RAND CORPORATION REPORT
CHINESE MILITARY COMMERCE AND U.S.
NATIONAL SECURITY
JOHN KERRY'S PRIVATE TRADE TRIP TO BEIJING
CLICK HERE TO READ THE STORY ON INSIGHTMAG.COM
PLA DONG FENG 21 ADVANCED MISSILE
ALL DOCUMENTS OBTAINED BY FEDERAL COURT ACTION SMITH V. COMMERCE 398CV716
SNIPS FROM THE RAND REPORT
According to one informed observer, a large percentage of the
foreign earnings of defense-industrial companies are repatriated
back to the factory or group of factories in China, in order to
reinvest at the firm level, purchase new technology or alleviate
some of the socials pressures currently drowing these factories
in red ink, such as raising worker's wages and subsidzing other
security burdens. The second major recipients are the traders
themselves, who must pay for the foreign operations base and
often reward themselves with large official and unofficial
commissions from the transactions. The final group of
recipients, the superior ministry and/or COSTIND, may extract a
tax from the factories, although this money is generally assumed
to be a relatively small percentage of the overall pie. In the
case of the ministry level receipts, these funds are believed
to be used for a wide variety of legitimate and illegitimate
purposes, ranging from modernization of industrial plant to the
padding of the Swiss bank accounts of top ministry officials.
For COSTIND, the case is much the same, although the funds might
also be used to fund defense conversion activities, technology
purchases, or R&D. With all these "taxes," "commissions," and
bureaucratic handouts along the way, it is very unlikely that
any significant sums of money are transferred to the military
side of the system.
Where do these profits go and what are they used for? Most
analysts belive that military enterprises are permitted to keep
a substantial proportion of their earnings. According to Tai
Ming Cheung, the amount retained varies according to the type of
military enterprises and the profitability of the operation, but
they are generally able to retain 20-40 percent of their profits
for reinvestment and other uses. The remaining moneies are
divided between the General Logistics Department (40-60%),
regional and provincial military authorities (10-20%) and the
local PLA unit that owns the enterprise (10-20%). The profits
passed to the local PLA unit, in turn, are divierted to two
general areas. Some of the money is used for training, as well
as to improve the living standards of the troops, including
barracks construction and repair, food subsidies, and medical
coverage. Other funds, however, are used for more corrupt
purposes, such as paying for lavish meals, expensive foreign
luxury automobiles, and Swiss bank accounts.
For those who oppose any subsidization of the PLA, there is thus
ample evidence that profits from PLA-affiliated enterprises
directly benefit the main-line forces of the Chinese military,
although the actual amount is not very substantial in the
context of the overall budget.
American companies in China sometimes seek to transfer dual-use
technology to their Chinese partners, some of who have military
connections.
The Chinese have even enlisted former government officials to
help them. Retired General Richard Secord, a member of the
Reagan national security team, helped COSTIND's Yuanwang
Corporation to create Technology Selection Inc. in Mountain
View, California, which plans to acquire dual use technology and
ship it to China.
The most well known example involves a McDonnell-Douglas joint
venture relationship with China National Aero-Technology Import
and Export Corporation (CATIC). In late 1996, a GAO
investigation concluded that sophisticated machine tools, sold
to the Chinese for use in the production of commercial aircraft
parts, had been illegally transferred to AVIC's Nanchang
Aircraft Factory, a defense-industrial factory which produces
fightere aircraft and cruise missile for the PLA as well as a
variety of civilian products. According to knowledgeable
technical officials, this equipment, which had been used in a
Columbus, Ohio plant to assemble Titan and MX missiles, would
have significantly upgrade the capacity fo the Chinese aircraft
or missile industry to produce high-tolerlance components.
The most notorious was the sale of broadband telecommunications
technology to HuaMei Communications Ltd., a joint venture
between SCM Brooks Telecommunications, a limited U.S.
partnership, and Galaxy New Technology, a Chinese company whose
primary shareholder was COSTIND.
No comments:
Post a Comment
Comments always welcome!