US tightens controls on military-use items to China

Washington, June 16: The United States is tightening export controls on high-tech goods ranging from aircraft to space communication systems that could be used by China's rapidly expanding military, a U.S. Commerce Department official said.

The new regulation, which takes effect on Tuesday, also creates a ''trusted customer'' program that will allow approved companies in China to import many high-tech goods without having to get an individual license, the official said, speaking with reporters on condition he not be identified.

''Because of a rapid and an opaque military modernization (program under way in China), we as well as other nations have to prudently hedge against the uncertainty of what that means,'' the official said.

Pentagon and U.S. intelligence officials says China's total real military-related spending for 2007 could be between billion and 5 billion, far higher than its stated billion in 2007, up 17.8 percent from the year before.

Military analysts believe China's forces will continue to grow stronger and pose a growing challenge to the U.S.

military. China has recently unveiled a new fighter plane, blinded a U.S. satellite using a ground-based laser, and blasted one of its own satellites out of orbit with a ballistic missile.

The conflicting defense spending figures have been a source of friction. Earlier this week, Chinese Foreign Ministry spokesman Qin Gang denounced U.S. comments on China's defense spending as ''irresponsible.'' China also has been urging Washington for many years to loosen export controls, which they say are one reason the huge trade surplus it runs with the United States.

The Commerce Department scaled back its original July 2006 proposal for controls based on consultations with the State and Defense departments, U.S. trading partners, business groups and the Chinese government, the official said.

''Trusted Customers''

The final list of controlled categories was reduced to 20, from 27, and includes certain aircraft and aircraft engines, underwater systems, avionics, inertial navigation systems, certain composite materials, lasers, depleted uranium and certain telecommunication systems related to space communications or air defense, the official said.

Generally available computers, semi-conductors, electronics, general purpose telecommunications equipment, and general purpose chemicals were taken off the list.

Many U.S. business groups objected to the original proposal, which they said would bar U.S. companies from selling products the Chinese can already buy in their own market or easily purchase from other suppliers.

The United States consulted with European and other allies before finalizing the new regulation, but was unable to persuade any of them to follow suit.

''They did not in the end choose to do what we have done.

But we have chosen to go forward because we think it's that important,'' the Commerce official said.

The new trusted customer -- or ''validated end user'' -- program reflects a U.S. priority of helping China ''facilitate their political and economic integration into the world community,'' the official said.

The Commerce Department hopes in the coming weeks to identify an initial list of validated end users in China that would be allow to import certain controlled goods after being approved by the United States, the official said.

''Clearly, a key criterion is whether they are a trusted customer do they have a demonstrative history of using these sensitive products in a responsible way,'' the official said.

''We'll likely look at ownership structure, but it's important to point out all companies will be permitted to apply Chinese companies, subsidiaries of US companies, subsidiaries of foreign companies in China,'' he said.

Reuters>