China’s implementation of non-proliferation controls has been subject to intense and ongoing criticism from the West since the 1970s. However, China’s non-proliferation commitments have gradually expanded over the decades, with implementation following behind, albeit with a substantial lag. There are signs that a tipping point may have been reached but China still has much to do to build confidence in its ability to manage strategic technology.
China and Proliferation
China has long been branded a proliferator. China itself acquired nuclear weapons in the 1960s and there were accusations of Chinese involvement in Pakistan’s nuclear weapons program as early as the mid 1970s. As recently as February 2015, Rohan Joshi writing in The Diplomat criticized China’s implementation of controls, stating: “China has demonstrated remarkable consistency over four decades in acting in ways that undermine with impunity the global non-proliferation regime.” Other commentators have also questioned China’s commitment to “non-proliferation norms” in relation to nuclear sales to Pakistan, stating: “As Russia exports reactor technology to Iran and China bypasses Nuclear Suppliers Group guidelines to provide Pakistan with nuclear technology for geopolitical* purposes, there is a heightened fear that non-proliferation norms lack the importance they once did as new suppliers emerge.”
The cases involving Chinese procurers Karl Lee and Sihai Cheng, who supplied sensitive goods to Iran, appear particularly egregious: transfers of proliferation-sensitive goods to the nuclear and missile programs of Iran have been prohibited by UN sanctions resolutions since 2006.
These cases could amount to a damning indictment of China as a supporter of proliferation, as Joshi argued. However, the reality is, as always, more nuanced.
China has since the 1980s increasingly accepted commitments to non-proliferation. The country’s early commitments were intended primarily to access Western technology, with a 1984 non-proliferation pledge by the then Chinese premier being a prerequisite for conclusion of a nuclear cooperation agreement with the United States. China eventually signed up to the Non-Proliferation Treaty in the mid 1990s, and then to the Nuclear Suppliers Group in 2002. It is not only in the area of nuclear exports that China has accepted increased commitments. In the 1990s, China agreed to adhere to the requirements of the Missile Technology Control Regime (MTCR) (although transfers to Pakistan did continue afterwards under what Pakistan described as a “grandfathering arrangement.” China then applied to join the MTCR in 2004, although its application is still tabled because of concerns about its implementation of non-proliferation controls.
While China’s commitments to non-proliferation measures have moved forward substantially in recent decades, its implementation of non-proliferation controls has been much slower. Despite the adoption of what some thought of as “comprehensive” export controls in 2002, Chinese entities continued involvement in transfers that breached China’s international commitments. The U.S., frustrated with the lack of action by Beijing to clamp down on involvement in proliferation by Chinese state and private entities, began to designate Chinese companies, with the effect of cutting them off from the U.S. economy and international financial markets.
In the last few years, the role of state-owned enterprises in proliferation does appear to have declined, with many of China’s biggest state-owned firms investing substantially in export compliance. This compliance wave is driven primarily, it seems, by their desire to be removed from (or steer clear of) U.S. sanctions lists. However, three categories of transaction continue to perturb pundits.
The first relates to nuclear transfers to Pakistan. China is indeed providing assistance to Pakistan in the construction of nuclear reactors. What is too often missed from the debate on whether the reactor sales show bad faith on the part of China regarding non-proliferation is that the reactors will not be used for the production of fissile material for weapons purposes and will be subject to IAEA safeguards. The export of reactors to Pakistan may not therefore provide meaningful indicators as to China’s lack of commitments to non-proliferation norms.
The second relates to so-called serial proliferators, allegedly including Karl Lee. The Lee case in particular has caused substantial U.S. concern primarily because China appears to have been unable or unwilling to take action. What is usually missed in the Lee case is that, at least for the alleged transfers available in open source information, the goods he has reportedly supplied Iran are mostly not covered by UN sanctions. Additionally, as a result of its membership application in 2004 not being taken forward, China has not updated its control list on missile technologies. Therefore, while some of the alleged transfers could be controlled in states such as the U.K. or U.S., it is not necessarily the case that the transfers would be in breach of China’s export control requirements. There are additional controls on the transfer of otherwise uncontrolled goods when it is known that the goods will be used to support weapons of mass destruction, but such controls tend to be difficult to enforce in many countries because of the need to show “knowledge.” Therefore, the Lee case may not be the litmus test that some believe it to be.
The final category relates to individual transactions or groups of transactions that are exported to prohibited end users or end users that are otherwise of concern. The Cheng case is such an example. Some non-compliance can be found in every country. The challenge with such cases in China, as with the Lee case, is that there is often a lack of transparency or responsiveness to Western intelligence tipoffs. Action on such tipoffs have become a central aspect of the global non-proliferation architecture, but too often officials report that after tipoffs are given the originator cannot deduce what action has been taken, if any. Problems are compounded by working challenges, such as the difficulty in accurately translating the bona fides of Chinese companies.
Progress at Last?
In the last 12 months, several important changes have been observed in China’s approach to implementation of non-proliferation controls that could be pivotal in efforts to prevent proliferation from and through China. While these changes are unlikely to lead to a substantial shift on implementation overnight, they do nonetheless have positive implications in the medium term.
Perhaps the main change is the creation of a bureau in the Ministry of Commerce to focus on strategic trade. The bureau has several divisions, including one focused on licensing, enforcement, and importantly also strategic trade cooperation. In parallel to the creation of the new bureau, China has also embarked upon the process of adopting a comprehensive export control law, which is expected in 2020.
Another important change came in the form of a court judgment in autumn of last year. A Chinese court ruled that the supply of “restricted” (as opposed to “prohibited” goods) could result in criminal, instead of only civil, penalties. Evidently, the threat of criminal sanctions provides more of a deterrent than civil sanctions alone, so this decision would seem to provide a legal basis for Chinese export controls which, hitherto, may have been lacking.
Taken together, these measures could allow for substantial progress in the implementation of export controls in China. Nonetheless, the creation of laws or organizations alone cannot overcome the kinds of proliferation challenges China currently poses. Instead, forward movement is required on a day-to-day basis at the working level of China’s counter-proliferation architecture. In this regard, an “emergency mechanism” that has been introduced to respond to specific concerns, including tipoffs from foreign governments, may be vital. Stronger working relations with key actors including the U.S. and EU will also be needed. (Indeed, such actors can and should provide assistance to China to implement controls – a free e-learning package on export controls in Mandarin developed by Project Alpha at King’s College London is a real-world example of the types of practical assistance that can be given.)
If China can demonstrate progress the country could benefit. China’s desire to move up the manufacturing value chain would be aided, or at least less hindered, if export license decisions in the U.S., Europe and elsewhere were not continually delayed by the need for extra assurances that the goods would not be misused or diverted.
Ultimately, despite the progress that has been noted and the positive overall direction for China’s implementation of controls, skepticism about China’s implementation of non-proliferation controls is likely to remain until tangible progress is seen.
Ian J. Stewart is seconded from the British Ministry of Defence to King’s College London where he heads Project Alpha, which works to understand and prevent illicit proliferation-related trade.
* Changed from the original “strategic”.