Briefing by Director General Liu Jieyi on New Export Controls for Missiles and Missile Related Items and Technology

August 30, 2002

Mr. Liu Jieyi: As you know, on August 22, the Chinese Government promulgated Regulations of the People's Republic of China on Export Control of Missiles and Missile-related Items and Technologies and the Missiles and Missile-related Items and Technologies Export Control List. This is another important measure China has taken to implement its missile non-proliferation policy, to further strengthen export controls over missiles and missile-related items and technologies and to energetically enhance such controls by legal means.

China attaches great importance to non-proliferation and is opposed to the proliferation of weapons of mass destruction (WMD) and their delivery systems. The Chinese Government has always been consistent in this policy. On the export control of missiles and missile-related items and technologies, China has always taken a prudent and responsible attitude. As early as ten years ago, in February 1992, China declared that it would observe the guidelines and parameters of the Missile Technology Control Regime (MTCR) in the export of missiles. Since then, we have taken administrative means to implement our non-proliferation policies and fulfill our commitments in this regard.

In recent years, the international situation has undergone changes. China is also moving toward a market economy. China's export control needs to take into account these developments to ensure the effectiveness of China's non-proliferation policies. The legislation in export control is the way to achieve this objective. After thorough study and hard work, China formulated the Regulations and the Control List.

Now, I would like to give you a brief account of the basic elements in the Regulations and the Control List:

1. The Regulations provide for a licensing system for export control of missiles and missile-related items and technologies. Without being licensed, no export can take place. More specifically,the export of items and technologies contained in Part I of the Control List, e.g. ballistic missiles, cruise missiles, rockets and unmanned aerial vehicles and their specially designed items and technologies, shall be subject to the Regulations of the People's Republic of China on Administration of Arms Export as arms. Should the exports of dual-use items and technologies contained in Part II of the Control List be related to military purposes, they shall also be controlled in accordance with the Regulations on Administration of Arms Export. The Regulations on Administration of Arms Export stipulate that the export of above-mentioned items and technologies shall only be operated by designated companies, not by all companies. The export of relevant items and contracts shall be examined and approved by the competent department for administration of arms trade and a license shall be required for the export. The company shall, when filing an application for a contract of arms export, provide valid certification documents of the recipient country concerning, among other things, the end-use and end-user.

The export of items and technologies contained in Part II of the Control List for civilian purposes shall be registered with the Ministry of Foreign Trade and Economic Cooperation. Exporters shall submit valid documents including the end-user and end-use certificates when applying for export licenses. Importers shall guarantee not to use items and technologies for purposes other than the declared end-use, nor to transfer them to any third party without the prior consent of the Chinese Government. The Ministry of Foreign Trade and Economic Cooperation shall, jointly with other relevant governmental departments including the Foreign Ministry, make a decision of either approval or denial regarding an export application. When an export has a bearing on the State security, social and public interests, the case shall be submitted to the State Council and the Central Military Commission for approval.

2. The Regulations reflect the "catch-all" principle in export control where there is a risk of proliferation.

When examining the export application and making a decision of either approval or denial, the competent department will take into consideration the end-use and end-user of the items as well as the WMD proliferation risks. If the importer violates the end-use guarantee or there is a risk of proliferation, the competent department may suspend the export license already granted.

The Regulations specially stipulate that if an exporter knows or should know that the missile-related items or technologies to be exported will be used by the receiving party directly in its program for developing missiles that can be used to deliver weapons of mass destruction, the exporter is still required to apply for export license even if the items and technologies do not figure in the Control List. Furthermore, the competent departments may decide, on an Ad Hoc basis, to exercise export control on specific items and technologies not contained in the Control List.

3. The Regulations and Control List will be strictly enforced. To ensure the authority and strict enforcement of the Regulations, the Regulations provide for clear-cut penalty measures for violations. Violators shall be investigated by relevant competent governmental departments for criminal liability in accordance with the provisions of the criminal law on the crime of smuggling, illegal business operations or other crimes; if such acts are not serious enough to warrant criminal punishment, they shall be punished by administrative means such as fines or revoking of the licensing for foreign trade operations.

Where government officials in charge of the export control of missile-related items and technologies abuse powers or neglect their duties, they shall be investigated for criminal liability in accordance with the relevant provisions of the criminal law; if such acts are not serious enough for criminal punishment, they shall be given administrative sanctions according to law.

The promulgation of the Regulations and the Control List marks a milestone in China's legal framework for export control. China will continue to improve its existing controls in the light of need and also drawing on other countries' successful and applicable experiences.

For years, the Chinese Government has been working on the legislation of export control over the sensitive items in other fields. The Chinese Government has successively formulated a series of laws and regulations and established relevant export control regimes in recent years, under which strict controls are exercised over the exports in nuclear, chemical and biological fields. Furthermore, China will continue to take measures to further improve and strengthen its relevant laws and regulations. These efforts are underway.

In the nuclear field, China has already promulgated the Regulations on Nuclear Materials Control, the Regulations on Control of Nuclear Export and the Regulations on the Control of Nuclear Dual-use Items and Related Technologies Export. In this regard, we are adopting two lists, the Zangger Committee List and the Nuclear-Supplier-Group's List.

In the chemical field, China has promulgated the Regulations on the Administration of the Controlled Chemicals, and strictly controls the production, operation, stockpiling, use, import and export of the chemicals listed on the Controlled Chemicals List. Further measures are underway to strengthen and improve export controls over other relevant chemicals and related equipment and technologies.

In the biological field, China has in place rules and regulations governing the activities such as managing, use, stockpiling, carrying, transporting and transfer of related dangerous bacteria (viruses) and vaccine. The Chinese Government is currently working on specific export control regulations on dual-use biological materials and related equipment.

The above mentioned extra export control measures in biological and chemical fields are expected to come out soon. Together with the promulgated governmental rules and regulations such as the Regulations on the Administration of Arms Export and the Administrative Regulations on the Import and Export of Technologies, China's regulations on export control for non-proliferation will cover all kinds of sensitive items such as nuclear, biological and chemical items and missiles and all types of arms concerned, thus forming a very comprehensive system of the export control over sensitive items.

That's the end of my monologue and I am ready to take questions.

Q: Will China continue to sell missiles or missile-related items and technologies to Pakistan, Iran and Yemen?

MR. LIU: In the first place, I am not sure about the factual basis of what you were suggesting in your question. China has been implementing a very strict policy on the non-proliferation of missiles and missile-related items and technologies. What we have been doing is to strengthen the relevant export controls in order to make sure that we are doing this in a comprehensive legal framework. The Regulations and Control List will be strictly enforced. Since we are talking about Regulations promulgated by China, I don't think it's fair and polite to bring other countries into discussion.

Q: As far as I know, this export control regime and list were agreed on November 2000, why did it take two years for you to formulate it?

MR. LIU: The Regulations and the Control List are very comprehensive. If you saw the List, you would realize the kind of technical detail contained in the List and the wide area it covers. So it would take the time and efforts of the experts from different fields to come out with the Control List. We have been working very hard on this. We have been taking the non-proliferation policy very seriously and doing the best we can to translate this policy further into a legal framework as embodied in the Regulations and Control List.

Q: Thank you very much for the important welcome news. Under Secretary Armitidge is in China, does this have any relation to this action?

MR. LIU: I am sure you have heard reports. I have seen nothing else besides the reports.

Q: Is there anything you are expecting the United States to respond to this gesture, for example, would you welcome the lifting of the ban on American commercial satellites being launched on Chinese rockets?

MR. LIU: Thank you for bringing up the issue of satellites launches. I think satellite launching in itself is something that benefits both sides. There shouldn't be any conditions attached to that. We hope the barriers will be removed soon so that this cooperation which benefits both sides can go ahead.

Q: You mentioned the civilian use technologies will be administered by MOFTEC, and military use items and technologies will pass through Central Military Commission. Is the central military Commission the ultimate authority on deciding how something goes out of it?

MR. LIU: According to the Regulations, the Control List is divided into two major parts. The first part would be related to items used directly for military purposes. The second part would be dual use items and technologies. For the second part, it is the duty of MOFTEC to receive applications and to examine the applications for export licenses together with other relevant government ministries including the Foreign Ministry. The first part follows the procedure of the Regulations on the Administration of Arms Export. For any item or technology on the Control List, if it concerns state security and other things as stipulated in the Regulations, it can be submitted to the State Council and also the Central Military Commission for approval.

Q: Is the List following the MTCR? Or is it a List maybe countries like Germany or the United States would have? Can you compare? The second question is about countries. Is China concerned about similar countries like Germany or the United States?

MR. LIU: You can get the Control List on the Foreign Ministry's website. It is a comprehensive List. In drawing up the List, we were guided by the consistent policy taken by the Chinese Government with regard to the nonproliferation of missiles and missile-related items and technologies. We also took into account the specific situation in China. Certainly we drew heavily on international experience including MTCR. If you compare the List with MTCR, you will find that the categorization is a bit different for the sake of easy administration. There are items not contained in MTCR in the List. So in this respect, this List covers a wider area than MTCR. Of course there is also a very limited number of MTCR items that are not in the list because they are not really that relevant, either because we don't have them, or they have never come into the picture, or because our experts do not know exactly what they are.

As for the second section, the Regulations will be applied across the board. No names appear in the Regulations or Control List. No names means all names.

Q: Is there any technology transfer in the past three years which would not take place if this Regulations have been enforced?

MR. LIU: The enforcement of the non-proliferation policy of the Chinese Government has been always strict. In all countries, there are individuals that try to violate the policies or laws. Some very few cases did occur in China, but the violators would be punished duly by law. Even in countries with the strictest export controls, law enforcement officials are very busy to track down their own companies and individuals who try to outsmart their regulations. That is an export control issue common to all countries.

Q: Will these Regulations now apply to pre-existing contracts? There was at least one contract that came into dispute with the United States in negotiating the aftermath of November 2000 agreement, in which China was arguing that this pre-existing contract should be excluded from the agreement.

MR. LIU: The Regulations control relevant items and technologies by a licensing scheme. In other words, starting from August 22, all relevant exports will have to have a license from either MOFTEC or according to the Regulations on the Administrations of the Arms Export, in order for items to go through the customs. I don't think contracts are something relevant.

Q: How would the Regulations affect the approval of these technologies compared with what they were before?

MR. LIU: We would examine the required documents, including the information about end-use and end-user. We would also assess the weapons of mass destruction proliferation risks. A whole range of factors will figure in the consideration and decision on the license for the export.

Q: When will China join the MTCR? Secondly, there is a report in Pakistan newspapers that Pakistan's missile development will be affected by the regulations.

MR. LIU: We have been in close consultations for years with members of the MTCR, to exchange views on what MTCR is and the direction it is taking. As I said, when China drew up the Control List, we took into account the experience in other areas, including MTCR, because the Annex of MTCR is of reference value. For the non-proliferation regime to be effective, it needs to be universal and non-discriminatory. More work need to be done for MTCR in this regard.

I am not aware of the newspaper report that you referred to.

Q: The United States has been pushing the Regulations for a long time. Now would you be expecting something or more things from the United States? We have already mentioned the satellite. And do you think the United States will scale down the sales of weapons to Taiwan? Or support in other areas?

MR. LIU: About the U.S. arms sales to Taiwan, there shouldn't be any sale of weapons to Taiwan in the first place. As you know, there are three joint communiqués between the United States and China. The United States is obligated in this respect.

I think I laid out specifically and in detail the reasons and considerations behind many years of efforts on part of the Chinese Government to improve its export control mechanisms in the area of missiles and in other areas. First and foremost it is translation into a legal framework and specific control lists of the consistent policy of Chinese Government with regard to the non-proliferation of missiles and the related items. As you know, in November 2000, the United States and China made arrangements. We each made a declaration in this area, in which the United States made the commitment in the field of satellite launches. It is important for any country to honor its commitment.

Q: How do you think about the impact of missile Regulations to the whole export of China?

MR. LIU: As the Regulations and Control List are just being applied, it is very hard to foresee now. In a few months time I can tell you on basis of facts.

Q: Where do you see the biggest area of risks for proliferation of today's world? Which regions or which countries do you fear the proliferation risks most?

MR. LIU: It is the common understanding of the international community that proliferation risk is everywhere. If you look at the United States anthrax incidents, you can realize that even in the United States, something of this kind can take place. I think in the new situation, especially after the September 11, we need to take a fresh look at the non-proliferation issue. Prior to the tragic terrorist incident of September 11, nobody thought that box knives could be weapons. We need to be vigilant everywhere.

Q: Currently, the UN is trying to formulate an international convention on non-proliferation of missile. Does China have a position on that? The US has expressed doubts that an international regime would be stronger than the MTCR.

MR. LIU: I think you are referring to the Export Group of the United Nations on the issue of missiles. That Expert Group concluded its work on a report to the General Assembly of United Nations. China sent an expert to the Group. This is an area in which the United Nations can very effectively and usefully work. We support the efforts in United Nations to strengthen a rule-based universal and non-discriminatory non-proliferation regime. So any efforts in this direction will be welcome.

I am not in the best position to answer for the United States. We support firmly the role of United Nations. I think for any country that fully supports non-proliferation, there shouldn't be any problem in supporting the United Nations in this area.

Q: Suppose there had been this regulations in place earlier, do you think there has been the exports that is now impossible?

MR. LIU: The policy of Chinese Government has been consistent with regard to the prevention of proliferation of missiles and missile-related items and technologies. It is not something like what you cannot do now was something that you could do in the past.

Q: You said that the Chinese regulations went further than MTCR regulations. And what were not included in the Chinese regulations are irrelevant to China. Why didn't China join the MTCR and adopt the irrelevant regulations because they don't mean anything to China anyway, and adopt the stricter rules? What is the stumbling block?

MR. LIU: In this case, the MTCR rules are not necessarily stricter rules. For China, the Chinese Regulations and Control List are stricter than MTCR, because they include relevant items for China that are not in the MTCR list. I don't think taking fully without any modifications the MTCR list would make them stricter than the current Control List. On the contrary, the reverse is true. About the relations between China and MTCR, I just mentioned that we have been having discussions with MTCR members over the years on MTCR and the things that MTCR members do. I don't think whether joining or not joining the MTCR is an issue directly related to what kind of a strict export control regime China is adopting.

Q: Since November 2000, the United States has put sanctions three times against Chinese companies because of proliferation. Do you think it would happen again?

MR. LIU: In the first place, the sanctions are not warranted. Secondly, applying sanctions is not the way countries should deal with each other in the area of non-proliferation, an area of common concern to the international community where cooperation is more appropriate. These sanctions should be lifted.

Q: I just want to clarify the process of making the regulations. Could you explain what was the work you have done since President Bush came to Beijing?

MR. LIU: The process of drawing up the regulations and list predated February. It was a process started long before that.

Q: What is the specific work you did from February to today? The Americans were trying to say that you have objective difficulties in legislation. And this is a factual question. For six months you didn't come out with the regulations, now you came out yesterday with US Deputy Secretary in Beijing. I was wondering what work you have done in promulgating the regulations?

MR. LIU: These are regulations formulated by the government authorities of China. I don't think any other country know how China was working on these Regulations and Control List. We promulgated them on 22 of August, because they were ready on that date. If they were ready some other date, we would have promulgated them some other day.

Q: My understanding is that the U.S. is requesting some of the items in the Control List be outright banned export. My understanding is that all the items in the Control List and the Regulations could be exported on a case by case basis. Why is China doing it this way?

MR. LIU: Every country is doing it this way, the United States, European countries, other countries, and MTCR members. The MTCR itself is a control regime, not a prohibition regime. No item contained in the MTCR is prohibited. So China is simply doing something that all other countries are doing, taking fully into consideration the risk of proliferation in the relevant field.

Q: You said the sanctions the US imposed on Chinese companies are not warranted. Could you tell us a little bit why they are unwarranted, because the transfers didn't take place, or the items that were transferred are not ones that are legislated by the US, or the items transferred are not considered as the risk of proliferation.

MR. LIU: We were not given detailed accounts of what those alleged activities might entail. But of course that does not mean that we are not taking the issue seriously and try to find out the fact. But the way that countries deal with each other in an area that calls for cooperation shouldn't be applying sanctions.

Q: And the new regulations says that if there are violations that do not amount to criminal penalties, there will be administrative fines ordered. Is there any administrative fines levied against those companies?

MR. LIU: Even in the past, prior to the promulgation of the regulations and the control list, there were laws in place to punish those who violate the Chinese Government's policy.

Q: Is the TMD considered as proliferation according to your standard?

MR. LIU: The security challenges we face today have changed, as evidenced by the tragic incident on September 11. It is necessary for countries and governments to cooperate to address such challenges, especially the challenges posed by non-state actors, terrorists and transnational crimes. To develop elaborate systems like missile defense systems is simply not the answer. Also, there are different views even in the United States about the nature of missile defense, whether it being a system of defense, or a system of offense, or a system combing both defense and offense. The most important thing is to maintain the international arms control and disarmament regimes, and to strengthen, not to weaken the rule-based arms control and disarmament. The development of missile defense is not in conformity with this general direction. It will not be an answer to the challenges or threats that it was allegedly intended to address.