Chinese Spying Is a Threat, Panel Says

By David Cho and Ariana Eunjung Cha
Washington Post Staff Writers
Friday, November 16, 2007

Spying by China in the United States is the biggest threat to keeping American technology secrets, a bipartisan government panel concluded in a report released yesterday.

The U.S.-China Economic and Security Review Commission also said that advances by the Chinese military are catching U.S. intelligence officials by surprise and that the Defense Department may be inadvertently outsourcing the manufacturing of key weapons and military equipment to factories in China.

The report, the panel's fifth, noted that China appears to be reversing its move toward free markets by setting up state-owned enterprises to maintain control over 12 key industries, including oil, telecommunications, shipping, automobiles, steel and information technology.

The commission also urged Congress to work with China to reduce its pollution, which is responsible for significant amounts of smog over the western United States, according to new studies quoted by the report. China is scheduled to build 562 coal-fired plants over the next five years and may have already replaced the United States as the largest greenhouse-gas producer in the world, the report said.

The panel, which was created by Congress in 2001 and has six members appointed by Democrats and six by Republicans, has been criticized for taking a hawkish stance on China in its annual reports. In the one released yesterday, it made 42 recommendations to Congress, and several of them raised questions about whether the Defense Department has been lax in overseeing the production of sensitive military technologies and gathering intelligence on the Chinese military.

The Pentagon is increasingly buying planes, weapons and military vehicles from private contractors that outsource the manufacturing to plants in China and elsewhere in Asia, the report said. But when questioned by the commission, defense officials admitted that they do not have the ability to track where the components of military equipment are made.

"As weaponry gets more and more sophisticated . . . I think well find ourselves more vulnerable for parts that are being manufactured by an adversary. It's really something the Pentagon needs to look at seriously," said commission member William A. Reinsch, president of the National Foreign Trade Council, which promotes free trade on behalf of businesses. Members said that the commission had never before delved so deeply into national security issues.

The report said China's military advances "have surprised U.S. defense and intelligence officials, and raised questions about the quality of our assessments of China's military capabilities."

In January, the Chinese military successfully blew up an old weather satellite. Some analysts said that was a signal that it could take out U.S. military satellites if a conflict broke out in the Taiwan Strait. China has also made attempts to blind U.S. spy satellites with lasers and is building a fleet of diesel-powered submarines that could sneak up on aircraft carriers.

Jia Qingguo, vice dean of the School of International Studies at Peking University, said he thinks the conclusions in the report are "exaggerations."

"When talking about spying technologies, the U.S. is second to no other," Jia said. "It's is true and fair to say that the speed of the modernization of China's national defense technology has been really fast, but it still lags substantially behind the United States."

Jia said China has given no indication that it wants a military confrontation with the United States. "As long as the United States doesn't want to invade China, China should not be a threat to the United States," he said.

Shen Dingli, a professor at Fudan University in Shanghai who focuses on China-U.S. relations, said that if U.S. companies that outsource sensitive technology to China "are afraid we will take their technology, they don't have to let us work on it."

"When companies come to China for outsourcing, it is them asking for favors, not the opposite," Shen said. "But then they turn around and say we are bad."

Responding to the report, Defense Department spokesman Stewart Upton said: "We are closely watching China's military modernization. China's lack of transparency regarding its military modernization raises uncertainty -- for the U.S. and for others -- regarding its strategic intent, and causes hedging against the unknown."

"These are not just unilateral concerns, these are concerns voiced by China's neighbors, others in the region," Upton said. "All of us are looking for a China that emphasizes transparency over opacity, substance over symbolism, and implementation over negotiation."

In the past, the U.S.-China review commission has come under fire for its criticism of China. C. Fred Bergsten, director of the Peterson Institute for International Economics, who has testified before the commission, said its annual reports tend to be "reflexively critical of China."

"The commission is primarily concerned about the threats and the risk of China and probably does not give enough weight to the potential benefits and opportunities that arise for the U.S. from the rapidly rising China power," Bergsten said

The panel has also been criticized by its members. Reinsch has refused to support two previous reports because he disagreed with their harsh rhetoric and stances.

However, Reinsch said, the current report got unanimous support, largely because it is more objective and supported cooperative efforts on pollution issues even as it criticized China for its trade surplus with the United States.

"This year we are more boring," Reinsch said, "but the result is a more balanced and more thoughtful report."

Cha reported from Shanghai.

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