Tuesday 24 February 2009

THE IMPACT OF FOREIGN WEAPONS AND TECHNOLOGY :Part 3

Manufacturing Improves

The PLA retains the ultimate goal of building its defense industries so that they become world-class defense technology innovators, rather than consumers of new ideas from elsewhere. One goal of the Shenyang 5th generation fighter program appears to be to indigenously develop and sustain all of its component parts. As the PLA assembles weapons with pieces from other countries, and gets better at this, it is also using its interactions with the West to generally improve its defense industries. But there remains widespread redundancy, overcapacity and slowness in applying design and manufacturing lessons available from the West. Greater rationalization in the defense sector is often impeded by companies that are able to gather political clout to ensure the survival of firms that should be allowed to fail.

One area where such interaction may be having an impact is in fulfilling one goal of the broad 1998 PLA military-industry sector reforms to give greater play to market forces. Companies like Chengdu are apparently succeeding in developing fighters that may be competitive in foreign markets, in part through knowledge gained by interacting with foreign companies. Chengdu is also learning that transparency assists marketing. It is clear that Chengdu has judged that success in foreign markets is critical to company survival. It may need foreign revenues if the PLA decides to rationalize and cut back the number of aircraft manufacturers.

Aircraft sector. Interaction with Western firms is having a positive impact already in the aircraft sector. In the 1989s this sector reflected older People’s War doctrines: multiple redundant design and production facilities dedicated toward making large numbers of relatively simple copies of 1950s Soviet fighter and bomber designs. Production methods were crude. Quality control was poor and as a consequence fighter unit readiness suffered. However, by 2002 Russian sources were reporting that the PLA was making remarkable advances in its aircraft manufacturing. They noted that the production finish of Sukhoi J-11 fighters being co-produced at Shenyang were better than Russian-made fighters from KNAAPO. Such a turn around did not come fast or easy for the PLA, but that it is occurring is in part a consequence of extensive interaction with Western aircraft concerns.

Russia is perhaps having the greatest impact on improving combat aircraft design and manufacture. Shenyang has the deepest relationship with Sukhoi and KNAAPO, the dominant Russian aircraft concerns. Having purchased the co-production rights to the Su-27SK, Shenyang has learned enough to begin to add increasing PRC-made content to this fighter. Shenyang and Chengdu have purchased Russian advice to improve indigenous designs like the J-8II, J-10 and FC-1. There is very likely significant Russian help for the Shenyang’s and Chengdu’s 5th generation fighter designs. In addition, the Ukraine’s Antonov aircraft company is moving into a dominant position in helping develop, and perhaps in the future, co-produce new PLA heavy cargo transport aircraft.

But other countries are aiding an improved PLA combat aircraft manufacturing capability. In 2002 a Russian source noted with some embarrassment that Shenyang J-11 fighters had a better production finish than KNAAPO-made fighters. He noted that much of Shenyang’s rapid improvement in J-11 manufacturing finish has been due to the import of modern production machinery from Russia, Japan, Sweden and even the United States. For example, as of mid-2003 Sweden’s Avure Company had sold the PRC eight of its modern high-power presses to fabricate aluminum aircraft parts, three of which were going to the Shaanxi transport aircraft maker, and the Changhe and Harbin helicopter makers. In addition, it appears that most Chinese aircraft manufacturers use French aircraft maker Dassault’s CATIA software that enables complex three-dimensional designs. Dassault has been selling its CATIA software in the PRC since about 1983. A recent report credits computer aided design software with accelerating the building of Chengdu’s FC-1 fighter and the twin-seat version of its J-10 fighter. Design drawings for both fighters were delivered in six months, where as before the drawings for just the single-seat J-10 had required ten months.

It is also possible that PRC companies which do substantial sub-contracting assembly work for major aircraft makers like Boeing and Airbus are taking knowledge gained from this work and applying it to improve their combat aircraft manufacturing. For example, the Chengdu makes parts for the Boeing 757 and Airbus 319 airliners. Shenyang does sub contract assemblies for Airbus. The Xian Aircraft Corporation builds Boeing 737-700 vertical fins and Airbus A320 cargo access doors. Sources who had visited Chengdu’s subcontract assembly lines had noted their proximity to the fighter production lines and that fighter parts they had viewed, in their opinion, benefited from assembly the line for the subcontract parts.

The PRC’s AVIC-1 aircraft consortium will likely gain far greater access to Western technologies via its new Advanced Regional Jet ARJ21 program. Revealed in 2002, the ARJ21 grew out of previous attempts to build competitive transport aircraft in the PRC. In the 1980s the PRC co-produced 33 McDonnell-Douglas MD-80 airliners, but PRC airlines preferred better-built less expensive foreign made transports to remain competitive. In the early 1990s there was an attempt to join with Airbus to build a new small airliner but the program faltered. With the ARJ21 AVIC-1 has succeeded in enlisting a long line of U.S. and European aircraft subcomponent producers to both co-produced their parts in the PRC or to purchase services. Even if there are safeguards it can be expected that the PRC will learn a great deal about these components. And once the ARJ21 program is secure it is likely that AVIC-1 will start producing larger airliners that will compete in markets now dominated by Boeing and Airbus. In addition, like the Brazilian EM-145 regional jet, the ARJ21 provides an ideal platform for military missions. Like the EM-145, the ARJ21 could be modified with the ERIEYE-like phased array radar being developed by the PLA or with system to perform maritime surveillance missions.

Shipbuilding. It is also increasingly apparent that after some delays, the PLA shipbuilding sector is benefiting from the reforms this sector implemented in the 1980s and 1990s to become globally competitive. But this process was slow. In 1997 the PLA launched a single LUHAI class destroyer. While it featured a modular superstructure and some stealth features, it had only a modest weapons and electronics suite. But by the turn of the decade PLA shipbuilding was put into high gear. In 2002-2003 the PLA produced two new classes of stealthy air defense destroyers, the first such ships dedicated to this task, a new class of stealthy frigate, series production of the improved SONG submarine, possibly two new large underway replenishment ships, and series production of an improved tank landing craft (LST).

This bust of new warship construction was made possible by new modern production methods. The destroyers were all built sequentially in the Shanghai Jiangnan shipyard, demonstrating modular construction and very close quality control likely made possible by computers and precision machine tools. The new frigate is made in two shipyards. The Guangzhou yard uses a covered assembly line to connect very large modules built in nearby locations, a state of the art technique. The improved SONG is being made in two shipyards, facilitating a rapid build up for these two critical ships.

COUNTRIES THAT SELL WEAPONS TO THE PRC

Russia

In a reversal of the late Cold War antagonism, since the collapse of the Soviet Union, the new Russian Federation has emerged as the PRC’s principle source for advanced military hardware, military technology, military-technical training and advice. In mid-2002, the Pentagon reported that since 1990, figures for “signed agreements” could range from “$10 billion to $20 billion” with actual deliveries ranging from “$7 billion to $10 billion.” In 1999, annual Russian arms sales to the PRC jumped from about $1 billion to $2 billion, a figure that will be sustained in 2004. The Pentagon concluded in 2002 that “Russian arms sales are expected to have a significant impact on China’s ability to use force against potential adversaries such as Taiwan.”

The most recent phase in PRC-Russian relations began in August 1986, when then-President Mikhail Gorbachev made a surprising speech which contained strong overtures towards the PRC. Among other things, Gorbachev proposed cooperation in space exploration. Following Tiananmen, the West’s shunning of the PRC’s military accelerated a military rapprochement with a newly impoverished Russia. Early in the 1990s, the PRC was able to drive hard bargains, getting the Russians to accept sub-standard “barter goods” in exchange for early shipments of weapons. By the mid-1990s, Russia’s pervasive need for hard currency forced a restructuring of their PRC military trade to a cash-basis. Early Russian reluctance to sell their most modern technology faded continuously during the 1990s so that now it is the Russians who are increasingly hard pressed to come up with “something new” for Beijing.

As already mentioned, in the late 1990s, the PRC started to double it annual arms purchases to the $2 billion level. This served to fund the purchase of large numbers of Sukhoi fighters, to sustain one and maybe two Sukhoi co-production agreements, a trebling of the number of KILO submarines and an unknown but believed high number of S-300 SAMs. In addition to purchasing advanced weapons, the PLA has been forced to learn—often the hard way—that new weapons require new doctrine, tactics, training and maintenance practices, or “software.” In many instances, the challenge of developing new “software” has been more difficult for the PLA than buying new “hardware.” But the PLA is learning. For example, the PLAAF’s experience with the inadequacy of the single mission Su-27 air superiority fighter influenced a mid-1990s decision to acquire only multi-role combat aircraft in the future. To take full advantage of the advanced capabilities of the Su-27, the PLAAF had to formulate more aggressive training programs. Access to Russian technology from the Su-27 has influenced domestic aircraft programs. In the early 1990s, Chengdu had to modify its J-10 fighter to take advantage of access to the Russian Saturn Alyuka AL-31 engine also used by the Su-27.

According to one report, Russia-PRC cooperation in space technologies pre-dates the break-up of the Soviet Union, beginning possibly in 1989. During a December 1992 visit to Beijing, then-Russian President Boris Yeltsin was pressed by the PRC to begin cooperation in space technologies. Space cooperation was early on the agenda for growing Russia-PRC cooperation, with efforts to formalize unconnected early cooperative programs in 1995. By 1999, a Russian report noted that there were 11 joint space programs being implemented. Perhaps sometime in 2000, a new bi-lateral commission was created to coordinate multiple bi-lateral space cooperation programs. Cooperation was expanded in 2003 to cover new area in unmanned spacecraft.

There is an increasing emphasis on broader technology development cooperation, in which the PRC seeks to attract Russian technological investment in the PRC and the PRC also invests in high technology in Russia. In 1993, there were 300 Russian scientists on long-term defense-related programs, and by 2000, this number jumped to 1,500. High technology development contracts between Russia and the PRC jumped from 35 contracts, totaling $11.7 million in 2001, to $20.7 million for 30 contracts in the first six months of 2002. A 2002 PRC technology delegation visiting Moscow to advance these contracts included officials from “leading shipbuilding, nuclear energy, aerospace and defense industry companies.” Long seeking to shift the balance of its military trade from hardware to technology, in December 2003, Defense Minister Cao Gangchuan made a special push to change this balance to 70 percent technology and 30 percent hardware.

Of note, the PLA wants to participate with Russia in joint sales to third countries. This is significant in relation to a possible ending of Europe’s arms embargo. If this happens, the PLA will likely try to form new alliances with European arms makers as quickly as possible, thereby creating anxiety in Moscow. One way for Beijing to calm Moscow’s fears would be to craft more multi-lateral military programs. But to remain competitive with Europe, it is possible that Russia may become more eager to sell whatever it has that is new and more deadly.

Ukraine

While the Ukraine has probably only sold roughly $1-2 billion million in military products to the PLA over the last decade, it has been useful nonetheless. Since the break-up of the Soviet Union, Russian and Ukrainian military concerns have become more competitive, and the PLA has sought to take advantage of this. The Ukraine has been a source for space and missile technologies, conducting training for PLA astronauts, and possibly selling the PLA advanced liquid fuel rocket engines. The Ukraine is a principle source for air-to-air missiles for PLA Sukhoi fighters. In terms of naval hardware, after much effort, the PLA was able to buy the rusting hulk of a carrier VARYAG and tow it to Dalian in 2002. There it will teach PLA Navy engineers about Soviet era aircraft carrier technology. The PLA may remain interested in the quite capable Ukrainian SLAVA class cruise.

In addition, the Ukraine contains top-notch electronic warfare specialists. It is in this area where the PLA is stepping out and investing to create new products. If reports are to be believed, it was PLA investment that allowed the Ukraine to create the feared KOLCHUGA passive radar. The PLA is reportedly paying Ukrainian companies to develop a new naval phased array radar, which may be the new radar for the PLAN’s No. 170 class air-defense destroyers. In such arrangements, the PLA likely owns the resulting new technology, as it most probably enables its engineers to absorb the knowledge of their Ukrainian mentors, strengthening their potential to produce a next generation product.

Israel

Even though Israel apparently has stopped its military exports to the PRC, it remains the second most important source of advanced military technology to the PRC due to its cumulative effect. Total estimates of the amount of Israel’s military exports to the PRC vary. SIPRI lists $162 million from 1993 to 2002, but in 1997, an Israeli official noted that Israel’s military sales to the PRC were approximately $10 million annually. Another estimate for that same year notes Israeli arms sales to the PRC may have been as high as $30 million annually from 1979. Notably, this trade was poised to leap by $1 billion, but the U.S. convinced Israel to cancel the sale of its sophisticated PHALCON AWACS aircraft in 2000.

During the late 1970s and early 1980s, the United States encouraged Israel to develop military technical ties with the PRC in order to indirectly aid PRC military modernization against the former Soviet Union. The formal go-ahead is reported to have come in 1979, when then-Defense Minister Ezer Weizman asked the late Israeli billionaire Shaul Isenberg to establish the Israeli-PRC arms trade. During the 1980s, Israel offered the PRC its technology in the areas of tank weapons, anti-tank missiles, surface-to-air missiles, cruise missiles, military electronics and aircraft design. But by the 1990s, the Israel-PLA relationship became a matter of increasing concern for Washington, not just because of the sophistication of technology sold, but because some of the technology was of U.S. origin or made possible by access to U.S. weapon systems, and was subsidized by U.S. taxpayers.

Israel’s principle motivation for pursuing its arms relationship with the PRC was to support its arms industries, whose independence and competitiveness Israel requires for its own national security. However, some Israelis have suggested another motivation. Israeli officials claim that one benefit of its sale of LAVI fighter technology to China has been to prevent sales of surface-to-surface missiles to Israel’s neighbors. However, in mid-1996, the CIA reportedly disclosed that China may have shipped “missile-related components” to Syria. And there is the larger question of PRC nuclear and missile proliferation and the dangers that has created for Israel. For example, the PRC has sold Iran both nuclear technologies that would contribute to its nuclear weapons program and missile technologies that have contributed to its long-range nuclear missile program. Furthermore, PRC missile technologies have been sold to Iran through proxies like North Korea. This occurred during the 1990s when the Israeli-PLA relationship was at its height.

In the early 1990s there were two incidents that caused great concern in U.S., especially in intelligence circles. One was the suspicion that Israel had sold the PRC an example of a U.S. PATRIOT surface-to-air missile. Israel strongly denied this charge and the U.S. is reported to have sent a team to Israel to investigate this transfer, but could not determine that Israel had sent a PATRIOT to the PRC. However, a U.S. official has disclosed that indeed the PRC did obtain one PATRIOT missile in the early 1990s. The leakage of U.S. track-via-missile to the PRC, though not as sensational as other military technology leakages, nevertheless constitutes a serious loss for the United States.

The most famous PRC-Israel project has been the co-development of the Chengdu Jian-10 (J-10) 4th generation multi-role fighter. This project drew heavily on Israel’s Israeli Aircraft Industries LAVI advanced fighter, was terminated after the U.S. withdrew its financial and political support. In 2003, a Russian source who visited Chengdu in the early 1990s remarked that it was possible to view Hebrew language placards on the walls where work was being done on the J-10. But the LAVI, in turn, drew heavily from U.S. technology, including some associated with the Lockheed-Martin F-16 fighter. U.S.-origin technology in the J-10 may include avionics, advanced composite materials and flight control specification. As more details about the J-10 have surfaced, it is increasingly apparent that Chengdu pooled technology influences from Israel and Russia to make this new fighter. Though long in gestation, the J-10 may enter production in 2004, and could prove to be a capable multi-role fighter able to hold its own against many current U.S. fighters.

But it was Israel’s attempt to sell its very advanced PHALCON phased array airborne radar to the PLA which finally mobilized a bi-partisan U.S. effort in the late 1990s to insist that Israel halt its exports of dangerous military technology to the PRC. Concern had been building since the deal was formalized at the Paris Airshow in 1997 that Israel would combine PHALCON with a Russian-supplied Beriev A-50 AWACS aircraft. The deal would have involved up to four aircraft for $1 billion. The advanced capabilities of the PHALCON exceeded that of the U.S. E-3 SENTRY and would have severely threatened Taiwan’s air defense capabilities. The Clinton Administration, starting with President Clinton, began to press its concerns to Israel in November 1999. The issue soon united both Democrat and Republicans in opposition, both in the Administration and in the Congress, and even among strong supporters of Israel. Former Prime Minister Ehud Barak announced Israel’s cancellation of the deal during a U.S.-Israeli summit in July 2000. This cancellation caused a furor in Israel among the PHALCON sale’s supporters and Israel was forced to pay $350 million in compensation to the PRC. But the PHALCON’s capabilities are still prized by the PLA and this perhaps is why, as recently as late 2001, China has persisted in trying to convince Washington to reverse its decision.

Since the cancellation of the PHALCON sale, the U.S. applied increasing pressure on Israel to curtail all sales of dangerous weapons to the PLA. In late 2000, a U.S-Israeli committee was reportedly created to review Israel’s sale of such technologies. Nevertheless, such sales have surfaced. In 2002, it was reported that Israel sold a large number of its HARPY anti-radar drone to the PLA. In early 2002, Israel was close to a sale for its AMOS small-bus communications satellite, originally designed for the Israeli military. But through 2002 and 2003, the U.S. apparently convinced Israel to stop its sales of advanced military technology to the PLA. In mid-2003, the AMOS sale fell through and Israeli Aircraft Industries reduced their Beijing office. A December 2003 report notes that Israel may be trying to revive some military-technical commercial ties that may focus primarily on counter-terrorism. Given that there is little distinction between counter-terrorism capabilities and those required by Special Force units for assault missions, it is necessary for the U.S. to continue to monitor Israeli military commercial activities with the PRC.

Europe

In the late 1970s and into the 1980s, the Europeans jumped into the PRC arms market to compete with the U.S. and Israel. France and Britain were the leaders, followed by Italy, and then Germany selling mainly dual use items. Sweden also began an arms relationship. The 1980s saw several European countries sell military technology to the PRC as part of the anti-Soviet effort. However, most but not all of this commerce was curtailed by European Union sanctions in response to the 1989 Tiananmen Massacre. After the mid-1990s, Britain, France, Spain and Italy modified their interpretations of the 1989 sanctions to allow increasing “dual use” technology to be sold to the PRC. Under this flag, Europeans have sold defense electronics and helicopter technology to the PLA.

By the late 1990s, Beijing was putting heavy pressure on many European countries to end these sanctions and resume military technology and weapons sales. Seeing that its harangue could have effect, Beijing continued to press hard. Beijing scored by blocking a German reconnaissance satellite sale to Taiwan in 1999 and put sufficient pressure on Germany, and Spain in 2001 to 2002, to block the sale of their conventional submarine technology to Taiwan. During his August-September 2002 tour of Europe, former Premier Zhu Rongji explicitly called for Europe to resume military sales. As U.S.-EU relations went from tepid to worse in 2002-2003, it appears that Beijing saw an opening to extract concessions from Europeans who were looking for stronger links to Beijing to take the place of those they were giving up with Washington. In June 2003, during a visit to Beijing, French Defense Minister Michele Alliot-Marie said, "We are working hard to lift the ban.”

Beijing began applying serious pressure in its release of a White Paper on PRC-EU relations, saying, “The EU should lift its ban on arms sales to China at an early date so as to remove barriers to greater bilateral cooperation on defense industry and technologies.” This White Paper was released weeks before a high-profile Summit of EU leaders in Beijing in November. Then, in early December, German Chancellor Gerhard Schroeder called for the embargo to be lifted during a visit to the PRC. Barely two weeks later, at an EU summit in Brussels, French President Jacques Chriac’s call for the end of the embargo was joined by Dutch Prime Minister Jan Peter Belkenende, Swedish Premier Goran Perrson and Chancellor Schroeder. A summit statement later said that Foreign Ministers would “re-examine the question of the embargo on the sale of arms to China.” Days later, the European Union Assembly adopted a resolution against lifting the embargo, citing the PRC’s threats to Taiwan, but the advisory nature of this body means it cannot stop a lifting of the EU embargo on arms sales to the PLA in 2004.

For the last few years, restrictions have been relaxing, especially regarding sale of space technology to the PLA. Britain, Germany and Italy have sold satellite technology to the PRC. The European space consortium Astrium has sought to sell manned space life support technology and has lobbied to allow the PRC to join the International Space Station. A 2003 agreement to secure a PRC financial contribution to the future European GALILEO navigation satellite constellation marked a new high-point in space cooperation. By October, the PRC and the European Space Agency were reported close to completing a five-year space cooperation agreement that would cover “space science, Earth observation, environmental monitoring, meteorology, telecommunications and satellite navigation, microgravity research for biology and medicine, and human resource development and training.”

In conjunction with the mid-December EU summit, major European defense and aerospace companies called for an end to the embargo. Their tone was set by EADS, which in early October signed a “strategic cooperation agreement” with AviChina, an investment arm of AVIC II, that would involve the “the joint development, manufacturing and modernization of helicopters, regional aircraft and training aircraft.” Said an EADS spokesman, “We have been working with Avic II for 30 years. It makes perfect sense for us to become a strategic partner in AviChina.”

France

During the 1990s, France maintained a quiet relationship with the PLA, continuing cooperation in the helicopter sector. But as the decade ended, France became the strongest advocate to remove the 1989 embargo. Once the embargo is terminated, France very likely expects to be rewarded with immediate military business. The French would have much to offer; they are active in almost every sphere of military-technical research and eager to support their military base through exports. In early 2002, French political and industry officials wanted to sell the PLA new imaging satellite technology. France’s HELIOS II electro-optical imaging satellite, due to be launched in 2004, likely has a sub-1 meter resolution. An early candidate for sales might be the Snecma M-88 turbofan engine. This advanced high-thrust low-weight engine would be a good candidate for either incorporating into new training/attack fighter design or to serve as the basis for a long-term co-development program. France has had experience trying to graft its electronic systems into Soviet/Russian weapons, experience the PLA may find attractive. Some French official suggested selling the now-to-be-scrapped Clemenceau aircraft carrier in the mid-1990s and the French might now wish to sell aircraft carrier technology. This may even include technology associated with the RAFALE-M carrier version of the Dassault RAFALE 5th generation fighter.

Germany

Germany’s decision to support the lifting of the EU embargo likely has more to do with currying economic favor with Beijing and finding another way to distance itself from Washington. While it is difficult to imagine Germany selling actual weapons to the PLA, (it had trouble selling tanks to NATO ally Turkey), there are a range of dual use technologies that Germany would like to sell the PLA, to include space, electronic and fuel cell technologies. Germany is developing a radar satellite called SAR-Lupe, which will join the French HELIOS II to form Europe’s first independent intelligence and surveillance satellite network.

Italy

Italy will likely take advantage of the end of the EU embargo. Its main helicopter company, AugustaWestland, is a key partner with the PLA in developing its new medium helicopter.

Sweden

It appears that Sweden will support a European Union decision to end its arms embargo against the PRC. While Swedish governments have been among the most principled supporters of nuclear and conventional arms control, Sweden maintains a modern innovative arms industry which is very active in the international marketplace. Should the embargo end, Sweden would be able to offer the PLA a great deal of world-class weaponry but more importantly, the Swedes could convey hard-learned lessons in information integration, joint warfare and in rationalizing defense industries.

During the 1980s, Sweden sold to the PLA a small number of its popular Haaglunds Bv-206 tracked military carriers, which are still operated by a PLA Army unit near Beijing. There are suggestions that the PLA is developing a light-weight SAM based on the effective Swedish RBS-70. It is not possible to find additional reporting on the possible sale of this missile. It is perhaps possible that Pakistan, which assembles the RBS-70, may have been a source for this technology. More recently, in 1997, Sweden sold two of its Combatboat 90E 9-ton Special Forces fast transport boats. These can carry 6-10 troops at speeds up to 40 knots. Perhaps more intriguing is the possibility that Sweden sold the PLA a whole system or technology associated with the Ericcson PS-890 ERIEYE active phased array airborne warning radar. Again, it is not possible to find open reporting to substantiate this suspicion. However, Internet images of a Y-7 transport aircraft with a radar remarkable similar in shape to the PS-890, and then confirmation that there is an active program with a similarly shaped radar on a Y-8 transport, at least serve to justify concern. If indeed the PLA did have the ERIEYE or a radar based on its technology, this would substantially improve its ability to prosecute air and naval operations against Taiwan.

Britain

While the UK will proceed much more with an eye to Washington than France or Germany, it is likely that British companies will take advantage of the end of the EU embargo. British military electronics companies quietly resumed marketing efforts in the mid-1990s, with Racal scoring with a sale of its SKYMASTER AEW radar. Rolls Royce’s success in completing its co-development of the SPEY turbofan indicates that British companies will make a stronger push to sell to the PLA.

United States

During the heyday of the 1980s, the U.S. was eager to compete for a share of the emerging PLA military technology market. U.S. sales successes included S-70 helicopters, counter-artillery radar, some torpedoes and the beginning of programs to upgrade J-7 and J-8 fighters. Additional items under discussion include PHALANX CIWS, co-production for a civilian model of the CH-47 heavy-lift helicopter, and co-development of a new main battle tank. The abrupt end for commercial sources of U.S. military technology after 1989, however, did not end PRC attempts to get it. In the 1990s, the PLA instead concentrated on seeking to exploit dual-use technologies and on exploiting business still permitted in the realm of commercial space launches. In addition, the PLA placed greater emphasis on obtaining U.S. technology via espionage. Via the latter, the PRC is accused of having obtained classified information pertaining to several U.S. nuclear warheads and neutron warheads. The PRC is believed to have acquired some U.S. Tomahawk components from Serbia or Afghanistan. The PRC’s espionage effort is expected to remain intense. In August 2003, a report noted that “The FBI ranks China as the greatest espionage threat to the United States in the next 10 years to 15 years.”

There is a question, however, whether the U.S. government will come under increased pressure from U.S. industry sources to relax its arms embargo on the PRC, especially if Europe removes hers as expected. For a number of years, the U.S. helicopter industry has lobbied Congress and the Administration to ease export rules. These have been relaxed and there have been some sales of small helicopters. But there should be continued caution. Some helicopters that the U.S. industry would like to sell to the PLA, like the CH-47, are also used by Taiwan’s Army. It would take little imagination for the PLA to paint their CH-47s to resemble those of Taiwan and use them to infiltrate Special Forces units, enhancing their ability to achieve strategic surprise.

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