China, Arsenal of Terror

Today comes word of more sanctions on Chinese state-owned companies, all with close ties to the military, for helping Iran with its nuke and missile programs.

The sanctions, announced by the State Department, are part of a diplomatically complex effort to cut off the flow of technology into Iran that could aid its weapons programs, while pressing both China and Russia to threaten action against Tehran at the United Nations Security Council.

Included in the latest sanctions, first reported Tuesday by The Washington Times, are two companies closely tied to the Chinese military: the China North Industries Corporation, known as Norinco, and the China Aero-Technology Import and Export Corporation, or Catic, which is one of the country’s largest producers of military aircraft.
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The other Chinese companies were the Hongdu Aviation Industry Group, the Limmt Metallurgy and Minerals Company, Ounion (Asia) International Economic and Technical Cooperation Ltd. and the Zibo Chemet Equipment Company.

Further reading on some of the sanctioned companies here:

• Norinco, a massive parastatal in China’s military-industrial complex, has an extensive history of proliferation to Iran, and was once a major supplier to American discount stores.
• Zibo Chemnet, several other Chinese companies, and North Korea’s Changgwang Sinyong Corporation were all sanctioned in July 2003 for WMD proliferation activities.
• Hongdu Aviation produces this trainer for the Chinese air force. The airframe shows clear signs of having F-18 genes and is a potential precursor to an indigenous fighter production or export program. There is little question that China can supply Iran with all the technology it needs to build UAVs and cruise missiles, which is could then use to deliver any WMD it can sufficiently miniaturize.
• China Aero Technology was sanctioned in January of 2005 for helping Iran with its WMD programs. The State Department’s Federal Register publication of the sanctions notice (70 Fed. Reg. 133-01) also lists new sanctions against Zibo Chemnet, Norinco, and North Korea’s Paeksan Associated Corporation, all for technology transfers to Iran.
• Limmt was sanctioned in 2004 for technology transfers to Iran, along with “The Beijing Institute of Aerodynamics of China, the Beijing Institute of Opto-Electronic Technology (BIOET) of China, . . . the China Great Wall Industry Corporation of China, [and] China North Industries Corporation (NORINCO) of China.” Another name on the list: North Korea’s Changgwong Sinyong Corporation, about which I will say much more later.

The Times writes that no evidence links these technology transfers to the highest levels of China’s government, but that statement dissolves under a flood of circumstantial evidence, and reopens concerns about a recently-exposed attempt by a Chinese triad to smuggle surface-to-air missiles into the United States. A Chinese general was implicated in the plot. Given the extensive and often repetitive nature of the violations by these Chinese parastatals and the close connections between those companies and the Chinese military, it’s not unreasonable to infer that senior officials of the Chinese government authorized those transfers. I’m not alone in drawing that inference:

The U.S. intelligence community has concluded that China and North Korea have cooperated to produce and deliver components for missile and WMD programs to a number of Middle East clients, Geostrategy-Direct.com reported in its current editions. The intelligence finding led to the U.S. decision to impose sanctions on Chinese companies cooperating with North Korea in the fields of missile and WMD. After a lengthy debate within the National Security Council and State Department, the Bush administration approved the new sanctions to demonstrate a tougher policy toward Beijing, the officials said.

Note the familiarity of some of the names mentioned in that 2003 report:

The five Chinese companies sanctioned were identified as Taian Foreign Trade General Corporation of China, the Zibo Chemical Equipment Plant of China, the Liyang Yunlong Chemical Equipment Group Company of China, China North Industries Corporation, known as Norinco, and the China Precision Machinery Import/Export Corporation.

The best that can be said in China’s defense is that nearly three years after being put on notice that its top military parastatals were working with the North Koreans to arm Iran, China’s government has failed to take effective measures to stop to very same companies from selling similar components to the same customer.

Opening the floodgates of dual-use technology to China–and for some very suspect reasons–ought to be recorded as one of America’s greatest foreign policy miscalculations, alongside President George H.W. Bush’s failure to confront China morally and politically after the massacre at Tienanmen. The current administration doesn’t escape criticism, either. Just this past March, the State Department extended a waiver of import sanctions against NORINCO, clearly a flagrant supplier of sensitive technology to the mullahs. This apparently caused sufficient concern in Congress that the Senate held hearings. Those hearings specifically focused on both NORINCO and the North Korean nuclear crisis.

North Korea’s Changgwang Sinyong, whose name repeatedly emerges in these reports, has a long history of selling missile and UAV technology to A.Q. Khan’s network in Pakistan and Yemen (you may recall the So San incident), as well as to Iran. This 2003 report states that CSC also has a significant presence in Syria, Libya, and Egypt. CSC is essentially North Korea’s state missile technology proliferation firm. It has been sanctioned at least eight times.

On June 28, 2005, President Bush signed Executive Order 13,382, which imposed the ultimate penalty on CSC and several other North Korean entities: it flat-out froze their assets. Shortly thereafter, the Treasury Department’s Office of Foreign Asset Control published some interesting details. First, we learned that CSC uses a number of aliases / dummy companies / fronts, including “Korea Mining Development Trading Corporation,” “External Technology General Corporation,” and “North Korean Mining Development Trading Corporation,” or KOMID. Other North Korean companies sanctioned:

• Korea Ryonbong General Corporation, alias Korea Yonbong General Corporation, and formerly known as the Lyongaksan General Trading Corporation.
• The Tanchon Commercial Bank, which has previously called itself the Changgwang Credit Bank, the Korea Changgwang Credit Bank.

I’ll give you one final detail on Changgwang Sinyong. India’s Chandigarh Tribune, presumably passing along a leak from Indian intelligence, states that in 1998, one Kang Thae-Yun was CSC’s Pakistani representative, and was heavily involved in selling missile technology to Pakistan and Iran. Mr. Kang’s wife found a novel way to bring more income into the Kang household: feeding information about CSC’s activities to “western intelligence agencies.” In June of that year, North Korean counterintel evidently caught up with her and terminated her career with extreme prejudice.

The story appears to be well sourced; a number of the details it reported back in 2002 were subsequently confirmed with the exposure of A.Q. Khan’s links to the North Koreans. It is followed up by this 2004 report, of somewhat questionable origin, which claims that the murdered woman, Kim Sa Nae, was actually a nuclear scientist herself, and was shot under murky circumstances while staying on A.Q. Khan’s own compound with other North Korean scientists.

A Pakistani official said his country’s intelligence agents suspected that the United States was using Kim as a mole inside the North Korean delegation, but that her actions were uncovered by Pakistani and North Korean agents.

An Indian official who is familiar with his government’s assessment of the killing said bluntly: “She was in fact killed by the North Koreans on the grounds that she was in touch with certain Western diplomats.”

The report notes that three days after her death, Ms. Kim’s body was tossed onto a C-130 carrying centrifuges and bomb blueprints to Pyongyang. A month later, Mr. Kang also returned to North Korea, undoubtedly under very uncomfortable circumstances.

The other news today about China’s dealings with evil regimes comes in the form of this Chosun Ilbo report, speculating that another Chinese bank may soon face U.S. money laundering sanctions in connection with North Korea:

The U.S is secretly investigating a new Chinese bank on charges of laundering illegal capital flowing out of North Korea, the Japanese Yomiuri Shimbun reported Wednesday, quoting diplomatic sources. However, the name and location of the bank has not been revealed, the daily added. The U.S has seized forged US$100 bills–the so-called supernotes-worth US$45 million over the last 16 years since it uncovered the counterfeit notes made in the North for the first time in late 1989. In Taiwan alone, the US confiscated supernotes worth US$13 million last year. The U.S Treasury Department recently informed countries involved in the situation and urged them to take countermeasures, the Japanese daily reported.

I’ve previously reported on the effect of a similar investigation of Banco Delta Asia of Macau, Macau’s second-largest bank. Delta ultimately cut off North Koreans’ transactions, resulting in an exodus of North Korean spies and money launderers from Macau. The Asian WSJ has reported that the Bank of China, China’s largest bank, is also under investigation by Treasury, although it’s not clear if the BOC is the subject of the latest Yomiuri report. Seng Heng Bank, also of Macau, has also been named.

If the explanation were as simple as money, the Chinese parastatals wouldn’t risk the loss of their potential revenue with the United States or such deep trouble with the U.S. Congres. Only strategic considerations conceivably trump those other interests.

China’s near term goals are the establishment of its supremacy in East Asia, reunification with Taiwan on its own anti-democratic terms, and the securing of its access to raw materials that are key to its economy. The only real potential threat to China’s goals is the United States, along with an emerging alliance of Asian and Pacific nations, jointly pursuing a quiet strategy of containing Chinese naval power inside the Island Curtain that stretches from the Kuriles to the Strait of Molucca. As with China’s support for North Korea, which is conditional in theory but unconditional in practice, China seeks to slip the bonds of containment by leveraging security distractions for the United States without creating an unreasonable risk of war.

Unquestionably, 9/11 and Iraq have been extraordinarily helpful to China’s plans, having arguably put an end to the Pentagon’s two-major-theater-war doctrine. There can be little doubt that Chinese generals quietly relish the idea of Iran and North Korea growing as nuclear and proliferation threats to the United States, and probably the thought of more mass-casualty terror attacks in the United States.

Notwithstanding the temporary convergence of economic interests, China is no friend of the American people. But then again, it’s not exactly a friend of the Chinese people, either.