Mr. Chairman,

Thank you for giving me the opportunity to participate in this hearing on China’s proliferation policies and practices.

China has come a long way since the 1960s, when its declared policy was to support nuclear proliferation as a means of "breaking the hegemony of the superpowers."  It has also come a long way since the 1980s, when it provided direct support to Pakistan’s nuclear weapons program and engaged in activities that would have been clear violations of the NPT had China been a party to the NPT at the time.

During the 1990s, China made substantial progress in adopting international nonproliferation norms, joining international agreements, and controlling exports of sensitive goods and technologies.  Yet, throughout that period, China still had the reputation of being an indiscriminate proliferator, willing to sell almost anything to anybody.  This was a reputation the Chinese did not truly deserve but, nonetheless, it persists to this day.  Part of the reason for this image is that China’s progress in complying with and enforcing nonproliferation standards over the years has been uneven.  The pattern has often been two steps forward, one step back.

In the area of multilateral agreements, China joined the Nonproliferation Treaty (NPT), the Chemical Weapons Convention (CWC), the Biological Weapons Convention (BWC), and it signed the Comprehensive Test-Ban Treaty (CTBT). The CTBT was particularly tough for China because, unlike the other four members of the "permanent five" (P-5), China was the only one with ongoing testing requirements and it decided to give them up to join the CTBT.  It also joined the NPT nuclear suppliers' committee (the Zangger Committee), and it is the first of the P-5 countries that took the steps necessary to bring the International Atomic Energy Agency’s strengthened safeguards protocol into force in its country.  Yet, at the same time, it has held negotiations on a fissile material cutoff treaty hostage to its concerns about U.S. missile defenses, it has not joined the Missile Technology Control Regime (MTCR), and its compliance with the BWC and CWC continues to be in doubt.

Its record on regional nonproliferation is also something of a mixed bag.  On South Asia, China was America’s closest partner in dealing with the May 1998 nuclear tests by India and Pakistan and has exerted influence on a number of occasions in the last few years to keep India and Pakistan from going over the brink.  But, at the same time, it has continued, presumably because of its longstanding strategic relationship with Islamabad, to transfer very important missile equipment and technology to Pakistan’s ballistic missile program.

On Iraq, China had a fairly good record of implementing the Security Council embargo during the 1990s. Moreover, it is clear that China would not have vetoed the Council resolution sought by the U.S. on the eve of the recent Iraq war had it been put to a vote. At the same time, its record on technology transfers was not unblemished.  It provided fiber optic cable to Iraq, which helped Iraq upgrade its air defense systems.  In addition, once the United States abandoned the effort to obtain a Security Council resolution that would have provided stronger international legitimization of military action, China became increasingly negative and called the U.S. military operation "illegal."

On North Korea, China played an important role behind the scenes in achieving the Agreed Framework of 1994, reportedly telling Pyongyang at a crucial moment that, unless it altered its position, China would not use its veto in the Security Council to block sanctions.  In the present crisis over North Korea’s nuclear program, China has become increasingly energetic in trying to dissuade Pyongyang from pursuing nuclear weapons. Several months ago, it reportedly sent North Korea a tough signal by suspending oil supplies for a few days. In the last few weeks, it sent a Vice Foreign Minister to Pyongyang to deliver a letter from President Hu Jintao and to urge North Korea to attend a second round of talks in Beijing. Clearly, China strongly opposes nuclear weapons on the Korean Peninsula.

But it is important to appreciate that, from a Chinese perspective, there are worse developments than a nuclear-armed North Korea -- among them a war on the Peninsula and a collapse of the North Korean regime that could result in chaos, massive flows of North Korean refugees to China, the sudden reunification of the two Koreas under Seoul’s leadership, and U.S. forces stationed in a reunited Korea near China’s border. Therefore, while China can be expected to play an active role in bringing North Korea to the negotiating table and trying to facilitate a peaceful solution, it will be very reluctant to join in coercive measures, such as cutoffs of food or fuel supplies, that could lead to widespread instability in the North or the collapse of the regime.

It has been in the area of sensitive exports where, on the one hand, China’s progress has been the most impressive but where, on the other hand, remaining shortcomings have caused the greatest controversy. It is useful to look at the record in some detail.

In 1992, China sold M-11 ballistic missiles to Pakistan.  In 1994, as part of a deal to end M-11-related sanctions, China pledged not to sell complete ground-to-ground missiles of "MTCR class" (i.e., capable of delivering a 500-kilogram payload to a range of at least 300 kilometers).  And in fact, since that time, we have no evidence that China has actually sold complete missiles of that category.

In 1995, a Chinese company sold ring magnets to Pakistan’s uranium enrichment program.  In 1996, after the United States withheld all Export-Import Bank loans to China for a period of over three months, China pledged not to provide any assistance to unsafeguarded nuclear facilities anywhere in the world, in Pakistan or anywhere else.

In 1997, in the run-up to Chinese President Jiang Zemin’s visit to Washington and in exchange for a certification by President Clinton that would enable a U.S.-China peaceful nuclear cooperation agreement to enter into force, China agreed to refrain from any new nuclear cooperation with Iran, to end support for a uranium conversion facility, and to complete two existing, non-sensitive projects in a short period of time.  It also agreed to put comprehensive, nuclear-related export controls in place and to join the Zangger Committee.  Earlier, it had terminated the sale of two nuclear power reactors to Iran and turned down Iran’s request to purchase a research reactor highly suitable for the production of plutonium.  Years later, a senior Chinese official told me in private that the reason China was willing to cut off support for Iran was that Chinese intelligence had taken into account the information the U.S. had shared about Iran’s plans and intentions and had come to the same conclusion we had -- that Iran was in fact seeking nuclear weapons.

In 1997-1998, there were indications that China had become unresponsive even to Pakistan’s requests for missile assistance.  In particular, China was refusing to fulfill some existing obligations to Pakistan’s missile program.  However, after the May 1998 India/Pakistan nuclear tests and after some frictions had developed in the U.S.-China relationship, especially over the bombing of China’s Belgrade embassy and U.S. arms sales to Taiwan that Beijing found objectionable, there was a resumption of Sino-Pakistani missile-related activity which had slowed down over the past few years.  This increased missile export activity led to U.S. threats of new sanctions and during 2000 these threats were accompanied by a U.S. moratorium on the export of satellites to China for launch on Chinese boosters.  The U.S. government undertook lengthy negotiations with the Chinese throughout 2000 and reached an agreement in November 2000 under which China agreed it would not assist any country in any way to acquire MTCR-class ballistic missiles.  China also agreed for the first time to put into place comprehensive export controls in the missile field.  In exchange for this, the U.S. agreed to waive some pending missile sanctions against China and to resume the processing of licenses for the export of satellites to be launched in China.

Despite this new agreement, evidence soon emerged that China was continuing to engage in missile-related transfers inconsistent with the agreement.  New sanctions were imposed in September 2001 for transfers of MTCR-controlled equipment to Pakistan’s missile program. But in the summer and early fall of 2002, the Chinese promulgated the comprehensive, missile-related export controls called for in the November 2000 agreement, and also upgraded controls in the chemical and biological field. They also apparently took disciplinary action against the Chinese entity that the U.S. had earlier sanctioned for engaging in missile assistance to Pakistan, the China Metallurgical Equipment Corporation.

Notwithstanding China’s strengthened controls, problematic Chinese exports have continued. Sanctions were imposed on Chinese entities in January, May, and July of 2002 and in May and June of 2003, all for transfers to Iran’s chemical or missile programs. A total of 35 Chinese entities were sanctioned on those occasions, although the number is somewhat misleading. Given the overlapping nature of several U.S. nonproliferation sanctions laws (e.g., Iran Nonproliferation Act, Iran-Iraq Nonproliferation Act, chemical/biological and missile sanctions laws), several of those Chinese entities were sanctioned more than once for the same transfer. Moreover, since the Iran Nonproliferation Act authorizes the imposition of sanctions for transfers to Iran of dual use items (regardless of their end use), it is possible that some of the sanctioned transfers were not destined for CW, BW, or missile programs (as compared to less sensitive end-uses). It is also not clear how many of the sanctioned transfers were made with the knowledge and approval of Chinese authorities. Indeed, there are solid grounds for believing that Chinese entities, especially in the chemical area, have often sought to circumvent Beijing’s laws and regulations. Still, the continuation of questionable Chinese transfers -- most of them surely headed for Iran’s CBW or missile programs -- suggests both that China’s authorities are not exercising sufficient restraint and that they do not yet have an effective export control system in place.

So, the trend line over the past decade -- in terms of Chinese adherence to multilateral nonproliferation agreements and norms, China’s role in regional proliferation issues, and China’s control over sensitive exports -- has been positive. But China’s transformation from being part of the nonproliferation problem to being part of the nonproliferation solution is far from complete. What accounts for this mixed record?

On the positive side, China has increasingly internalized the view that preventing proliferation of WMD is in China’s own national interest.  Chinese leaders have come to recognize that the proliferation of these capabilities, especially in their neighborhood, would undermine the stable international environment that they believe is necessary at this stage in China’s development.

Reinforcing China’s interest in stability is China’s interest in being seen as a major and responsible player that abides by the international rules. This desire to be perceived as an upstanding world citizen is one reason why the Chinese have traditionally reacted so strongly to the imposition of U.S. nonproliferation sanctions (even sanctions that have negligible tangible effect) and why the threat of sanctions can often be used to leverage better Chinese behavior.

On the negative side, China’s growing stake in nonproliferation can sometimes be outweighed by other Chinese goals -- for example, maintaining its strategic relationship with Pakistan, avoiding instability or regime change in North Korea, or demonstrating its opposition to a unipolar world.

Another factor diluting China’s commitment to non-proliferation is its tendency to see cooperation with the United States on proliferation issues as a function of the U.S.-China bilateral relationship.  When those relations are good, China’s cooperation can be forthcoming; but when those relations are bad, or in a state of decline, then its cooperation is much more difficult to obtain. Thus, breakthroughs on nuclear cooperation with Iran came just before President Jiang’s 1997 visit to Washington, and China’s missile-related exports controls were announced before his visit to Crawford. But the Belgrade embassy bombing and certain U.S. arms sales to Taiwan were followed by dry spells in the nonproliferation area.

A third factor diluting China’s commitment to nonproliferation is that, even when Beijing has wanted to restrain its exports, its ability to control exports has been limited, especially in the area of dual-use goods and technologies. Many Chinese firms that engage in potentially sensitive trade are spin-offs from state-owned enterprises and no longer operate under the direct supervision of central authorities. Beijing now has most of the legal and regulatory tools in place to control exports, at least on paper. A key deficiency is in the area of enforcement. China has yet to devote the necessary resources, especially in terms of trained manpower, to implementing its controls and has yet to adopt a proactive approach toward enforcement. Although there are clear indications that Chinese entities are violating Beijing’s laws and regulations, there is little evidence that violators are being pursued and penalized.

Despite China’s mixed record, proliferation issues are no longer a major irritant in U.S.-Chinese bilateral relations. As the relationship has gotten better and broader over the last two years, cooperation in such areas as counter-terrorism has tended to diminish the significance of remaining proliferation concerns. A risk in such a situation is that, if proliferation issues are no longer seen as a serious impediment to better relations and are not given persistent, high-level attention in bilateral discussions, the positive trend line of the last decade will go flat or even become negative.

A concern in this regard is that the U.S. Government has departed from some of the practices that kept the trend line positive through the 1990s. That period was characterized by intensive and often contentious bilateral engagement on nonproliferation issues. When the U.S. had intelligence about troublesome Chinese transactions with third countries, it usually raised the matter with Chinese officials, pressed them to stop the transfer, threatened and often imposed sanctions, and offered to end or waive sanctions in return for improved Chinese performance. Meetings were held frequently, at both expert and senior levels. It was often a rocky road, but it produced real progress in terms of improvements in Chinese behavior.

The current approach is very different. Only rarely does the U.S. share intelligence information with Chinese authorities about transactions of concern. Partially this is due to a concern about compromising intelligence sources and methods. But it is also the result of strong doubts in the Administration that Chinese authorities would use the information to put a halt to the transfers. Under the current approach, U.S. sanctions laws are frequently invoked. But instead of using them as tools to leverage better Chinese behavior, sanctions are simply imposed, sometimes without even explaining to Beijing the specific nature of the infraction and without pressing the Chinese on how they can avoid a recurrence. The frequent imposition of sanctions, moreover, has diluted their value as a means of influencing Chinese behavior. Because the economic impact of nonproliferation sanctions on China is usually negligible, their main value as a disincentive is in branding China and Chinese entities publicly as proliferators. But as sanctions become more numerous and are invoked in circumstances in which their justification is marginal at best, the sanctions become routine and lose their ability to stigmatize irresponsible export behavior. Instead of putting effective pressure on China to enforce its export control laws and regulations more rigorously, the trivialization of sanctions tends to let China off the hook.

The Administration should not equate the frequent imposition of sanctions with having a sound policy to address the China proliferation challenge. Sanctions are an essential element of a sound policy, but they are not ends in themselves. They should be used not just to punish but also to encourage better behavior. If the U.S. is to get the Chinese to take export controls more seriously, it will need to be more engaged bilaterally than it has been in recent years. It will have to raise transactions of concern with Chinese officials (sharing information where possible), press them hard to practice greater restraint in their licensing decisions, urge them to exercise tighter control over Chinese entities and penalize violators, offer to cooperate with relevant Chinese authorities to strengthen their export control system (especially its enforcement capability), and, where necessary, threaten and even impose sanctions.

The U.S. also needs to stay engaged with China in addressing regional proliferation threats. On North Korea, the U.S. has welcomed the increasingly active role Beijing has played in bringing the North Koreans to the negotiating table. But if a solution is to be reached on the nuclear issue, China will have to go beyond facilitating talks to helping shape the substantive outcome, including by making clear that, if Pyongyang persists in acquiring nuclear weapons, China will have no choice but to join others in the Security Council in adopting punitive measures. On Iraq, China can be helpful, both at the U.N. and eventually perhaps on the ground in Iraq, in assisting international efforts to reconstruct an Iraq that is free of weapons of mass destruction and not a threat to its neighbors. On Iran, China’s position as a friend of Tehran and as a member of the IAEA Board and U.N. Security Council puts it in a strong position to help persuade Iranian leaders that their interests are best served by abandoning present efforts to obtain nuclear weapons. On South Asia, while avoiding arms and technology transfers that can fuel tensions in the region, China can use its improving relationship with India and its traditional strong ties to Pakistan to promote dialogue and confidence-building steps between the two protagonists.

The U.S. should also encourage China to become a more active participant in the global nonproliferation regime. China, for example, should take the steps necessary to join both the Nuclear Suppliers Group and the Missile Technology Control Regime, and should drop its preconditions for beginning negotiations on a Fissile Material Cutoff Treaty. Beijing should also be urged to join the Proliferation Security Initiative (PSI), currently an 11-nation coalition of the willing exploring the legal and practical issues involved in seeking to interdict air, sea, and ground shipments of WMD and WMD-related materials. Because of PSI’s special relevance at the present time to the North Korean case, China may initially be reluctant to associate itself with the effort. But the U.S. can begin now to hold confidential, bilateral discussions on PSI issues with China in the hope of eventually bringing it on board.

Being a responsible member of the international nonproliferation regime today, especially after 9/11, means taking a variety of steps designed to prevent terrorist groups or hostile regimes from getting their hands on the ingredients for WMD. Among those steps are measures to secure and account for sensitive materials, physical protection measures applicable to facilities housing such materials, and effective border controls to interdict illicit trafficking. We have little knowledge of China’s current capabilities and practices with respect to protecting its nuclear and other sensitive installations and materials from theft, seizure, or sabotage. This should be a high priority item on the U.S. nonproliferation agenda with China. The two countries should share information with each other on how they protect their WMD-related facilities and materials, and the U.S. should be prepared, where necessary, to assist China in strengthening its capabilities and procedures, especially in the nuclear area.

China eventually should also become a contributor to the G-8 "Global Partnership Against the Spread of Weapons and Materials of Mass Destruction." Established at the June 2002 G-8 summit in Canada, the eight leaders committed their countries to donate $20 billion over ten years "to prevent terrorists, or those that harbour them, from acquiring or developing nuclear, chemical, radiological, and biological weapons; missiles; and related materials, equipment, and technology." The initial focus of the Global Partnership was to prevent proliferation threats arising from Russia and other states of the former Soviet Union, but the G-8 envisioned broadening the focus to threats arising elsewhere. The Eight also expected that non-G-8 countries would participate in the initiative as contributors. Given its expertise, resources, and close ties with countries around the world, China could become an important contributor to the Global Partnership. The U.S. and other G-8 members should discuss the initiative with China and encourage it to become involved.

In conclusion, it is reasonable to believe that the future of the nonproliferation regime will depend in no small degree on the willingness of China to play a major and positive role. That will require Beijing not only to put its own house in better order (in terms of adopting a more conscientious approach to controlling the export of sensitive equipment and technology), but also to assume greater responsibility for addressing proliferation challenges in various regions of the world. The Chinese record over the last decade or so -- in the areas of sensitive exports, regional proliferation, and the global nonproliferation regime -- has improved slowly but steadily, although there have been notable lapses. At least part of the positive evolution in China’s performance can be attributed to constant prodding by the United States. If we wish to see further improvement and avoid recidivism, the U.S. should abandon the detached posture it has adopted in recent years and return to a policy of tough but constructive engagement.