exports of highly sensitive military products—su

missile technology—which are related to Ch

nonproliferation commitments.

26

 For other mi

exports, the MFA’s regional departments are involv

licensing decisions, given their knowledge of reg

politics and the potential impact of an arms deal on reg

stability. For example, the MFA’s Department of 

Asian and North African Affairs—not the Arms C

Department—played the key role in China’s decision 

K-8E jet trainers to Egypt.

In the past, the MFA was reportedly not well info

about China’s sensitive exports and often found out 

them after the fact. Establishment of this new depar

and the promulgation of a formal licensing and app

process for military exports makes it unlikely that the 

would not be informed of a pending arms export assu

that the deal was officially authorized. Traditionall

MFA has taken a more conservative approach to C

conventional arms exports; this approach likely r

from the MFA role in assessing the impact of such ex

on China’s foreign relations, its international image

the extent to which such sales are consistent with C

existing arms control commitments. For example, one 

claimed the MFA opposed the DF-3 missile sale to 

Arabia in 1988, arguing against the deal’s mi

proponents that it would damage Sino-U.S. relatio

second, more recent study claimed that while the 

supported the deal, it sought modifications in order to 

the negative impact on China’s relations with the U

States and the Soviet Union.

27

• The Ministry of Foreign Trade and Econ

Cooperation (MOFTEC). MOFTEC has nom

39
jurisdiction over most exports and has the author

regulate all foreign trade activities.

MOFTEC is responsible for issuing broad-based 

laws governing China’s export controls such as the 

Foreign Trade Law. MOFTEC’s principal role in the e

control process is to participate in the license review p

and to issue the licenses. Specifically MOFTEC’s S

and Technology Department normally participat

interagency discussions about exports of controlled 

such as nuclear, nuclear dual-use, or chemical goods. (

nuclear and chemical areas, the China Atomic E

Agency and the Chemical Industry Administration ta

lead in vetting export applications and then refer th

MOFTEC.) Interestingly, MOFTEC has no role at all 

licensing process for military goods; MOFTEC does no

issue the licenses after an interagency decision is ma

• General Administration of Customs (GAC)

Customs Service is the enforcement bureau for e

controls. It is responsible for inspecting exports befor

leave China to ensure they have the appropriate e

licenses and transit documents. Exporters often first 

the GAC before applying for a license in order to dete

if an item is controlled by China’s export control regula

The GAC operates a computer database listing cont

items.

Leadership Oversight.

In addition to the six agencies noted above, three 

government organizations have a role in arms 

decisions. All three are high-level agencies bu

considered secondary actors because they do not reg

participate in policymaking or export control dec

unless highly controversial and politically sensitive 

are being considered. All of these organizations have 

more influence than the six cited above, but this influe

often only wielded in unique circumstances.

40
• The State Council (China’s Cabinet). Officials fro

State Council, CMC, COSTIND, and MOFTEC used to 

occasionally to discuss military export policies. Accord

China’s 1997 regulations on military exports, State C

officials only review applications for “major mi

exports” along with the CMC before a deal is approved

unclear whether the State Council’s role has changed 

wake of the 1998 restructuring effort.

• The Central Military Commission (CMC). S

officials from the CMC meet with State Council offic

discuss export policies; China has stated that “m

military exports and contracts must be examined 

approved by the CMC and the State Council.

• Military Products Export Leading G

Interpretations of this organization differ. Accordi

Chinese sources, this “leading group” is composed o

senior government and military officials (e.g., China’

Premiers and CMC members) who meet on an ad hoc 

to discuss the most controversial and sensitive we

exports. Given the high level nature of the gr

participants, it only considers arms deals tha

internally controversial and politically sensitive for C

foreign relations. However, some Western scholars 

that this small group is the same organization as the f

SACMPT but with a different name.

China’s Military and Defense-Industrial

Enterprises.

China’s weapons exporters are divided into two di

categories: military enterprises and defense-indu

enterprises.

29

 The military enterprises (jundui qiye

originally owned and operated by the PLA and engag

both military and civilian commerce within China 

internationally. Only a small number of PLA entitie

trading companies involved in arms imports and ex

whereas the majority of PLA companies pro

nonmilitary goods; others produce nonlethal mi

41
equipment such as tents and uniforms. Before July 

these PLA companies had formal and direct links 

CMC’s General Departments (Staff, Logistics, Politica

now Armaments), the Military Regions and Districts

the active duty and reserve forces of the Army, Air 

Navy, and the Strategic Rocket Forces. The enterprise

20-40 percent of their profits to the military’s Ge

Logistics Department (GLD), and “these monies [were

to improve the living standards of the troops by r

wages, constructing new barracks, or suppleme

messing budgets.”

30

 During the 1990s, in order to r

corruption and maintain discipline, the mil

consolidated many of its enterprises into conglome

which reported to the CMC’s general departments or 

heads of military regions.

By contrast, the defense-industrial enterprises ( ju

qiye) report to the State Council and form the backb

China’s defense production system. These enterprises 

formerly divided among China’s five defense produ

“ministries,” but in July 1999 these five were divide

ten industrial enterprise groups, with two to each mi

industry. This organizational bifurcation was part 

government’s defense reform effort intended to 

autonomy and competition into the operation of C

sluggish defense industrial sector. While these 

produce military goods for the PLA under contract

have no formal links to the PLA. Many of these enter

produce a variety of civilian and military goods whic

marketed domestically and internationally. The p

from these sales do not go to the PLA but are 

reinvested in the firms to improve their produ

capabilities.

31

Military Enterprises.

Before mid-1998, the principal PLA enterprises en

in the export of military goods were Poly Technologie

and to a lesser extent the China Xinxing Export-I

42
Corporation. In the wake of President Jiang’s call f

PLA to end its commercial activities, it is not clear if 

these companies will continue to export military produ

• Poly Technologies (Baoli) Ltd. Founded in 1984

Technologies used to be the main commercial export a

the Equipment Division of the General Staff Depar

(GSD). Since its establishment, Poly Technologies ha

millions of dollars worth of weapons from the PLA’s su

stocks. In 1987, Poly Technologies’ sales peaked 

exports worth about $500 million. Its customers inc

Thailand, Burma, Iran, and Pakistan. The highest p

deals Poly Technologies conducted include Silk

missile sales to Iran in the 1980s and the 1988 sale of 

medium-range ballistic missiles to Saudi Arabia. 

Technologies reportedly received a commission for its 

exports but the majority of the profits were repatria

the General Logistics Department to subsidize the 

budget.

32

As the global arms market became more competit

the 1990s, Poly Technologies diversified into a wide v

of commercial ventures including hotels, real e

development, casino operations, and other businesses

also operates several subsidiaries in the United State

other countries as well. Poly’s operations in the U

States include PTK International, Dynasty Holdin

and Poly U.S.A Inc., among others.

33

In the past, Poly Technologies was known to be c

tied through family relations to various senior memb

the Chinese government. These ties to high

government officials and its direct military links m

difficult for the MFA to control Poly’s arms export activ

Yet, the extent to which this situation persists is un

given the growth and institutionalization of China’s 

control and nonproliferation community in the 1990

the recent divestiture of the PLA from comm

activities. 

43
• China Xinxing (Group) General Corporation. Xi

is one of five commercial enterprises operated b

General Logistics Department of the PLA. It conduct

military and civilian business activity but with a g

reliance on the latter. It operates several subs

companies which are involved in medical science 

technology, mining products, chemicals, real e

development, car production, and shipping activ

Located throughout China, these companies contro

100 industrial plants and mining enterprises. The mi

and civilian items the Xinxing Group produces for C

domestic market include uniforms, textiles, leather g

footwear, machinery, steel, and chemicals. Its interna

sales arm is called the China Xinxing Export-Im

Corporation, and it exports mainly nonmilitary items 

as truck parts, cars, touring buses, salt, iron, steel, m

ores, and a variety of other goods. It exports mi

supplies and logistics equipment such as uniforms, bed

shoes and boots, implements, backpacks, and tents.

Xinxing Group also operates a known subsidiary i

United States, Xin Xing U.S.A., and other operation

exist as well.

Defense-Industrial Enterprises.

China’s defense industrial enterprises—coverin

aviation, aerospace, ordnance, and shipbui

sectors—normally conduct arms exports through tr

firms which function as their window to the interna

market. These trade arms are not involved in mi

production but rather are licensed by the governm

conduct military exports and are independent of the 

interestingly, during the 1980s and 1990s some of 

enterprises actually competed with PLA compani

arms sale contracts with developing countries. The

currently five key firms involved in conventional we

sales. Details on them and their past export activiti

provided below. In July 1999, China divided its five 

defense industrial group corporations into 10 indu

44
enterprise groups. Despite this bifurcation, so far ther

indication that each of the enterprise groups will esta

its own trading firms. The ones detailed below contin

serve their corresponding industries.

• China North Industries Corporation (NORIN

Founded in 1984, NORINCO is the successor organiz

to China’s Fifth Ministry of Machine Building w

oversaw the production of tanks and other arm

vehicles, artillery, munitions, and small arms. NOR

was established during an early reorganization of C

defense industrial system which sought to “corpor

China’s five defense industries to make them more effi

Currently, NORINCO operates 157 large 

medium-sized companies employing 800,000 people, a

as 30 R&D centers and more than a dozen technical col

NORINCO also operates more that 80 overseas subsid

including some 11 companies in the United States.

35

Beginning in the early 1980s as PLA orders decline

defense producers were officially encouraged to “con

many of NORINCO’s factories diversified into produ

variety of civilian goods. NORINCO’s factories now m

vehicles and vehicle motors, chemical industry pro

mechanical products, light industrial products, and o

and electric products. In terms of military goods, NOR

develops, produces, and markets a variety of pro

including fire control systems, sighting and aiming sys

and nuclear, chemical and biological protection equip

Its most prominent military-related exports are 

firearms” and ammunition. During the 1980s, NOR

sold thousands of tanks, artillery, and armored pers

carriers to China’s then-traditional clients like Iran, 

Pakistan, and Thailand. In the late 1980s and early 1

demand for NORINCO’s weapons took a sharp dow

due to the poor quality of its military equipment com

with increased competition from Russian wea

exporters. 

45
• China Precision Machinery Import-E

Corporation (CPMIEC).

36

 Established in the early 1

CPMIEC is involved in missile and missile techn

exports; it is the prime marketer of China’s M-

missiles including the M-9/DF-15 and the M-11/D

CPMIEC reportedly can negotiate sales of near

missiles and technologies produced by the China Aero

Corporation, except strategic systems. CPMIEC 

markets liquid- and solid-fueled rocket engines. CP

imports and exports high technology equipment, incl

defensive weapon systems, space equipment, sa

technologies and products, precision machinery, o

instruments, and electronic products.

The types of missiles CPMIEC offers for export incl

• Surface-to-surface missiles: M-9/DF-15, M-11/DF

• Cruise missiles: SY-1 (CSS-N-1), YJ-1/C

YJ-2/C-802, HY-1 (CSS-N-2/CSSC-2), HY-2/C

(CSSC-3), HY-4/C-201 (CSSC-7), C-601 (CAS-1);

• Surface-to-air missiles: HQ-2 (B, J), CSA-N-2, F

LY-60, KS-1, Vanguard (shoulder-launched); and,

• Free rocket systems: WS-1.

CPMIEC was sanctioned in May 1991 and August 19

the United States for its involvement in M-11 expo

Pakistan. 

According to a company brochure, CPMIEC is:

A nationwide foreign trade organization which combines tr

with industry and technology. As a subsidiary of Ch

Aerospace Corporation, CPMIEC has the status of a le

person and independently carries out import and exp

business. 

Backed by the immense economic and technology base and 

strong production capability of the space industry in Ch

supported by ample funds, advanced facilities and a la

number of well experienced experts from the research 

development institutes and plants, CPMIEC has adequ

46
capacity for research, design and manufacture of vario

high-precision equipment and products of high technology

CPMIEC deals with import and export business in hi

technology, including defensive weapon systems, spa

equipment, satellite techniques and products, spec

equipment, precision machinery, optical instrumen

electronic products, etc. CPMIEC accepts orders 

processing with customer’s drawings, materials, and sampl

engages in joint research and development, co-producti

joint venture, technology transfer and compensation tra

contracts for the design and construction of industrial and ci

projects, consultations of technical and foreign trade busin

information and other forms of trade activities.

Since CPMIEC was set up in 1980, it has established a w

range of business relations with dozens of countries a

regions throughout the world. In business activities, CPMI

has always been honoring its contractual obligations, keep

the commitments, and seeking high efficiencies. It has a

been exporting various products with reasonable pric

superior quality and reliable performance, together with go

after-sales services and long-term supply of spare parts.

The company brochure also defined the sco

CPMIEC’s services. They include:

• Export of weapon systems;

• Design and construction of test range, technica

firing sites; modification and upgrading and maintena

foreign weapon systems; and,

• Export of civilian products and technologies conv

from military production; and joint venture, co-produ

and manufacture with supplied materials, design

samples. 

CPMIEC’s engineering design and construction se

include: 

• Delivery of technical and firing sites;

• Air and sea defense missile test ranges;

47
• Special facilities for research and design, simul

CAD and CAM, microwave testing, motor testing, an

testing, non-destructive testing, static and dyn

strength testing, full-scale testing, information, telem

meteorology, computer and material science;

• Special production facilities, including micr

precision machinery, composite materials, che

milling, chemical deposition, heat isostatic pres

quality control, environment control, microelectr

autoclave and vacuum deposition; and,

• Military and civilian buildings for general purp

China Great Wall Industry Corporation (CGW

China Great Wall is a subsidiary of the China Aero

Corporation (CASC), which controls all of China’s rese

development, testing, and evaluation of missiles, 

launch services, and related equipment. CGWIC im

and exports some missile technology, space technolog

equipment, space launch services, precision mach

electronics, instruments, and meters. It is mainly inv

in providing satellite launch services and has been en

in these activities since the mid-1980s. CGWIC is cur

developing improved versions of the CZ-2, CZ-3, and 

families of space launch vehicles (SLVs) to augment C

ability to place large payloads into geosynchronous o

CGWIC was sanctioned twice (as a subsidiary of CAS

May 1991 and August 1993, by the United States f

involvement in exports of M-11 missiles to Pakistan.

• China National Aero-Technology Import-E

Corporation Group (CATIC Group). The CATIC Grou

a subsidiary organization of the Aviation Indu

Corporation of China (AVIC), and is now responsib

trading military and civilian aircraft. The CATIC Gr

not a production entity but rather sells military and ci

aircraft, engines, missiles, and other airborne equip

For a few years in the early 1990s, CATIC was th

organization within AVIC which could negotiate fo

import/export of AVIC products. CATIC negotiate

48
deals and was responsible for getting the products fro

factory to the customer; CATIC also provided after

maintenance contracts. However, this changed wit

adoption of the factory manager responsibility sy

because individual factories began negotiating con

themselves and did not go not through CATIC. The fac

still relied on CATIC to ship the items abroad. CATIC 

faced competition from the PLA Air Force (PLAAF) 

undermined CATIC’s profit-making ability. The P

began competing with CATIC for post-sale mainte

contracts through its Aeronautical Engine

Department (AED) which had an office in 

Technologies. Drawing on over 20 overhaul 

maintenance factories, the Air Force’s AED pres

CATIC with real competition in the area of mainte

contracts.

39

Over the past two decades, CATIC has been respo

for the export of the F-6 and F-7 light fighters, the K-8

jet trainer, the F-8II fighter-bomber, and the A-5 g

attack aircraft. These systems have been sold to cou

such as Iran, Pakistan, Myanmar, and Sri Lanka. O

CATIC’s most recent deals was the 1998 agreement 

Pakistan to co-develop the Super-7/FC-1 aircra

addition, CATIC has sold air-to-air, ship-to-ship

land-to-ship cruise missiles and related compo

produced in AVIC factories. Some of the specific m

systems CATIC has exported include the PL-5B, 

PL-9, FL-1 (CSS-N-1 Mod 2), FL-2 (CSS-NX-5), and 

cruise missiles. CATIC may also have played a r

exporting Silkworm missiles to Iran which were po

produced at the Nanchang Aircraft Factory.

In recent years AVIC and CATIC have not fared 

economically due to a significant drop in the deman

their products, within and outside China. The Ch

government has preferred to buy civilian aircraft 

Boeing and Airbus rather than from its dom

manufacturers. In the military realm, the PLA in 

concluded a deal with Russia for the purchase 

49
Sukhoi-27 complete aircraft and a joint production d

assemble and produce as many as 200 of the aircraft

deal came about in light of AVIC’s inability to prod

fighter with equivalent capabilities. Su-27s assemb

Chinese factories conducted their first flight tests in 

1999. China has a poor record of bringing prototype

serial production, and the delay in assembling the 

aircraft is one example of endemic problems in C

aviation industry. Interestingly, the Su-27 project m

involved assembling materials from a “kit” purchased 

Russia, but even then the project took several years 

the first flight test occurred. As for future related ex

derived from the Su-27, one can imagine the difficultie

delays involved if China sought to integrate Ru

aircraft technologies into a domestic weapons system

Given AVIC’s systemic difficulties producing mi

aircraft and the resulting decline in domestic orde

Chinese fighters, it is likely that CATIC will increa

look to the international market to sell its military air

For example, the main reason CATIC is co-developin

Super-7 fighter with Pakistan is that the PLA Air 

refused to buy the aircraft; co-development will h

reduce the research and development costs of the fi

Aircraft exports will be used to generate hard curren

the purchase of advanced production technologies wh

turn, could help modernize the production capabilit

AVIC factories as part of China’s effort to devel

indigenous capacity to produce advanced military air

• China Shipbuilding Trading Corporation (CS

CSTC is the trading arm for China’s shipbuilding ind

CSTC is principally responsible for the export of 

produced in the CSSC’s 75 large- and medium

shipyards, 57 marine equipment manufacturing p

and the 36 R&D and design institutes. The CSTC 

marketed military vessels, commercial ships, m

equipment like diesel engines, and some nonmarine 

all over the world. It has offices in Hong Kong, Moscow

50
Angeles, Hamburg, Bangkok, London, Athens

Islamabad.

41

CSTC military products include a wide mix of plat

currently used by the PLA Navy such as Luda and 

class destroyers, Jiangwei and Jianghu class fri

missile corvettes, missile fast attack craft, patrol 

landing craft, replenishment ships, and anti-smug

boats. According to CSTC, “Various types of naval v

can also be designed and built according t

requirements of foreign navies and have been expor

many countries.”

42

 In the past the CSTC has exp

Jianghu class frigates to Thailand and Pakistan, H

class fast attack craft to Iran, as well as various patrol 

and landing ships to Sri Lanka, Myanmar, and Bangla

The CSTC’s ability to increase its exports of military v

is an open question, however. Few countries have or

major warships such as frigates or destroyers in the 

years, and requests for smaller naval vessels have 

declining as well. Although the shipbuilding indu

ability to design and produce better quality vessel

vastly improved because of its growing comm

business, it still lacks the ability to equip these ships 

advanced weapons technologies and propulsion 

navigation systems. As a result, many of China’s f

clients like Thailand have shifted to buying naval ship

naval weapons systems from non-Chinese sources.

CHINESE ARMS EXPORTS: THE PROCESS

43

Formal procedures.

Prior to 1997, China’s procedures governing the exp

military products and related technologies 

unpublished and ambiguous. In recent years, ther

been much progress in this area as China has soug

formalize and institutionalize its arms export r

process. Yet, many uncertainties remain. China’s eco

reform policies—which emphasize decentralization, 

51
autonomy, and foreign trade—have created cond

which make controlling military exports all the 

difficult. The principal legal framework for export co

was laid out in the 1994 Foreign Trade Law (FTL). Th

included several export control-related provisio

provided the authority to prohibit exports of item

national security reasons; it permitted Beijing to re

exports based on China’s obligations to interna

treaties; and it required Chinese companies to apply 

license to export goods controlled by international tr

and conventions. These provisions were very genera

did not identify distinct procedures or define control li

vetting exports of nuclear, chemical, missile, or mi

products. By 1995, the Chinese government acknowl

the establishment of the SACMPT and described 

procedures specifically related to controls on mi

exports in its white paper on arms control 

disarmament; yet, no formal law governing military ex

was issued for another 2 years.

Indeed, China’s illegal shipment of 2,000 AK-47s 

United States in early 1997 testifies to the lax cont

some military exports in China prior to the promulgat

this law. The executive director of Poly Technologies, 

the PLA’s largest arms exporters and formerly control

the General Staff Department, said on the record th

GSD is not always required to authorize transfers of 

arms, even when the weapons are taken from stoc

controlled by the General Logistics Department.

44

China’s formal process for vetting and perm

exports of military products and related technologie

publicly outlined in the October 1997 Regulations on E

Control of Military Items.

45

 (See Appendix II.) 

regulations require Chinese arms exporters to re

several different types of government approval before 

is authorized. Depending on the type of military pro

being transferred, a variety of government organiza

may participate in these approval processes. 

according to the 1997 regulations, a Chinese com

52
seeking to export military products must apply to the 

Administrative Committee on Military Products 

(SACMPT) for official registration and authorization 

“military trading company.” (See Appendix V for flow 

showing China’s export control system for military g

The SACMPT’s administrative arm, the State Bure

Military Products Trade, handles administrative 

day-to-day affairs of the SACMPT. According to the 

law, the SACMPT has formulated application proce

for authorization, but they are not yet publicly availab

addition, the SACMPT is responsible for authorizing 

companies as military export transportation agen

handle export transportation and other related busine

No companies other than state registered transpor

companies can participate in the transit of mi

products out of China. The procedures for this 

authorization also are not publicly availab

Furthermore, as noted above, the SACMPT an

subsidiary bureau no longer exist, and it is cur

uncertain how this change and the likely sh

responsibilities to COSTIND has affected the operat

the 1997 regulations.

Currently, there are several Chinese companies 

are authorized to export military products and re

technologies, but the total number is not currently k

As noted above, some of the most well-known 

exporters are NORINCO, China Xinxing (Group) Ge

Corporation, Poly Technologies Inc., China Great 

Industry Corporation, the China Precision Mach

Import-Export Corporation, China Nat

Aero-Technology Import-Export Corporation, an

China Shipbuilding Trading Corporation. Interest

this number greatly exceeds the few companies autho

to export controlled nuclear and chemical mate

equipment, and technologies. Only two companies

China Atomic Energy Agency and SINOCHEM

authorized to sell nuclear items; similarly, only two Ch

chemical companies, SINOCHEM and China Ha

53
Chemical Industry Group, are permitted to e

controlled chemicals. All other businesses in China m

through these companies to export controlled nucle

chemical products.

47

Once a company has been designated as an o

military trading company, the next step is to engage C

military export licensing system. The licensing p

involves two steps: contract approval and lice

authorization. First, a company must submit a provis

unsigned export contract to the State Bureau of Mi

Products Trade for review and approval. The SB

normally reviews these contracts itself, but in ce

circumstances it consults with “the relevant departm

of the State Council and the CMC. The SBMPT has 15 

to approve the contract in order for it to be considered 

and for the export review process to continue. The 

regulations also require companies to append “certific

documents” from the recipient countries to the applic

for contract approval. The regulations do not specify 

types of certification documents are needed, bu

possibility is an end-use certificate. Once an export co

is approved by the SBMPT and subsequently signed b

Chinese and the foreign company, the next step inv

applying for a military export license. This latter 

appears somewhat perfunctory and less complicated 

the previous one because it involves attaching the app

export contract to a license application. The SBMPT

MOFTEC, will then issue or deny a license within 5 d

This license is required before China’s Customs Servi

legally permit military items to be exported.

By contrast, exports of “major” military produc

first reviewed by the SACMPT and then submitted to h

level offices in the State Council and the CM

approval.

49

 If a pending export is politically sensitiv

potentially controversial, then the issue can be review

the Military Products Export Leading Small Group

high-level government group is comprised of very s

government and Communist Party officials such a

54
members of the Central Committee’s Political Bu

Given their senior status, this group meets infrequen

consider only the most controversial arms exports 

could have a negative impact on China’s foreign relatio

The 1997 regulations also stipulate that individua

not export military goods, and the law sets a series 

standards to which military export companies 

conform in their dealings. Companies must not:

• Endanger national security or social and p

interests; 

• Supplant competitors with unfair competitive me

• Infringe upon intellectual property rights protec

the national laws;

• Forge, alter, fraudulently obtain or transfer 

export project approval documents, contract app

documents, licenses, valid certificates from rec

countries, and other documents;

• Exceed the scope of businesses defined and app

by the authorities; or,

• Engage in other conduct that violates the law

administrative regulations.

51

Violations of any of these six standards can result 

closing down of the military trading company

violations of any of the steps in the licensing processe

result in the revocation of an export license. In additio

and all violations are considered criminal offenses an

be prosecuted. This stipulation also applies to the s

the military trading companies to prevent them 

engaging in illegal conduct such as accepting bribes.

Despite the seeming comprehensiveness of 

regulations, there are two major areas of uncertainty 

law which raise serious questions about its abil

effectively control exports of military products and re

technologies. First, these regulations do not specify w

55
any, “control lists” the Chinese agencies refer to 

reviewing a license application. The United State

example, uses the Commerce Control List (CCL) an

State Department Munitions List (ML) but no equiv

seems to exists in China for military items. MO

officials claim that such a list exists for missiles and re

technologies (i.e., MTCR Annex items), but one has 

been openly published. In the areas of nuclear and che

exports, China has already incorporated internationa

such as the ones used by the Nuclear Suppliers Grou

the Chemical Weapons Convention, into its existing e

regulations. No equivalent international list cov

military products has been adopted by the Chinese

possibility is that Chinese officials already use th

Wassenaar lists when reviewing license applications

though neither was referenced in the 1997 export c

regulations. MOFTEC’s recently published The Cat

of Technology Whose Export Is Banned or Restric

China may represent a first attempt to lin

international munitions and dual-use technology lists 

by Wassenaar to China’s existing law covering mi

exports. 

The second uncertainty in this law is the exte

interagency consultation during the contract authoriz

and license review process. The SACMPT, as describ

the 1995 white paper, is composed of officials from the 

COSTIND, MOFTEC, and the PLA General Staff. Ye

1997 regulations do not specify when in the process 

various agencies voice their input or how often. Do the

to review each license? Do they also provide input 

reviewing license applications for only sensitive expor

do they only participate in the formulation and revis

regulations covering military exports? In the nuclear 

specialized agencies such as the China Atomic E

Agency normally take the lead in the licensing pr

while informally consulting with others such as MOF

military officials, or the Foreign Ministry when que

arise. (MOFTEC will then issue a license if approved.

56
informal consultation process, which is common pract

planned economies, may constitute the exte

regularized interagency discussion of license applica

related to military exports.

52

 These uncertainties b

even greater given the apparent abolition of SACMP

the possible shift of its responsibilities to COSTIND.

Despite these ambiguities, the MFA has likely bec

more influential voice in discussions about China’s 

export policies and decisions about specific sen

weapons exports. The MFA recently establish

Department of Arms Control and Disarmament und

leadership of Ambassador Sha Zukang, which has an 

division of some 10-12 officials devoted to cov

conventional weapons issues. Although the majority o

work deals with China’s participation in interna

regimes, this concentration of expertise on conven

arms issues within the MFA could be very influent

interagency debates and consultations. Moreover

professionalism, experience, and trust which Ambas

Sha has built within the Chinese decisionmaking stru

on these issues will lend him and his new depar

greater political leverage. This professionalism 

especially important at a time of transition in Ch

nonproliferation and arms control policies.

The MFA’s overall influence on arms contro

nonproliferation topics appears to depend on the nat

the issues being debated in Beijing. For exa

Ambassador Sha’s office has taken the lead on v

China’s opposition to U.S. national missile defens

theater missile defense programs. Sha has been unu

outspoken on this issue (for a Chinese diplomat); h

given interviews to several major U.S. newspapers, 

though the official Sino-U.S. nonproliferation dialogu

been frozen since May 1999. Meanwhile few PLA of

such as China’s defense minister have made stateme

the missile defense issue, even though it is ostens

military topic. A similar situation exists regarding C

participation in the MTCR. By contrast, the PLA too

57
lead on drafting and editing China’s 1998 defense 

paper, with MFA officials providing limited inp

sections directly relevant to their responsibilities.

Government Reorganization and Downsizing.

In March 1998, China adopted a series of policies 

have resulted in the downsizing and restructuring of 

of the bureaucracy, including the defense industrial s

These changes within China’s defense industries 

uncertainties in the short-to-medium term about the p

functioning of military export controls. In the long 

however, these changes—if properly implemented—

create a more organized and rational system for contr

military exports. Four important changes in particula

affect the processes and players involved in arms 

decisions.

The first major organizational change dir

influencing China’s controls on military exports wa

dissolution of the SACMPT in March 1998. As of early 

Chinese authorities have not yet officially stated 

government agency (new or old), or combination of ex

agencies, will assume SACMPT’s responsibilitie

overseeing the control of military exports.

53

 A C

Foreign Ministry official suggested the changes m

limited to a shift in the administrative agents specif

the 1997 regulations, while the licensing processes ou

in the law will remain fixed.

54

 The 1997 regulations ha

yet been revised to reflect these organizational cha

however. As noted above, the administr

responsibilities of the former SACMPT have possibly 

assumed by the new COSTIND. This shift of responsib

would be consistent with COSTIND’s emerging role 

administrative and regulatory organization gove

China’s defense enterprises. Under this scenario

successor organization to the SACMPT would only rep

the State Council, which represents a shift from 

SACMPT’s previous position as a quasi-mil

58
organization reporting to both the CMC and the 

Council. Indeed, Liu Jibin, the new civilian he

COSTIND, was quoted in a 1999 Washington Post art

saying that his organization would assume cont

weapons imports and exports. He noted that C

defense corporations are being eased out of policy dec

related to arms exports and imports.

55

Adding to its growing export control profile, the 

COSTIND also assumed control of two subsidiary bur

the State Aerospace Bureau and the China Atomic E

Agency, whose principal role is to oversee and reg

China’s aerospace and nuclear industries. T

organizations were formerly part of two larger indu

groups: the CASC and China National Nuclear Corpo

(CNNC).

56

 As part of their responsibilities, thes

bureaus may be expected to vet export license applica

for their respective industries. This trend suggests 

China’s other defense industries may follow su

separating their administrative offices and housing th

the new COSTIND.

57

 Indeed, this development m

positive for nonproliferation because the placement of 

regulatory bodies within the new COSTIND separates 

from corporate interests which rank exports among 

principal goals.

Second, following the reconstitution of COSTIND

GAD was formed in April 1998. This new PLA ge

staff-level department draws together the unifo

military from COSTIND with the General 

Department’s Equipment Directorate, as well as with 

military equipment-related offices from other parts 

General Staff system. The GAD’s main role is to overs

development, procurement, supply, maintenance, an

life-cycle management of the military’s weapons sys

The GAD was also tasked with overseeing the PLA’s te

and training bases such as the Xichang satellite la

center.

58

 The GAD will also have a limited role in v

some military-related exports but will be a key PLA vo

arms control negotiations affecting China’s mi

59
capabilities. The specific roles and influences of the G

arms export policymaking were discussed in the pre

section. 

Third, and beyond these specific reorganization

government adopted a series of policies in March 

aimed at downsizing and streamlining its bureau

These decisions will have limited effects on China’s e

control system, although the staffs of ministries invol

export control administration have been cut signific

MOFTEC’s personnel, for example, were cut by 45 pe

and the Science and Technology Department—w

reviews applications for “sensitive exports”—was re

by 30 percent.

59

 China’s Ministry of Foreign Affairs 

required to reduce its staff by only 26 percent (not the 

55 percent requested by the State Council), and its 

Control and Disarmament Department has act

expanded.

The arms control community in China is very smal

very few diplomats have developed a specialization in 

issues. As a result, much of the MFA’s arms control s

young and relatively inexperienced with specific i

Most staffers have received little, if any, formal train

arms control and nonproliferation issues in Ch

universities or diplomatic academies and have had to 

“on the job”; the youngest members of the Arms Contr

Disarmament Department staff are often hired s

because of their strong English language skills. Given 

constraints, the MFA’s input on export controls iss

normally limited to participation in the formulat

policies; MFA officials do not normally review li

applications, unless they are deemed particularly sens

The fourth recent change affecting China’s arms ex

policies and decisionmaking processes is 

decommercialization of the military and law enforce

agencies. In July 1998, Jiang Zemin issued an edict c

for the PLA and the People’s Armed Police (PAP) to 

themselves from their business activities. Accordi

60
some estimates, the PLA owned and ope

10,000-15,000 enterprises engaged in a varie

commercial ventures from transportation, ve

production, and hotel operation to real estate develop

and telecommunications. The Chinese leadership too

step to reduce corruption and smuggling within PLA 

as part of a broader effort to professionalize and mode

its military. A special office was established withi

State Economic and Trade Commission to coordina

hand-over of military enterprises. This office will tak

and manage the military’s largest enterprises wh

provincial and local governments will assume control 

smaller enterprises. The hand-over will reportedly oc

three phases: preparation, transfer, and restructuring

transfer process was reportedly completed by Decemb

1998.

60

 U.S. experts indicate that by early 2000 

4,000-5,000 PLA companies were civilianized, but th

PLA retains control of some 10,000 smaller enterpris

The potential effects on China’s arms exports are m

On the one hand, the PLA’s divestiture from bu

activities could renew incentives for illegal arms exp

in order to generate the income lost as a result o

decommercialization effort. It is generally accepted th

profits from the PLA’s business activities contributed 

PLA’s operating budget, especially within certain 

With this money no longer being generated, PLA 

especially ones based in provinces far from Beijing

seek to export weapons from surplus stockpiles to ma

for the funding shortfall.

62

 To be sure, Premier Zhu R

China’s economic reform czar, promised to compensa

PLA for its lost income. According to discussions with s

officials of the GLD, compensation will amou

approximately 3.2 billion renminbi per year (about 

million) or about 3 percent of China’s officially dec

military budget for 1997. Yet, it is not entirely clear 

funds will be sufficient to cover the defense budget’s a

shortfall. PLA leaders were reportedly very upset 

Zhang Wannian, the vice-chairman of the CMC

61
accepting Zhu’s compensation offer before consulting 

them about the PLA’s actual financial needs.

63

On the other hand, the military’s decommercializ

and restructuring efforts may have broken ce

bureaucratic linkages which could hinder the abil

current and former PLA companies to export 

Specifically, these policies may have severed ties be

(1) former PLA enterprises and PLA departments 

GSD), and (2) PLA enterprises and China’s de

industrial enterprises. With the creation of the GAD 

more centralized control over China’s weapons stock

unclear whether former PLA enterprises such as 

Technologies will be able to draw from PLA stockpi

order to sell weapons abroad, as it did in the past.

Also, it is not certain whether formal relation

persist between former PLA companies like 

Technologies and defense industrial enterprises 

NORINCO; these channels used to be crucial to Poly’s 

exports. In the past, Poly requested that NOR

overproduce weapons for the PLA stockpile in order fo

to export the excess items. However, if NORIN

production decisions are now made within the 

COSTIND and monitored by the GAD, then companie

Poly may no longer be able to influence production ra

order to facilitate their arms exports. To be sure

Technologies still holds much influence in Chinese mi

circles and this power may allow it to remain a prom

arms exporter. Poly’s influence results fro

long-standing personal relationships with officials i

PLA’s military supply system and the central role Po

played in negotiating arms imports from Russia. I

latter case, Poly’s connections with Russian arms exp

are viewed as crucial to China’s continued access to Ru

weapons systems. For this reason alone, 

Technologies—despite its official break with the PLA

retain its strong connections with PLA officials involv

weapons imports and exports.

64

62
Furthermore, as a result of the divestiture of the 

many of the newly civilianized companies may no l

have financial incentives to maintain a close relatio

with the PLA and therefore might not be involved in 

exports. In China’s more competitive and profit-d

business environment, arms dealing has likely becom

unappealing pursuit for Chinese companies. Weapons 

are often controversial and have become increas

complicated to conduct, given China’s growing e

control system, the government’s nonprolifer

commitments, and stiff international competition.

ENDNOTES - CHAPTER 2

1. Zhongguo de Guofang (China’s National Defense), Beijing

Information Office of the State Council, July 1998. Also see Zhon

Junbei Kongzhi yu Caijun (China’s Arms Control and Disarm

Beijing, China: Information Office of the State Council, Novembe

2. Zhengdang de is often improperly translated into Eng

“appropriate” instead of “legitimate.” The former is arguably a 

standard than the latter in terms of evaluating a nation’s r

self-defense. Many translations of China’s 1995 white pap

“appropriate” instead of “legitimate,” although the Chinese cha

are the same in both the 1995 and 1998 white papers. The 

translation for “appropriate” is shidang de.

3. These principles are articulated in numerous Chinese doc

including: Zhongguo de Guofang and Zhongguo de Junbei Kon

Caijun. They can also be found in dozens of Foreign Ministry stat

defending China’s arms exports.

4. Fu Cong, “An Introduction of China’s Export Control S

paper presented at Tokyo Workshop on Nonproliferation 

Control Regimes, Tokyo, Japan, December 11-12, 1997. Fu 

currently the director of the “Fourth Division,” covering policy r

and analysis of the Arms Control and Disarmament Departmen

Chinese Foreign Ministry. He was previously the Director of th

Division” covering nuclear issues.

5. See Regulations on Export Control of Military Items (Ap

II); Fu Cong. For a full analysis of these regulations, see the 

Profiles database operated by the East Asia Nonproliferation Pr

63
the Center for Nonproliferation Studies in Monterey, C

regulations are also included as Appendix II in this report.

6. The UNROCA was established by United Nations G

Assembly Resolution 46/36L in December 1991. The register firs

recording submissions from UN members in 1993 for their impo

exports of major conventional weapons in calendar year 1992. 

1998 defense white paper compiles and presents all of its UN

submissions.

7. See http://domino.un.org/REGISTER.NSF.

8. China was not alone in this. According to a study on the UN

participation of 39 Asia-Pacific states, only six countries (Au

Canada, Japan, New Zealand, Republic of Korea, and the United 

included background information with their submissions cover

3-year period 1992-94. Bates Gill, “Asia-Pacific Participation 

United Nations Register of Conventional Arms: Prospe

Regionalization,” in United Nations Centre for Disarmament 

Workshop on the United Nations Register of Conventional Ar

Experience of the Asia-Pacific Region, New York: United Nation

pp. 21-31.

9. See, for example, Edward J. Laurance, Siemon T. Wezem

Herbert Wulf, Arms Watch: SIPRI Report on the First Year of t

Register of Conventional Arms, Oxford: Oxford University Pres

Annexes 1 and 2; Malcolm Chalmers and Owen Greene, Th

Register in Its Fourth Year, Bradford Arms Register Series W

Paper No. 2, Bradford England: Department of Peace S

University of Bradford, November 1996.

10. Statement by Ambassador Sha Zukang to the Confer

Disarmament, June 26, 1997.

11. SIPRI Yearbook 1997: Armaments, Disarmame

International Security, Oxford: Oxford University Press, 1997, 

12. For general details on China’s position during the ACM

see Robert Shuey and Shirley A. Kan, Chinese Missile And 

Proliferation: Issues For Congress, CRS Issue Brief, Congre

Research Service, The Library of Congress, February 12, 1996

Shirley A. Kan, Chinese Proliferation of Weapons of Mass Dest

Current Policy Issues, CRS Issue Brief, Congressional Research S

The Library of Congress, October 17, 1996, p. 11; Weixing Hu, “

Nuclear Export Controls: Policy And Regulations

Nonproliferation Review, Winter 1994, p. 5.

64
13. The Munitions List used by the Wassenaar Arrangem

slightly modified version of COCOM’s International Munition

The Core List of Dual-Use Technologies is a narrow version of CO

International Industrial list and is divided into subcategories o

intermediate, and sensitive technologies. Information sharing 

members and end-use certification agreements are required f

category of technology; exports of sensitive technologies are su

“presumptive denial of transfer requests.” For a complete explan

the negotiation and contents of the Wassenaar Arrangeme

Inventory of International Nonproliferation Organizations and 

1996-1997, Monterey, CA: Center for Nonproliferation Studies

pp. 28-30. This report can be found at http://cns.miis.edu/pub

14. Countries have to meet four criteria to become a membe

Wassenaar Arrangement: (1) Be a producer/exporter of a

associated dual-use goods and technologies; (2) Have national 

which do not permit the sale of arms or sensitive dual-use i

countries whose behavior is a cause for concern; (3) Ad

international nonproliferation norms and guidelines; a

Implement fully effective export controls. See Inventory of Intern

Nonproliferation Organizations and Regimes 1996-1997.

15. News Briefing by the Foreign Ministry, Beijing Review, J

17-23, 1994, p. 14; Bates Gill, “Determinants And Directio

Chinese Weapons Imports,” Pacific Review, Vol. 8, No. 2, 1995, 

16. “One On One: Interview with Ambassador Sha Zukang,” 

News, February 1, 1999, p. 22.

17. The Ministry of Foreign Trade and Economic Cooperat

the Ministry of Science and Technology issued a circular 

publication and distribution of “The Procedures for the Manage

Restricted Technology Export.” For the text of the regulatio

Zhonghua Remin Gongheguo Duiwai Maoyi Jingji Hezuo Bu W

as translated in Foreign Broadcast Information Service (he

FBIS), January 17, 1999; “China Approves New Export Cont

Sensitive Technology,” Reuters, December 2, 1998.

18. James A. Baker III, The Politics of Diplomacy: Revoluti

and Peace 1989-1992, New York: G.P. Putnam’s Sons, 1995, p. 

19. “China Responsible for its Arms Sales,” Beijing Review

2-8, 1992, p. 33.

20. See also Appendix III and Appendix V.

65
21. Interviews with Chinese military officials, Beijing, Sep

1998. For a recent discussion of COSTIND’s role and its relation

the defense enterprises, see “Speech of Liu Jibin at COSTIND W

Meeting,” Zhongguo Hangkong Bao (China Aviation News), A

1999. Also see Tseng Hai-tao, “Jiang Zemin Pushes F

Restructuring of Military Industry—Developments of 

Commission of Science, Technology, and Industry for National D

and Five Major Ordnance Corporations,” Kuang Chiao Chin

Angle), July 16, 1998, p. 18-20, as translated in FBIS-CHI-98-20

28, 1998; Liu Xiaohua, “Zhu Rongji Discusses Matters o

Importance With Military—Inside Story of Reorganization of 

Five Major Military Industry Departments,” Kuang Chiao 

February 6, 1998 as translated in FBIS-CHI-98-065, March 6, 19

COSTIND’s continued role in defense conversion, see Liu 

“Implement the Guideline of Military-Civilian Integration, Reju

the National Defense Science and Technology Industry,” Renmin 

February 2, 1999, p. 12, as translated in FBIS, February 2, 199

22. China’s nuclear export control law specifies that com

must first apply to the CAEA as part of the authorization pro

selling controlled nuclear equipment and technologies.

23. Conversation with Foreign Ministry and MOFTEC o

April 1999 and February 2000.

24. The Chinese translation of the General Armaments Depa

is Zong Zhuangbei Bu (×Ü×° ± ̧ 2¿). Although the term “zhuan

often translated as “equipment,” Chinese officials and s

normally refer to this new organization as the General Arm

Department and not as the General Equipment Department.

25. Interviews with U.S. defense officials in Beijing.

26. The “First Division” covers nuclear issues such as the 

testing, nuclear nonproliferation, fissile material issues, and 

export controls; the “Second Division” covers chemical and bi

issues such as China’s compliance with the CWC and chemica

controls; the “Fourth Division” (also called the “Compreh

Division”) is principally devoted to meeting the research need

department but has also covered Southeast Asian security 

Discussions with Chinese officials, Beijing, September 1998. F

background, see Individuals, Institutions, and Policies in the 

Nonproliferation and Arms Control Community, Conference 

The East Asia Nonproliferation Project (EANP), Monterey CA: 

for Nonproliferation Studies, November 1997; Wendy Frieman a

out a basic organizational structure for Chinese arms 

66
decisionmaking in her Chinese Arms Control Organizations: 

Primer, McLean: Science Applications International Corpo

January 17, 1997. Frieman’s work is now maintained as an u

section within the China Profiles database operated by the Ea

Nonproliferation Project, Center for Nonproliferation S

Monterey, CA. This database is accessible at http://cns.miis.e

27. John W. Lewis, Hua Di, and Xue Litai, “Beijing’s D

Establishment: Solving the Arms-Export Enigma,” Intern

Security, Spring 1991; Lu Ning, The Dynamics of Foreign

Decisionmaking in China, Boulder, CO: Westview Press, 19

113-117. 

28. Conversation with senior MOFTEC official in the Scie

Technology Department, Beijing, March 2000. This official did n

which government organizations were involved in vetting p

military exports.

29. This section draws largely from James Mulvenon, 

Military Commerce and U.S. National Security, Center for Asia 

Policy, Santa Monica CA: The Rand Corporation, July 1997.

30. Mulvenon, Chinese Military Commerce, p. 5.

31. For more detail on the operation of this system, se

Frankenstein and Bates Gill, “Current and Future Challenges 

Chinese Defense Industries,” The China Quarterly, June 19

394-427. 

32. Tai Ming Cheung, “Arms Reduction: The PLA’s Main W

Dealer Goes Civilian,” Far Eastern Economic Review, October 1

p. 68; James Mulvenon, Chinese Military Commerce; Bat

“Determinants And Directions For Chinese Weapons Import

Pacific Review, Vol. 8, No. 2, 1995, pp. 369-370; Hua Di, “China

Ballistic Missile Proliferation,” in William C. Potter and Har

Jencks, eds., The International Missile Bazaar: The New Su

Network, Boulder, CO: Westview Press, 1994, p. 170; John W

Hua Di, and Xue Litai, “Beijing’s Defense Establishment: Solv

Arms-Export Enigma,” International Security, Spring 1991, p. 

Kong, “China’s Arms Trade Bureaucracy,” Jane’s Intelligence 

February 1994, p. 81; “Patent Office Weaves Web In China Arm

York Times, August 22, 1991, p. A19.

33. Mulvenon, Chinese Military Commerce, pp. 14-15.

67
34. This information was taken from the China X

Export-Import Corporation internet homepage. It can be fo

http://www.cxxcs.com/xinxin-homepage. 

35. Some of this information was taken from the NORINCO i

homepage; it can be found at http://www.norinco.com. Also 

Ming Cheung, “Elusive Ploughshares: Chinese Defense Plants 

Civilian Production,” The Far Eastern Economic Review, Octo

1993, pp. 70-71; “NORINCO’s Long Arm,” Far Eastern Ec

Review, September 7, 1989, p. 12; Mulvenon, China’s M

Commerce.

36. Company brochure of CPMIEC, Military Division, 

Precision Machinery Export-Import Corporation, Beijing, China

Strategic Weapon Systems, various issues; Hua Di, in Potter and 

Missile Bazaar, p. 165; Robert Shuey and Shirley A. Kan, “C

Missile and Nuclear Proliferation: Issues For Congress,” CR

Brief, September 29, 1995, p. 4; “Testimony of Timothy V. Mc

Senior Research Associate, Program For Nonproliferation S

Monterey Institute Of International Studies,” House Foreign 

Committee, Subcommittee On International Security, Intern

Organizations And Human Rights, April 28, 1993, p. 170; T

Report, May 1995, pp. 6-7; “China Helping Iranian M

Developments,” Jane’s Defence Weekly, July 17, 1996, p. 13; J

Lewis and Hua Di, “China’s Ballistic Missile Programs: Techn

Strategies, Goals,” International Security, Fall 1992, p. 5.

37. A website for CGWIC can be found at http://www.cyberex

company/gw/gw.htm. 

38. “CZ” stands for “changzheng” which means “long march

39. The authors are indebted to Kenneth Allen for this infor

For more background, see Kenneth W. Allen, et al., China’s A

Enters the 21st Century, Santa Monica, CA: The RAND Corp

1995.

40. This section draws largely from Evan S. Medeiros, “Re

Chinese Defense Conversion: Some Evidence From the Shipb

Industry,” Issues and Studies, May 1998, pp. 79-101; Evan S. M

“Linking Defense Conversion and Military Modernization in C

Case Study of China’s Shipbuilding Industry,” unpub

manuscript. For a comprehensive overview of the structu

operation of China’s shipbuilding industry, see Shipbuilding 

People’s Republic of China, private consultants’ report, Hong 

Asian Strategic Limited, 1995.

68
41. Official CSTC information can be found on the company 

at http://www.chinaships.com. 

42. This quotation was taken from the CSTC website.

43. See also Appendix V.

44. For more details on this smuggling incident and an ana

the security implications of Chinese military companies operatin

United States, see James Mulvenon, Chinese Military Commerce

45. This description and analysis of the 1997 regulations will 

the SACMPT and the SBMPT, even though they have been ab

because their successor organizations officially have not been 

yet. The 1997 regulations define military exports as “com

exports of military-purpose equipment, specialized production fa

and other materials, technologies, and related services.” Th

includes the export of “police-purpose equipment.” See Articles 2 

of the regulations.

46. The 1997 regulations stipulate that all documents w

military trading company submits to the SACMPT during this 

process are confidential in order to preserve “the legitimate rig

interests of the military trading companies.” See Article 

Regulations on Export Control of Military Items.

47. A U.S. export control expert maintains that China has 

limit the number of authorized exporters of dual-use technologie

than a dozen. Interview with Richard Cupitt, February 1999.

48. The 1997 regulations specify that the SACMPT “will form

the procedures for license application and review, but these pro

are not yet publicly available. It is not known if these procedu

differ from the ones used by MOFTEC.

49. The 1997 regulations do not explicitly distinguish b

major military exports and other military products. There is no 

list appended to the regulations which would offer some guidan

50. Interviews with Chinese officials and academics, 1999

U.S. experts argue that the SACMPT is the same organization 

Military Products Export Leading Small Group; yet, Chinese s

and officials insist that they are two different bodies that have d

roles and responsibilities and operate at different levels 

government. 

69
51. See Article 22, Regulations on Export Control of Military 

52. Draft version of Richard T. Cupitt and Yuzo Murayama

Controls of the People’s Republic of China1998, Center for Intern

Trade and Security, University of Georgia, p. 17.

53. The responsibilities among various government agen

controlling exports of nuclear and chemical equipment, materia

technologies are much clearer, although some questions still 

For more detail, see Bates Gill and Evan S. Medeiros, “Fore

Domestic Influences on Chinese Arms Control and Nonprolif

Policies,” The China Quarterly, March 2000.

54. Conversation with mid-level officials in the Arms Cont

Disarmament Department of China’s Foreign Ministry, Sep

1998 and April 1999.

55. John Pomfret, “Chinese Army Out of Business? Beijing R

Would Strip Military of Its Commercial Empire,” The Washingt

November 23, 1998, p. A20.

56. For information on the changes in the aerospace sec

“Aerospace Restructuring Said Not to Affect Great Wall,” Chin

(internet version), November 23, 1998; Michael Mecham, “Chin

Civil, Military Space Work,” Aviation Week and Space Tech

October 5, 1998, p. 23. For background on changes in the nuclear 

see “Nuclear Sector Reform Under Way,” China Daily, Febr

1999; Mark Hibbs, “With Demand Below Projections, China Ma

Nuclear Projects,” Nucleonics Week, March 4, 1999.

57. See “Nuclear Sector Reform Under Way,” China Daily, Fe

5, 1999. This report notes that China’s aviation industry has 

split into two groups, and that China’s other defense industries 

undergoing restructuring.

58. According to one report, the GAD has six subdepar

comprehensive planning, arms and services equipment

equipment, general equipment support, electronic informati

technological groundwork, and foreign affairs. Pai Chuan, “Co

System of the Chinese Army,” Ching Pao, December 1, 1998, pp

as translated in FBIS, December 1, 1998; Kuan Cha-Chia, “Jiang 

Sets Up General Equipment Department, Zhu Rongji Ad

Military Reform,” Kuang Chiao Ching, April 16, 1998, pp. 10-1

Other testing bases under GAD control are: Beijing Co

Center Northwest Nuclear Test Base, Shanghai Maritime 

70
Measurement Ship Base, Jiuquan Satellite Launch Center, T

Satellite Launch Center, Xian Satellite Launch Center, 

Aerodynamics R&D Center, and Baicheng Weapons Test Cen

China’s International Defense Industrial Organizations, D

Intelligence Reference Document DI-1921-60-98, Defense Inte

Agency, June 15, 1998.

59. Cupitt and Murayama, Export Controls in the People’s R

of China, p. 16.

60. The State Economic and Trade Commission of the P

Republic of China (SETC) was established in March 1993 dur

Cabinet restructuring scheme approved at the Eighth National P

Congress. The SETC is a Cabinet-level department whose mand

manage the operations of China’s national economy. Operatin

the State Council, the SETC has 17 offices which conduct resea

planning on the reform and restructuring of China’s economy 

with the objectives and needs of establishing a socialist 

economy.” This information is drawn the SETC homepag

http://www.setc.cn.net.

61. Interview with James Mulvenon, RAND Corporation, J

2000.

62.“PLA Exports Weapons for Foreign Exchange Profit,” Mi

October 14, 1999, p. A17, as translated in FBIS, October 19, 19

63. Interviews with PLA experts, Hong Kong, October 199

Rongji Promises to Make Up for PLA Losses,” Tao Jih Pao, J

1998, p. A5, as translated in FBIS-CHI-98-205, July 24, 1998.

64. The authors are grateful to James Mulvenon for his insi

the recent changes within the PLA and their possible impact on 

arms sales.

71
CHAPTER 3

CONCLUSIONS

Despite the declining volume of Chinese arms ex

China’s shrinking market share, and the possibility th

arms exports control process will become rationa

effective, Chinese arms transfers will continue to 

issue of concern for U.S. policymakers in the coming y

China’s past willingness to introduce certain mi

products such as cruise missiles and ballistic m

technologies into regions of U.S. concern (e.g., the M

East and South Asia) suggests that Chinese arms ex

will remain of interest to U.S. officials, policy analyst

military planners. Over the years, China has estab

strong political and technical relationships wit

governments and other entities in these countries 

can easily facilitate continued and possibly upgraded 

exports to those regions.

To be sure, China has made various pledges to 

exports of missiles and related technologies to South 

and the Middle East. Yet, China’s current commitmen

mostly bilateral, political promises made in the cont

U.S.-China bargaining; they do not appear to be rock

and unequivocal. In the past, China has soug

circumvent its commitments by following the letter 

obligations, but not the spirit of them, or by suggestin

Beijing’s interpretations of its commitments differ 

Washington’s. Thus, Beijing’s commitments may rest 

on political understandings about U.S.-China rela

than on apolitical contractual obligations. As such, a 

downturn in Sino-U.S. relations could lead Beiji

overturn commitments and enter upon a new round of 

exports.

73
Such a scenario is not unlikely given the ran

Sino-U.S. differences, especially over security issue

Taiwan. China continues to link its restraint in 

exports to diminishing U.S. arms sales to Taiwan

China could use its arms exports to particular cou

(e.g., Iran) as leverage in bilateral debates 

Taiwan-related issues. Indeed, China’s vehe

opposition to current U.S. proposals to provide 

technology to East Asia partners, especially to Ta

could trigger a new round of arms exports from Be

Chinese officials have already indicated they consider 

sales to Taiwan to be a form of missile proliferation 

may lead Beijing to reconsider its existing m

nonproliferation commitments. One possible scena

that China could restart its cruise missile sales to 

considering that its previous ban on such exports cam

response to significant U.S. pressure and is not p

China’s international nonproliferation commitments

Further complicating these issues are the ambig

and lack of transparency surrounding China’s o

policies and processes related to arms exports. C

currently declared policies on arms transfers an

regulations covering the review of pending export

unclear on several points. The principles which 

China’s official arms export policy are sufficiently flex

justify almost any export on the grounds that it contr

to the legitimate defense requirements of the recipie

addition, the 1997 regulations covering military pr

exports are vague on key points such as the number

types of military organizations which can export arm

nature and extent of interagency review of pending mi

exports, and—most importantly—which items are co

by the regulations. In the aggregate, these ambiguiti

particularly worrisome because they can pr

opportunities for Chinese entities to illicitly export mi

goods without the knowledge of central govern

authorities. 

74
Indeed, this may already be occurring. In early 

reports surfaced that a Chinese company had sold 

type of short-range missile/long-range artillery syst

Armenia. In response to protests of the deal by Azerba

Foreign Ministry, two senior Chinese officials—C

Ambassador to Armenia Zhu Zhaoshun and Vice Fo

Minister Wang Yingfan—admitted that Beijing di

know about or approve the deal, and that the ce

government has had difficulty controlling the activit

private Chinese arms exporters despite the 1997 law

the Chinese officials pledged that similar incidents w

not occur in the future.

2

Furthermore, the ongoing reorganization of C

government, especially within the defense indu

organizations, has injected a new and possibly 

troublesome variable into the arms export equation. 

changes call into question the continuing relevance 

past regulations as well as the nature of the export r

process. It is currently unclear which agency is respo

for overseeing and approving China’s military export

it is also ambiguous how the approval process has cha

Other important questions remain unanswered su

which government agencies are still involved i

approval process and which are not; what kinds of infl

these players have in the new process; and what ty

high-level involvement in the process still exists? Und

scenario, the new COSTIND has assumed responsibil

vetting China’s arms exports. But this outcome also 

the prospect that the financial interests of China’s mi

industries, which COSTIND oversees, may be a g

factor in arms export decisionmaking. However, as B

seeks to address the range of uncertaintie

reorganization has created, the risks that illicit we

exports could sneak through the cracks of China’s evo

export control system have increased. These evo

complexities argue for continued close and conc

observation of Chinese arms exports by U.S. diplo

75
policymakers, military planners, and civilian and mi

intelligence organizations.

ENDNOTES - CHAPTER 3

1. For a summary of China’s opposition to U.S. missile 

programs, see Evan S. Medeiros, Missiles, Theater Missile Defe

Regional Stability, Conference Report of the Second U.S

Conference on Arms Control, Disarmament and Nonproliferatio

Asia Nonproliferation Project, Monterey, CA: Cent

Nonproliferation Studies, April 1999.

2. The exact system sold to Armenia is currently unclea

probably an artillery system, not a missile, possibly similar to th

which China sold to Turkey in 1997. For official Chinese respo

the deal, see “Chinese Envoy on Missiles, Kosovo,” Noyan Ta

Russian), June 16, 1999, as translated in FBIS, June 16, 1999; 

Tells Azeri Envoy There Is No Recurrence of Arms Supp

Armenia,” Turan News Agency, June 3, 1999, as translated 

Summary of World Broadcasts, June 5, 1999.

76
FIGURES

Unless otherwise indicated, the figures used throu

this paper are taken from two sources: Richa

Grimmett, Conventional Arms Transfers to Deve

Nations, 1991-1998, U.S. Congressional Research Se

Washington, DC: Library of Congress, August 4, 1999

Richard F. Grimmett, Conventional Arms Transf

Developing Nations, 1990-1997, U.S. Congress

Research Service, Washington, DC: Library of Con

July 31, 1998. All other figures are taken from 

Stockholm International Peace Research Institute’s 

Yearbook 1990 to 1998. Both sets of figures reflect 

deliveries and not arms transfer agreements signed du

specific year. All CRS figures are expressed in curren

dollars to generally reflect the exchange rates 

prevailed during a specific year. All SIPRI figure

expressed in SIPRI trend indicator values. It is import

note that SIPRI “trend indicator values,” using 

figures, do not measure the actual monetary value of 

transfers, but serve as a measurement of “volume,” bas

a weapon system’s capabilities. They should not be di

equated or compared with monetary values attribu

transfers in other studies. See the SIPRI public

Sources and Methods for SIPRI Research on M

Expenditure, Arms Transfers, and Arms Production, 

Fact Sheet, Stockholm, January 1995.

77
78

Figure 1. U.S. Congressional Research Ser

Data for China’s Arms Deliveries, 1990-1998.

Figure 2. SIPRI Data for China’s A

Deliveries, 1990-1998.
79

Figure 3. U.S. Congressional Research Ser

Data for Total World Arms Deliverie

Developing Nations, 1990-1998.

Figure 4. SIPRI Data for Total World A

Deliveries to Developing Nations, 1990-1998.
80

Figure 5. CRS and SIPRI Data on Ch

Percentage of World Arms Transfers (based u

current U.S. dollars).
APPENDIX I

ACRONYMS

ACME Arms Control in the Middle East

AED Aeronautical Engineering Departme

APC armored personnel carrier

APL anti-personnel landmines

ASM anti-ship missile

AVIC Aviation Industries of China

CAD computer aided design

CAEA China Atomic Energy Agency

CAM computer aided manufacture

CASC China Aerospace Corporation

CATIC China National Aero-Technology

Import- ExportCorporation

CCL Commerce Department Control List

CDSTIC China Defense Science and

Technology Information Center

CGWIC China Great Wall Industry Corporat

CMC Central Military Commission

CNNC China National Nuclear Corporation

COCOM Coordinating Committee on

Multilateral Export Controls

COSTIND State Commission on Science,

Technology and Industry for

National Defense

81
CPMIEC China Precision Machinery

Import-Export Corporation

CRS Congressional Research Service

CSSC China State Shipbuilding Corporatio

CSTC China Shipbuilding Trading

Corporation

CTBT Comprehensive Test Ban Treaty

FMCT Fissile Material Cutoff Treaty

FTL Foreign Trade Law

GAC General Administration of Customs

GAD General Armaments Department

GLD General Logistics Department

GSD General Staff Department

MFA Ministry of Foreign Affairs

ML Munitions List

MOFTEC Ministry of Foreign Trade

and Economic Cooperation

MOU Memorandum of Understanding

MTCR Missile Technology Control Regime

NATO North Atlantic Treaty Organization

NORINCO China North Industries Corporation

NPT Nuclear Nonproliferation Treaty

PAP Peoples Armed Police

PLA Peoples Liberation Army

LAAF Peoples Liberation Army Air Force

SACMPT State Administration Committee

on Military Products Trade

82
SAM surface-to-air missile

SBMPT State Bureau of Military Products

Trade

SETC State Economic and Trade Commiss

SLV space launch vehicle

SSM surface-to-surface missile

TMD theater missile defense

UNROCA United Nations Register

of Conventional Arms

83
APPENDIX II

PEOPLE’S REPUBLIC OF CHINA

REGULATIONS ON EXPORT CONTROL 

MILITARY ITEMS

OCTOBER 22, 1997

Translated from Chinese by

The East Asia Nonproliferation Project

Center for Nonproliferation Studies

I. General Rules

ARTICLE 1

The Regulations are formulated to streng

centralized management of military exports and ma

normal military export order.

ARTICLE 2

The military exports referred to in the Regulation

commercial exports of military-purpose equipm

specialized production facilities and other mate

technologies and related services.

ARTICLE 3

Under the leadership of the State Council an

Central Military Commission, the State Administ

Committee on Military Products Trade (SACMPT) 

People’s Republic of China is responsible for military e

activities nationwide.

The State Bureau of Military Products Trade 

People’s Republic of China, the executive body o

85
SACMPT, implements the supervision and managem

nationwide military exports.

ARTICLE 4

The State enforces a centralized military e

management mechanism to prohibit any military e

activities that damage the national interests and se

and to maintain normal military export order in accor

with the law.

ARTICLE 5

All military exports should be consistent wit

following principles:

(1) They should assist the recipient country to deve

legitimate self-defense capabilities;

(2) They should not jeopardize the peace, securit

stability in the relevant regions and around the worl

(3) They should not interfere in the internal affairs 

recipient country.

ARTICLE 6

Provisions of international treaties which the Pe

Republic of China has concluded or joined shall prev

case they are different from the Regulations. How

clauses about which the People’s Republic of Chin

made statements of reservation are excluded.

II. Military Trading Companies

ARTICLE 7

Military trading companies referred to in 

Regulations are corporate legal entities that have l

obtained military export authorization to engage in mi

export activities within the approved business scope.

86
ARTICLE 8

Military export authorization is reviewed and gr

by the SACMPT. Specific application procedures w

stipulated by the SACMPT.

ARTICLE 9

Military trading companies will operate independ

in accordance with the law and be responsible for thei

profits and losses.

ARTICLE 10

Military trading companies shall abide by cont

guarantee product quality and improve after-sales ser

ARTICLE 11

Military trading companies, as required by the SAC

regulations, shall faithfully submit documents and 

related to their military export activities to the rel

departments. These departments shall mai

commercial confidentiality and safeguard the legit

rights and interests of the military trading companie

ARTICLE 12

Military trading companies can entrust autho

military export transportation agents to handle e

transportation and other related businesses. The SAC

will draw up the specifics in this aspect.

III. Military Export Management

ARTICLE 13

The State manages military exports through a lice

system. 

Military exports and contracts shall be filed for r

and approval in accordance with the Regulations. Mi

exports must be accompanied by military export licen

87
ARTICLE 14

Military exports are reviewed and approved by the 

Bureau of Military Products Trade or by the State Bur

Military Products Trade in joint consultation wit

relevant departments in the State Council and the Ce

Military Commission.

ARTICLE 15

Once the military export is approved, the mi

trading company can sign military export contracts 

overseas buyers. The signed military export contract 

be submitted to the State Bureau of Military Pro

Trade for review and approval. The State Bureau of Mi

Products Trade shall make an approval or decline de

within fifteen days upon receipt of the application. Mi

export contracts are valid only upon such approval.

Military trading companies shall append wit

military export contract approval application the 

certification documents from recipient countries when 

with the State Bureau of Military Products Trade.

ARTICLE 16

Major military exports and their related contracts 

be reviewed by the SACMPT and submitted to the 

Council and the Central Military Commission for appr

ARTICLE 17

Military trading companies shall apply to obtai

military export license with the approval documents f

export contracts prior to engaging in military exports

State Bureau of Military Products Trade shall 

military export licenses within five days upon receipt 

application to those requests that conform to the mi

export contract specifications.

The Customs will accept declarations upon presen

of the license to examine and allow passage of the ite

accordance with the relevant State regulations.

88
ARTICLE 18

The SACMPT will formulate the procedure

reviewing and approving military exports and contrac

for issuing military export licenses.

ARTICLE 19

Military export notification will be issued jointly b

State Bureau of Military Products Trade with 

relevant departments. Upon receipt of such notificatio

departments and local people’s governments conc

shall seriously fulfill their duties in accordance wit

relevant State provisions to ensure the safety, promp

and accuracy of military exports.

IV. Military Export Order

ARTICLE 20

No units or organizations shall engage in military e

activities without obtaining authorization in advance

The State prohibits individuals in military e

operations. 

ARTICLE 21

Military trading companies shall abide by the law 

provisions of administrative regulations in their mi

export activities to ensure the normal order of mi

exports. 

ARTICLE 22

Military trading companies shall not exhibit any 

following behaviors in their military export activities

(1) Endanger national security or social and 

interests; 

(2) Supplant competitors with unfair competitive m

89
(3) Infringe upon intellectual rights protected b

laws of the People’s Republic of China;

(4) Forge, alter, fraudulently obtain or transfer mi

export approval documents, contract approval docum

licenses, valid certificates from recipient countries

other documents;

(5) Exceed the defined and approved scope of activit

(6) Other activities that violate the laws 

administrative regulations.

ARTICLE 23

The State Bureau of Military Products Trade, on it

initiative or upon requests from other military tr

companies, can take actions against conducts that int

with the normal military export order.

V. Legal Responsibilities

ARTICLE 24

The State Bureau of Military Products Trade wi

warning to and demand within a definite time corr

measures from the military trading companies that v

Article 11 of the Regulations. If no correction is made w

the prescribed period of time, the State Bureau of Mi

Products Trade will request the SACMPT to revok

military export authorizations granted to such mi

trading companies.

ARTICLE 25

The military trading companies that violate Arti

and Article 22 of the Regulations will be penalized b

relevant State authorities according to the laws 

administrative regulations. The State Bureau of Mi

Products Trade can request the SACMPT to revok

military export authorizations granted to such mi

trading companies.

90
ARTICLE 26

Units that violate Article 20 of the Regulations wil

their illegal activities closed down by the State Bure

Military Products Trade and will be penalized by the 

authorities concerned according to the relevant law

administrative regulations.

ARTICLE 27

Any violations to the Regulations that cons

criminal offenses will be prosecuted according to law

ARTICLE 28

Military trading companies that plead not guilty 

penalization that revokes their export authorization

apply for review to the SACMPT within fifteen da

receipt of the penalization notification. The SACMPT 

make a review decision within fifteen days of receipt 

application. The review decision shall be deemed fina

ARTICLE 29

Staff working in national military export administ

and management posts who neglect duties, pe

fraudulent practices for selfish ends, abuse power, or a

and demand bribes shall be prosecuted according to 

criminal offenses have been committed. Discipl

penalties will be given to those whose conducts d

constitute criminal offenses.

VI. Appendix

ARTICLE 30

The export of police-purpose equipment is govern

the Regulations.

ARTICLE 31

The Regulations become effective on January 1, 1

91
93
95
96
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APPENDIX VI

INTERNET SITES FOR CHINESE

ORGANIZATIONS INVOLVED IN MILITA

EXPORTS AND EXPORT CONTROLS

China Great Wall Industry Corporation

www.cyberexp.com/company/gw/gw.htm

China Precision Machinery Import-Export Fuz

Corporation

www.nease.net/~lngzol/tungoil.html

China Precision Machinery Import-Export

Shenzhen Corporation

www.cpmiesc.com

China National Aero-Technology

Import-Export Corporation (CATIC)

www.catic.com

Aviation Industries of China

www.avic.com.cn

China Shipbuilding Trading Company Ltd.

www.shipbuilding.com.cn

cstckm.com

www.chinaships.com

China Xinxing Export-Import Corporation

www.cxxc.com/xinxing-homepage

China North Industries Corporation (NORINC

www.norinco.com

www.norincogroup.com.cn

General Defense Industry-related Websites

www.nuclear.cetin.net.cn

www.aero.cetin.net.cn

99
www.electron.cetin.net.cn

www.ship.cetin.net.cn

www.north.cetin.net.cn

State Commission on Science Technology and

Industry for National Defense (COSTIND)

www.costind.gov.cn

Ministry of Foreign Affairs

www.fmprc.gov.cn

Ministry of Foreign Trade and Economic

Cooperation

www.moftec.com

State Economic and Trade Commission (SETC)

www.setc.cn.net

100
ABOUT THE AUTHORS

EVAN S. MEDEIROS is currently a Senior Res

Associate on the East Asia Nonproliferation Project 

Center for Nonproliferation Studies in Mont

California. During 2000, he is visiting fellow at the Ins

of American Studies at the China Academy of S

Sciences in Beijing and a frequent lecturer at C

Foreign Affairs College. Before joining the Cent

Nonproliferation Studies, Mr. Medeiros was a Ful

Scholar at the University of Cambridge and the Sch

Oriental and African Studies, University of London (SO

Prior to working and studying in the United Kin

Mr. Medeiros was a Senior Research Analyst at the 

Control Association in Washington, DC. From 1993-9

Medeiros was a Project Associate with the Nu

Non-Proliferation Project at the Carnegie Endowme

International Peace and co-author with Leonard Sp

and Mark G. McDonough of Tracking Nuclear Prolife

(1995). Mr. Medeiros’ articles have appeared in 

publications as The China Quarterly; Issues and Stud

Journal of Chinese Studies and International Affair

Los Angeles Times; The Washington Post; Interna

Herald Tribune; Christian Science Monitor; The B

Globe; Defense News; Asia Times; and the San 

Union-Tribune. 

He holds an M.Phil in International Relations fro

University of Cambridge, an M.A. in China Studies fro

University of London’s School of Oriental and A

Studies, and a B.A. in Philosophy from Bates Colleg

Medeiros is currently a Ph.D. candidate at the L

School of Economics and Political Science writ

dissertation about the role and significance of arms c

in U.S.-China relations since normalization.

BATES GILL is Senior Fellow in Foreign Policy S

and Director of the Center for Northeast Asian 

101
Studies at the Brookings Institution in Washington, D

previously directed East Asian programs at the Cent

Nonproliferation Studies at the Monterey Inst

Monterey, California, and at the Stockholm Interna

Peace Research Institute, and formerly held the Fei Y

Chair in Comparative Politics at the Johns Ho

University Center for Chinese and American St

Nanjing, China. A specialist in East Asian foreign 

and politics, his research focuses primarily on Nort

Asian political, security, and military-technical is

especially with regard to China. His current res

addresses the divergence in strategic outlook w

characterizes the U.S.-China relationship.

He is the author of two books, China’s Arms Acqui

from Abroad: A Quest for “Superb and Secret Wea

(Oxford University Press, 1995, with Taeho Kim

Chinese Arms Transfers (Praeger, 1992). His third bo

which he is co-editor, is entitled, Arms, Transparenc

Security in Southeast Asia (Oxford University Press, 

His works have appeared in The Washington 

Christian Science Monitor, Pacific Review, Asian S

Foreign Affairs, National Interest, Orbis, China Eco

Review, China Quarterly, SIPRI Yearbook, Far E

Economic Review, Jane’s Defence Weekly, Aviation W

Space Technology, Jane’s Defence Yearbook, and Bu

Times.

Dr. Gill received his Ph.D. in foreign affairs fro

Woodrow Wilson Department of Government and Fo

Affairs, University of Virginia.

102
U.S. ARMY WAR COLLEGE

Major General Robert R. Ivany

Commandant

*****

STRATEGIC STUDIES INSTITUTE

Director

Professor Douglas C. Lovelace, Jr.

Director of Research

Dr. Earl H. Tilford, Jr.

Authors

Mr. Evan S. Medeiros

Dr. Bates Gill

Director of Publications and Production

Ms. Marianne P. Cowling

Publications Assistant

Ms. Rita A. Rummel

*****

Composition

Mrs. Christine A. Williams

Cover Artist

Mr. James E. Kistler