By Shirley A. Khan. and FAS.

Summary.

Congress has long been concerned about whether U.S. policy advances the national interest in reducing the role of the People’s Republic of China (PRC) in the proliferation of weapons of mass destruction (WMD) and missiles that could deliver them. Recipients of China’s technology reportedly include Pakistan and countries said by the State Department to have supported terrorism, such as Iran. This CRS Report, updated as warranted, discusses the security problem of  China’s role in weapons proliferation and issues related to the U.S. policy response since the mid-1990s.

China has taken some steps to mollify U.S. and other foreign concerns about its role in weapons proliferation. Nonetheless, supplies from China have aggravated trends that result in ambiguous technical aid, more indigenous capabilities, longer-range missiles, and secondary (retransferred) proliferation. According to unclassified intelligence reports submitted as required to Congress, China has been a “key supplier” of technology, particularly PRC entities providing nuclear and missile-related technology to Pakistan and missile-related technology to Iran.

Policy approaches in seeking PRC cooperation have concerned summits, sanctions, and satellite exports. On November 21, 2000, the Clinton Administration agreed to waive missile proliferation sanctions, resume processing licenses to export satellites to China, and discuss an extension of the bilateral space launch agreement, in return for another PRC promise on missile nonproliferation.

However, PRC proliferation activities have continued to raise questions about China’s commitment to nonproliferation and the need for U.S. sanctions. The United States has imposed sanctions on various PRC “entities” (including state-owned entities) for troublesome transfers related to missiles and chemical weapons to Pakistan, Iran, or perhaps another country, including repeated sanctions on some “serial proliferators.”

Among those sanctions, in September 2001, the Administration imposed missile proliferation sanctions that effectively denied satellite exports, after a PRC company transferred technology to Pakistan, despite the promise of 2000. Since 2009, the Obama Administration has imposed sanctions on 15 occasions on multiple entities in the PRC (some sanctioned repeatedly) for weapon proliferation-related activities.

Skeptics question whether China’s cooperation in weapons nonproliferation warrants the U.S. pursuit of closer ties, even as sanctions were required against PRC technology transfers. Some criticize the imposition of U.S. sanctions targeting PRC “entities” but not the government. Others doubt the effectiveness of any stress on sanctions over diplomacy or a comprehensive strategy.

Concerns grew that China expanded nuclear cooperation with Pakistan, supported the DPRK, and could undermine sanctions against Iran (including in the oil/gas energy sector). In 2002-2008, the U.S. approach relied on China’s influence on North Korea to dismantle its nuclear weapons. Beijing hosted the “Six-Party Talks” (last held in December 2008) with limited results. Since
2006, China’s balanced approach has evolved to vote for some U.N. Security Council (UNSC) sanctions against missile or nuclear proliferation in North Korea and Iran.

Some called for engaging more with Beijing to use its leverage against Pyongyang and Tehran. However, North Korea’s nuclear tests in 2006, 2009, and 2013 have prompted greater debate about how to change China’s calculus and the value of its role. After negotiations, the PRC voted in June 2009 for UNSC Resolution 1874 to expand sanctions imposed under Resolution 1718 in 2006 against North Korea. The PRC voted in June 2010 for UNSC Resolution 1929 for the fourth set of sanctions against Iran. In 2013, the PRC voted for UNSC Resolutions 2087 and 2094 on North Korea for missile and nuclear tests. Still, China agreed to sanctions in a balanced, incremental way, and questions remain about its implementation of agreed sanctions.

China’s approach has not shown fundamental changes toward Iran and North Korea. Legislation includes H.Res. 65 (Royce), H.R. 673 (Ros-Lehtinen), and S. 298 (Menendez).

Purpose and Scope

Congress has long been concerned about whether U.S. policy advances U.S. security interests in reducing the role of the People’s Republic of China (PRC) in the proliferation of weapons of mass destruction (WMD) and missiles as well as obtaining China’s cooperation in weapons nonproliferation. This problem refers to the threat of nuclear, chemical, or biological weapons and missiles that could deliver them. Some have argued that certain PRC transfers violated international treaties or guidelines, and/or have contravened various U.S. laws requiring sanctions to shore up those international standards.

Even if no laws or treaties are violated, many view China’s transfers as threatening U.S. security interests. Using unclassified consultations and citations, this CRS Report discusses the national security problem of the PRC’s role in weapons proliferation and issues related to the U.S. policy response, including legislation. Table 1, at the end of this report, summarizes the U.S. sanctions imposed or waived on PRC entities or the PRC government for weapons proliferation. For a discussion of the policy problem in the 1980s to 1996, see CRS Report 96-767, Chinese Proliferation of Weapons of Mass Destruction: Background and Analysis, and CRS Report 98-485, China: Possible Missile Technology Transfers Under U.S. Satellite Export Policy—Actions and Chronology, by Shirley A. Kan.

PRC Proliferation Challenges

Partial Nonproliferation Commitments

Since 1991, Beijing has taken steps to address U.S. and other countries’ concerns by increasing its partial participation in international nonproliferation regimes and issuing export control regulations. However, questions have remained. China first promised tentatively to abide by the Missile Technology Control Regime (MTCR) in November 1991 and February 1992 and later reaffirmed that commitment in an October 4, 1994, joint statement with the United States. The MTCR, set up in 1987, is not an international agreement and has no legal authority, leaving issues about U.S. sanctions to shore up the standards unresolved. It is a set of voluntary guidelines that seeks to control the transfer of ballistic and cruise missiles that are inherently capable of
delivering at least a 500 kg (1,100 lb) payload to at least 300 km (186 mi), called “Category I” or “MTCR-class” missiles.

It was unclear whether China adhered to the revised MTCR guidelines of 1993 calling for the presumption to deny transfers of any missiles capable of delivering any WMD (not just nuclear weapons). A 1996 State Department fact sheet said that China unilaterally committed to controlling exports “consistent with the MTCR Guidelines and Annex,” with the MTCR consisting of a common export control policy (Guidelines) applied to a common list of controlled items (Annex).

However, a Senate Foreign Relations Committee report of September 11, 2000, said the State Department had argued to Congress that China agreed to the MTCR Guidelines, but not the Annex. On November 21, 2000, Beijing said that it has no intention of assisting any other country in developing ballistic missiles that can be used to deliver nuclear weapons (missiles with payloads
of at least 500 kg and ranges of at least 300 km) and promised to issue missile-related export controls “as soon as possible.”

After a contentious period that saw new U.S. sanctions, the PRC finally published those regulations and the control list (modeled on the MTCR) on August 25, 2002, as Washington and Beijing prepared for a Bush-Jiang summit on October 25, 2002. In 2004, China applied to join the MTCR but has not been accepted as a member.

China acceded to the Nuclear Nonproliferation Treaty (NPT) on March 9, 1992. The NPT does not ban peaceful nuclear projects. On May 11, 1996, the PRC issued a statement promising to make only safeguarded nuclear transfers. China, on July 30, 1996, began a moratorium on nuclear testing and signed the Comprehensive Test Ban Treaty (CTBT) in September 1996 but (like the United States) has not ratified it. Premier Li Peng issued nuclear export control regulations on September 10, 1997. On October 16, 1997, China joined the Zangger Committee (on nuclear trade).

Also in October 1997, China promised not to start new nuclear cooperation with Iran. On June 6, 1998, the U.N. Security Council (including China) adopted Resolution 1172, asking states to prevent exports to India or Pakistan’s nuclear weapon or missile programs. The PRC issued regulations on dual-use nuclear exports on June 17, 1998. In May 2004, China applied to join the
Nuclear Suppliers Group (NSG), which accepted China as a member after the Bush Administration decided to support China, despite congressional concerns.

In 1995, China issued its first public defense white paper, which focused on arms control and disarmament. Also, China signed the Chemical Weapons Convention (CWC) in January 1993. On April 25, 1997, China deposited its instrument of ratification of the CWC, before it entered into force on April 29, 1997. From 1993 to 1998, the PRC issued export control regulations on chemicals.

On October 14, 2002, on the eve of a Bush-Jiang summit, the PRC issued regulations for export controls over dual-use biological agents and related technology. On December 3, 2003, China issued a white paper on nonproliferation, which stated that its control lists are almost the same as those of the Zangger Committee, NSG, CWC, Australia Group, and MTCR.

Continuing Concerns and Intelligence Report

Nevertheless, China is not a member of the MTCR or the Australia Group (AG) (on chemical and biological weapons). (In June 2004, China expressed willingness to join the MTCR.) China didnot join the 93 countries in signing the International Code of Conduct Against Ballistic Missile Proliferation in The Hague on November 25, 2002. China has not joined the Proliferation Security Initiative (PSI) announced by President Bush on May 31, 2003.

PRC weapons proliferation has persisted, aggravating trends that result in more ambiguous technical assistance (vs. transfers of hardware), longer range missiles, more indigenous capabilities, and secondary (i.e., retransferred) proliferation. The Director of Central Intelligence (DCI) noted that, for July-December 1996, “China was the most significant supplier of WMD-related goods and technology to foreign countries.”

As required by Section 721 of the FY1997 Intelligence Authorization Act, P.L. 104-293, the intelligence community’s report to Congress, “Unclassified Report to Congress on the Acquisition of Technology Relating to Weapons of Mass Destruction and Advanced Conventional Munitions,” has named “entities” in China (plus North Korea and Russia) as “key suppliers” of dangerous technology that could contribute to WMD and missile programs. China’s “entities,” including state-owned defense industrial corporations, have been “associated” with Pakistan’s nuclear and missile programs and Iran’s missile programs. Subsequent discussions of this required report refer to this “Section 721 Report.”

Original legislation required a semi-annual report. The FY2004 Intelligence Authorization Act (P.L. 108-177) changed the requirement to an annual report. The Director of National Intelligence (DNI) submitted to Congress the latest unclassified “Section 721 Report” to cover the year of 2011.

Nuclear Technology Sales to Pakistan

Overview

In 1996, U.S. policymakers faced the issue of whether to impose sanctions on the PRC for technology transfers to Pakistan’s nuclear program, and Beijing issued another nuclear nonproliferation pledge. Since then, the United States has maintained concerns—but at a lower level—about continued PRC nuclear cooperation with Pakistan, particularly involving the construction of nuclear power plants at Chashma. The PRC government is believed to know about the nuclear cooperation with Pakistan.

Nonetheless, in 2004, the Bush Administration supported China’s application to join the Nuclear Suppliers Group (NSG), despite congressional concerns about China’s failure to apply the NSG’s “full-scope safeguards” to its nuclear projects in Pakistan. (Full-scope safeguards apply IAEA inspections to all other declared nuclear facilities in addition to the facility importing supplies in order to prevent diversions to weapon programs.)

Nuclear Cooperation

Concerns have persisted about PRC assistance to Pakistan’s nuclear facilities. As reported by Pakistani and PRC news sources in 1992, China began to build a nuclear power plant at Chashma and was suspected in 1994 of helping Pakistan to build an unsafeguarded, plutonium-producing reactor at Khushab, according to Nucleonics Week (June 19, 1997, and February 26, 1998).

Operational since 2001, the Chashma reactor has IAEA safeguards but not full scope safeguards (Nucleonics Week, April 26, 2001; and IAEA, Annual Report 2001). Referring specifically to Pakistan’s efforts to acquire equipment, materials, and technology for its nuclear weapons program, the DCI’s June 1997 “Section 721 report” for the last half of 1996 (after China’s May 1996 pledge) stated that China was the “principal supplier.”

Then, on May 11 and 13, 1998, India conducted nuclear tests, citing China’s nuclear ties to Pakistan, and Pakistan followed with nuclear tests on May 28 and 30, 1998. China, as Pakistan’s principal military and nuclear supplier, failed to avert the tests and did not cut off nuclear aid, but condemned the tests at the U.N. The Arms Control and Disarmament Agency’s annual report on arms control for 1998 stated that “there continued to be some contacts between Chinese entities and Pakistan’s unsafeguarded and nuclear weapons program.”

In 2000, news reports said that some former U.S. nonproliferation and intelligence officials suspected that China provided equipment for Pakistan’s secret heavy water production plant at Khushab, where an unsafeguarded reactor reportedly started up in April 1998 and generated weapons-grade plutonium. Clinton Administration officials at the White House and State Department reportedly denied China’s involvement but said that they did not know the origins of the plant.

The DCI reported in November 2003 that, in the first half of 2003, continued contacts between PRC entities and “entities associated with Pakistan’s nuclear weapons program” cannot be ruled out, despite the PRC’s 1996 promise not to assist unsafeguarded nuclear facilities. The Director of the Defense Intelligence Agency (DIA), Vice Admiral Lowell Jacoby, testified to the Senate Intelligence Committee on February 24, 2004, that PRC entities “remain involved with nuclear and missile programs in Pakistan and Iran,” while “in some cases,” the entities were…….

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