March 25, 2011
By Shirley A. Kan
In 1996, U.S. policymakers faced the issue of whether to impose sanctions on the PRC for technology transfers to Pakistan’s nuclear program, and Beijing issued another nuclear nonproliferation pledge. Since then, the United States has maintained concerns—but at a lower level—about continued PRC nuclear cooperation with Pakistan, particularly involving the construction of nuclear power plants at Chashma.
The PRC government is believed to know about the nuclear cooperation with Pakistan.
Nonetheless, in 2004, the Bush Administration supported China’s application to join the Nuclear Suppliers Group (NSG), despite Congressional concerns about China’s failure to apply the NSG’s “full-scope safeguards” to its nuclear projects in Pakistan. (Full-scope safeguards apply IAEA inspections to all other declared nuclear facilities in addition to the facility importing supplies in order to prevent diversions to weapon programs.)
Ring Magnets and Another Pledge
In 1996, some in Congress called for sanctions after reports disclosed that China sold unsafeguarded ring magnets to Pakistan, apparently in violation of the NPT and in contradiction of U.S. laws, including the Arms Export Control Act (P.L. 90-629) and Export-Import Bank Act (P.L. 79-173), as amended by the Nuclear Proliferation Prevention Act of 1994 (Title VIII of P.L.103-236).
On February 5, 1996, the Washington Times disclosed intelligence reports that the China National Nuclear Corporation, a state-owned corporation, transferred to the A.Q. Khan Research Laboratory in Kahuta, Pakistan, 5,000 ring magnets that can be used in gas centrifuges to enrich uranium. Reportedly, intelligence experts believed that the magnets provided to Pakistan were to be used in special suspension bearings at the top of rotating cylinders in the centrifuges.
The New York Times, on May 12, 1996, reported that the shipment was made after June 1994 and was worth $70,000. The PRC company involved was China Nuclear Energy Industry Corporation, a subsidiary of the China National Nuclear Corporation. The State Department’s report on nonproliferation efforts in South Asia (issued on January 21, 1997) confirmed that “between late 1994 and mid-1995, a Chinese entity transferred a large number of ring magnets to Pakistan for use in its uranium enrichment program.”
The Clinton Administration’s decision-making was complicated by considerations of U.S. corporations doing business in China. Officials reportedly considered imposing then waiving sanctions or focusing sanctions only on the China National Nuclear Corporation, rather than large-scale sanctions affecting the entire PRC government and U.S. companies, such as Westinghouse Electric Corporation (which had deals pending with China National Nuclear Corporation) and Boeing Aircraft Company.
In February 1996, Secretary of State Warren Christopher instructed the Export-Import Bank to suspend financing for commercial deals in China for one month, reported the New York Times (February 29, 1996). Christopher reportedly required time to obtain more information to determine whether sanctions would be required.
Meanwhile, DCI John Deutch reportedly said at a White House meeting that PRC officials at some level likely approved the sale of magnets. Defense Secretary William Perry supported this view, but officials of the Commerce and Treasury Departments and the U.S. Trade Representative argued there was lack of solid proof, according to the Washington Post (April 1, 1996).
On May 10, 1996, the State Department announced that China and Pakistan would not be sanctioned, citing a new agreement with China. Clinton Administration officials said that China promised to provide future assistance only to safeguarded nuclear facilities, reaffirmed its commitment to nuclear nonproliferation, and agreed to consultations on export control and proliferation issues. The Administration also said that PRC leaders insisted they were not aware of the magnet transfer and that there was no evidence that the PRC government had willfully aided or abetted Pakistan’s nuclear weapon program through the magnet transfer. Thus, the State Department announced that sanctions were not warranted, and Export-Import Bank considerations of loans for U.S. exporters to China were returned to normal.
On May 11, 1996, China’s foreign ministry issued a statement that “China will not provide assistance to unsafeguarded nuclear facilities.” In any case, since 1984, China has declared a policy of nuclear nonproliferation and a requirement for recipients of its transfers to accept IAEA safeguards, and China acceded to the NPT in 1992.
That year, Congress responded to the Administration’s determination not to impose sanctions by adding language on “persons” in the Export-Import Bank Act, as amended by Section 1303 of the National Defense Authorization Act for FY1997 (P.L. 104-201), enacted on September 23, 1996.
Other Nuclear Cooperation
On October 9, 1996, the Washington Times reported that a CIA report dated September 14, 1996, said that China sold a “special industrial furnace” and “high-tech diagnostic equipment” to unsafeguarded nuclear facilities in Pakistan. In September 1996, PRC technicians in Pakistan reportedly prepared to install the dual-use equipment. The deal was allegedly made by the China Nuclear Energy Industry Corporation, the same firm which sold the ring magnets.
Those who suspected that the transfer was intended for Pakistan’s nuclear weapons program said that high temperature furnaces are used to mold uranium or plutonium. The CIA report was said to state that “senior-level government approval probably was needed” and that PRC officials planned to submit false documentation on the final destination of the equipment.
According to the press, the CIA report said that the equipment was set to arrive in early September 1996. The Washington Post, on October 10, 1996, further reported that the equipment was intended for a nuclear reactor to be completed by 1998 at Khushab in Pakistan. On October 9, 1996, the State Department said that it had not concluded that China violated its promise of May 11, 1996.
However, the State Department did not publicly address whether the suspected transfers occurred before May 11, 1996, violated the NPT, or contradicted U.S. laws (including the Arms Export Control Act, Export-Import Bank Act, and the Nuclear Proliferation Prevention Act).
Concerns have persisted about PRC assistance to Pakistan’s nuclear facilities. As reported by Pakistani and PRC news sources in 1992, China began to build a nuclear power plant at Chashma and was suspected in 1994 of helping Pakistan to build an unsafeguarded, plutonium-producing reactor at Khushab, according to Nucleonics Week (June 19, 1997, and February 26, 1998). Operational since 2001, the Chashma reactor has IAEA safeguards but not full scope safeguards (Nucleonics Week, April 26, 2001; and IAEA, Annual Report 2001).
Referring specifically to Pakistan’s efforts to acquire equipment, materials, and technology for its nuclear weapons program, the DCI’s June 1997 “Section 721 report” for the last half of 1996 (after China’s May 1996 pledge) stated that China was the “principal supplier.” Then, on May 11 and 13, 1998, India conducted nuclear tests, citing China’s nuclear ties to Pakistan, and Pakistan followed with nuclear tests on May 28 and 30, 1998.
China, as Pakistan’s principal military and nuclear supplier, failed to avert the tests and did not cut off nuclear aid, but condemned the tests at the U.N. The Arms Control and Disarmament Agency’s annual report on arms control for 1998 stated that “there continued to be some contacts between Chinese entities and Pakistan’s unsafeguarded and nuclear weapons program.”
In 2000, news reports said that some former U.S. nonproliferation and intelligence officials suspected that China provided equipment for Pakistan’s secret heavy water production plant at Khushab, where an unsafeguarded reactor reportedly started up in April 1998 and generated weapons-grade plutonium. Clinton Administration officials at the White House and State Department reportedly denied China’s involvement but said that they did not know the origins of the plant.1
The DCI reported in November 2003 that, in the first half of 2003, continued contacts between PRC entities and “entities associated with Pakistan’s nuclear weapons program” cannot be ruled out, despite the PRC’s 1996 promise not to assist unsafeguarded nuclear facilities. The Director of the Defense Intelligence Agency (DIA), Vice Admiral Lowell Jacoby, testified to the Senate Intelligence Committee on February 24, 2004, that PRC entities “remain involved with nuclear and missile programs in Pakistan and Iran,” while “in some cases,” the entities were involved without the government’s knowledge, thus implying that there were cases in which the PRC government had knowledge of the relationships.
On May 5, 2004, China signed a contract to build a second nuclear power reactor (Chashma-2) in Pakistan. This contract raised questions because of continuing PRC nuclear cooperation with Pakistan and its signing right before a decision by the Nuclear Suppliers Group (NSG) on China’s membership, applied with U.S. support. With a pre-existing contract, Chashma-2 was exempted from the NSG’s requirement for full-scope safeguards (not just IAEA safeguards on the reactor).2
After China’s grandfathering of the Chashma-2 reactor under a pre-existing contract, the United States and other countries monitored China’s subsequent agreement in October 2008 to build two more nuclear reactors in Pakistan for compliance with the NSG’s rules, unless there is an exemption (like that for India in 2008). In February 2010, China and Pakistan signed an agreement to finance the construction of two more reactors, Chashma-3 and Chashma-4, and the next month, Pakistan’s government approved the deal in which the PRC promised a loan for the projects. In June, PRC companies signed the contract to build the reactors.3 The PRC acknowledged the deal and contended that the reactors would be subject to IAEA safeguards.
However, Assistant Secretary of State for South and Central Asian Affairs Robert Blake said in Beijing on May 4 that China’s deal would require it to seek an exception to the NSG’s guidelines. Acting Assistant Secretary of State for International Security and Nonproliferation Vann Van Diepen testified that the Administration decided to vote against an exemption for China, at a hearing on July 22 of the House Foreign Affairs Subcommittee on Terrorism, Nonproliferation, and Trade.
On September 21, the PRC Foreign Ministry claimed that the 3rd and 4th reactors were “based on” the PRC-Pakistan agreement signed in 2003 and that China requested IAEA safeguards. In November, China indicated that it planned to build a fifth nuclear reactor in Pakistan.
Meanwhile, on December 21, 2010, PPG Paints Trading Company in Shanghai pled guilty in a U.S. court to illegally exporting high-performance coatings from the United States through the PRC to the Chashma-2 reactor in Pakistan from June 2006 to March 2007. The “Section 721 Report” for 2010 reported that PRC entities have been associated with Pakistan’s nuclear programs.
A. Q. Khan’s Nuclear Network
China’s past and persisting connections to Pakistan’s nuclear program raised questions about whether China was involved in or had knowledge about the long-time efforts, publicly confirmed in early 2004, of Abdul Qadeer Khan, the former head of Pakistan’s nuclear weapon program, in selling uranium enrichment technology to Iran, North Korea, and Libya.
DCI George Tenet confirmed A.Q. Khan’s network of nuclear trade in open testimony to the Senate Intelligence Committee on February 24, 2004.
China’s ties to the network was a concern, particularly because China was an early recipient of the uranium enrichment technology using centrifuges that Khan had acquired in Europe. In return, in 1982, China gave Pakistan 15 tons of uranium hexafluoride gas for production of bombgrade uranium, 50 kilograms of weapons-grade enriched uranium enough for two bombs, and a blue-print for a nuclear weapon that China already tested, according to Khan.4
Also, there were questions about whether China shared intelligence with the United States about Khan’s nuclear technology transfers. With the troubling disclosures, China could have been more willing to cooperate on nonproliferation or could have been reluctant to confirm its involvement. A senior Pakistani diplomat was quoted as saying that, while in Beijing in 2002, PRC officials said they knew “A.Q. Khan was in China and bribing people, and they wanted him out.”5
Particularly troubling was the reported intelligence finding in early 2004 that Khan sold Libya a nuclear bomb design that he received from China in the early 1980s (in return for giving China his centrifuge technology), a design that China had already tested in 1966 and had developed as a compact nuclear bomb for delivery on a missile.6
That finding raised the additional question of whether Khan also sold that bomb design to others, including Iran and North Korea. According to two former U.S. nuclear bomb designers, the PRC proliferated nuclear bomb technology to Pakistan, including a test conducted in 1990 for Pakistan of its first nuclear bomb.7
DCI Porter Goss testified in February 2005 that the Bush Administration continued to explore opportunities to learn about Khan’s nuclear trade, adding that “getting to the end of that trail is extremely important for us. It is a serious proliferation question.”8
In his memoir of 2007, George Tenet wrote that Khan’s broad international network included China, North Korea, and vaguely “the Muslim world.”9 Finally, on January 12, 2009, the State Department imposed sanctions on 13 people and three companies for involvement in A.Q. Khan’s network that proliferated nuclear technology to Iran, Libya, and North Korea. But the State Department did not name China among a number of countries that cooperated to investigate and shut down that proliferation network.
Shirley A. Kan
Specialist in Asian Security Affairs
This article is an edited shorter version of the much longer March 3, 2011, Congressional Research Service report, “China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues”
1 Mark Hibbs, “CIA Knew About Khushab D2O Plant but Not Source, Officials Claim,” Nucleonics Week, March 23, 2000; “Pakistani Separation Plant Now Producing 8-10 Kg Plutonium/Yr,” Nuclear Fuel, June 12, 2000.
2 “Pakistan, China Agree on Second Chashma Unit,” Nucleonics Week, May 6, 2004.
3 Daily Times, Lahore, October 19; Nucleonics Week, October 23; Jane’s Defense Weekly, October 29, 2008; Daily Times, Lahore, March 30, 2010; Financial Times, April 29, 2010; Reuters, June 24, 2010.
4 David Sanger and William Broad, “From Rogue Nuclear Programs, Web of Trails Leads to Pakistan,” New York Times, January 4, 2004; Simon Henderson, “Investigation: Nuclear Scandal, Dr Abdul Qadeer Khan,” Sunday Times,
London, September 20, 2009; R. Jeffrey Smith and Joby Warrick, “A Nuclear Power’s Act of Proliferation,” Washington Post, November 13, 2009.
5 Barton Gellman and Dafna Linzer, “Unprecedented Peril Forces Tough Calls,” Washington Post, October 26, 2004.
6 Joby Warrick and Peter Slevin, “Libyan Arms Designs Traced Back to China,” Washington Post, February 15, 2004;
William Broad and David Sanger, “As Nuclear Secrets Emerge in Khan Inquiry, More Are Suspected,” New York
Times, December 26, 2004.
7 Thomas Reed, “The Chinese Nuclear Tests, 1964-1996,” Physics Today, September 2008; Alex Kingsbury, “Why China Helped Countries Like Pakistan, North Korea Build Bombs,” U.S. News & World Report, January 5, 2009.
8 Senate Select Committee on Intelligence, hearing on “Global Intelligence Challenges 2005: Meeting Long-term
Challenges with a Long-term Strategy,” February 16, 2005.
9 George Tenet, At the Center of the Storm: My Years at the CIA (Harper Collins Publishers, 2007).
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