But many military and intelligence experts say the scandal is, for the most part, false fire. Not only are the dealings of Loral, Hughes and other U.S. companies not a security threat, but their China contracts may be crucial to maintaining America's military edge in the next century. America's defense edge, in other words, depends more than ever on its companies' commercial success. The Pentagon needs high-tech products for the military but no longer buys enough of them to keep U.S. defense companies in business. And dozens of other countries now produce the same stuff.
Satellites are a good example of just how fused commerce and defense have become.
And that means launching in China. Today the good news is that the balance of power between Beijing and investors may be shifting. Thanks to the Asian contagion, the glow has come off the China market at the very moment Prime Minister Zhu Rongji is privatizing hundreds of big state enterprises and badly needs foreign investment. Others are diverting investments to Latin America. For many U.S. businessmen, things at this point can't go much more wrong.