Compromised - Chinese access to high technology data and defense industry secrets

National Review, June 14, 1999 by Richard Lowry

The Year of the Sucker.

In October 1998, an investigator with the House committee formed to look into Chinese espionage and acquisition of advanced U.S. technology questioned an official of Hughes Space and Communications, a California company. Had the corporation given China information to "improve" its rockets after one had blown up with a Hughes satellite on top of it? "Well," answered the official, "I'm not sure 'improve' is a difficult word." Only after several similar dodges would he admit that Hughes had indeed suggested improvements to China: "If they were actually improvements."

The report recently issued by the committee, headed by California Republican Chris Cox, makes clear that, after losing two satellites in Chinese launches, Hughes knew it had to make Chinese rockets more reliable and knew that such help was illegal without a State Department license. Its decision was easy. It handed China the technology, without a license.

The Cox report is a story of an open society and its enemy (or its "strategic partner"), a case study in how the last major Communist dictatorship has made liberal democracy and capitalism work for it. In China, all defense-related companies are subordinated to the military; in the United States, corporations strain to operate outside the minimal rules put in their way to protect the national security ("depends on what your definition of 'improve' is"). China charges almost all its official visitors to the U.S. (in 1996, some 80,000 came as part of various delegations) with information-gathering tasks, and is liable to enlist any of its citizens in its campaign to steal U.S. technology; Washington, meanwhile, refuses to wiretap a suspected spy working in a nuclear lab for fear of violating his rights.

Freedom and the rule of law of course have their security costs. But a vigilant government would work to minimize them. Instead of checking the heedless capitalist impulses of firms like Hughes, the Clinton administration has encouraged them-all has been subordinated to trade. Unrestrained commerce, coupled with the see-no-evil approach to fundraising that produced Trie, Chung, and Huang, dovetails with an old liberal tendency: to believe that national interests don't really diverge, that negotiation and cultural exchange (even at our nuclear labs) will smooth out any differences.

Energy Department security officer Notra Trulock testified before Congress that when he warned the administration about Chinese spying in 1995, his concerns were shrugged off as those of "a Cold War warrior." No McCarthyites here! (No racists, either-presumably among elements of the Clinton administration the loyalty of ethnic Chinese is automatically considered beyond reproach.) So the Chinese scored a series of intelligence coups that must make them think that in the United States it is perpetually the Year of the Sucker.

China's push to steal U.S. nuclear secrets began two decades ago in the wake of the Cultural Revolution (which hadn't done wonders for the advancement of physics and engineering). After seeing high-tech munitions in action in the Gulf War, the Chinese placed a renewed, ongoing emphasis on acquiring military technology. This, together with the newest revelations, puts a particularly shameful light on the Democratic uproar when Sen. Fred Thompson talked in 1997 of a Chinese "plan" to buy access and influence in the United States.

The most spectacular Chinese espionage successes have come in the U.S. nuclear labs. These have traditionally been run like college campuses, with security arrangements straight out of Animal House. China stole classified information on every currently deployed American warhead, a disgraceful record for which all recent administrations, as Democrats stress, share some blame. But the Clinton administration's unique contribution is that it knew what was happening and chose to try to ignore it and spin it away.

And the labs are just the beginning. The Chinese have pushed on all fronts. In joint ventures between Chinese and American firms, China often requires technology transfers as part of the deal. According to the Cox report, "The Communist Party has long believed that forcing technology from foreign firms is not only critical to the PRC, but also is a cost that foreign firms will bear in order to obtain PRC market entry." Right on both counts.

Such ventures potentially make for an identification of interests between the U.S. firms and the Chinese. This is what happened with Hughes and another satellite manufacturer (and provider of illicit information to the Chinese), Loral Space and Communications. Doing business with these firms gave the Chinese high-placed allies. In 1996, Loral chairman Bernard Schwartz was no less than the number-one Democratic donor. C. Michael Armstrong, former chief of Hughes, served as chairman of President Clinton's Export Council at the same time his company was illegally exporting rocket technology to China. Both men pushed to get export-licensing authority transferred from the State Department to the more relaxed Commerce Department-an arrangement that suited everyone: The administration got its donations, the firms got their business, and the Chinese got their chance to filch U.S. technology.