New guidelines fashioned by the Reagan administration are expected to lead to approval of most of China's requests for military-related technology while pushing U.S. sales of such technology next year to more than $1 billion, according to diplomatic and business sources.
The guidelines now being reviewed by U.S. allies will be submitted formally to Chinese leaders next week by Secretary of Defense Caspar W. Weinberger, who is scheduled to arrive here Sunday for a five-day visit, the sources said. The regulations shifting the Communist government to the category of "friendly, nonaligned" nations are expected to be released in the next few days.
Meanwhile, U.S. and Chinese officials completed a week of negotiations with "substantial progress" toward a nuclear cooperation agreement that would permit American firms to participate in China's ambitious plans for atomic energy, according to informed diplomats.
The list of newly transferable technology to be unveiled by Weinberger reportedly represents a significant increase in permitted levels of sophistication and covers about three-quarters of China's pending requests for dual-use equipment, which is designed for civilian purposes but has potential for military adaptation. Weinberger is prepared to give "positive consideration" to Chinese requests for lethal weapons, renewing a 1981 U.S. offer to consider such sales on a "case-by-case basis," according to an informed diplomat.
The diplomat said Weinberger also is prepared to reemphasize U.S. willingness to assist China in its military modernization efforts and to have regular military exchanges.
The secretary hopes his visit will add momentum to the recent improvement in Sino-American relations and to repair the strategic ties that came unraveled by two years of squabbling over Taiwan and other issues, the diplomat said. The visit comes at a time when China is moving toward normalization with the Soviet Union and is balancing its relations with the two superpowers.
U.S. offers to expand defense and technology exchanges reflect a reawakened interest in China's security as Moscow steps up its military presence in Asia, and they apparently are aimed at demonstrating the benefits of American friendship.
Washington reportedly believes a strong and secure China able to deter Soviet expansionism is the best guarantee of U.S. interests and those of its allies in the Asian-Pacific region.
"It is not in the U.S. interest for China to fall farther and farther behind the Soviet Union or other aggressive neighbors to the point where it no longer has a credible self-defense or ability to deter coercion or intimidation," explained a senior western diplomat.
To help China modernize, the Reagan administration moved in May to liberalize the transfer of dual-use technology--computers, electronics and know-how--that Peking claimed was being blocked by bureaucratic hangups.
Peking was shifted to a classification reserved for "friendly, nonaligned" nations and advised to wait for guidelines spelling out exactly what could be purchased.
According to business sources, Washington has devised a tricolor zoning system for seven categories of technology sought by China: electronic test instruments, microcircuits, electronic recording equipment, semiconductor manufacturing equipment, oscilloscopes, computers and instruments with imbedded microcomputers.
About three-quarters of China's requests are expected to fall in what is known as the "green zone," which carries the presumption of approval. The Commerce Department can automatically permit sales without interagency review.
The "yellow zone" for more advanced technology also has the presumption of approval, but requests must be cleared by an interagency group.
The "red zone" applies to the highest levels of technology and carries the presumption of disapproval.
Although all of the dual-use equipment made available under the guidelines could enhance China's military capability, experts believe the reforms could provide nothing to threaten U.S. security interests or those of its allies in Asia.
As Washington reviewed the issue, it has quietly begun applying some of the new criteria. The result is a substantial increase in U.S. technology sales, which are expected to reach $800 million this year--compared to $300 million in 1982. U.S. Embassy sources said sales are projected to surpass $1 billion in 1984.
One of the most potentially lucrative areas is the sale of nuclear technology for China's planned atomic energy plants. Plans for two stations have been set--an 1,800-megawatt twin reactor facility and 300-megawatt plant--and foreign firms have been lining up for contracts.
But American firms are now prohibited from participating by a U.S. law barring the transfer of nuclear materials, equipment or technology to nations that have failed to sign the 1968 Nuclear Nonproliferation Treaty or adopted similar guarantees against diversion of atomic materials.
Diplomatic sources are confident of removing the barrier in a U.S.-China nuclear cooperation agreement now in the final stages of negotiations.
A U.S. delegation headed by Ambassador on Nuclear Affairs Richard Kennedy ended the second round of negotiations here today and narrowed differences with the Chinese side "quite a bit," according to an informed diplomat.
Kennedy, speaking to Vice Premier Li Peng in a meeting at the Great Hall of the People, said, "I think we had considerable success and moved the discussions forward substantially and reached a substantial amount of additional agreement." A third round is expected to complete the agreement.
Weinberger, the highest U.S. defense official to visit China since then-defense secretary Harold Brown came in 1980, is ready to discuss direct arms sales to China if his hosts broach the subject in talks, diplomats said.
One informed diplomat insisted, however, that the secretary does not intend to "act as an arms salesman or to prescribe for China what, if any, military technology or equipment they should consider requesting from the United States."
He said the visit is unlikely to result in any weapons sales to China.
Peking has never taken up the U.S. offer to sell it lethal weapons. Analysts believe the reason is China's anger at U.S. arm sales to the rival Chinese government on Taiwan. Also, the Communist leadership here is said to be debating the best way of modernizing its defense and still is uncertain about the degree of reliance on foreign aid.
"If the Chinese have formulated such a plan and if they have determined whether and how the United States might be of assistance in their defense modernization, the secretary will be prepared to discuss that issue," said a diplomat.
China is believed to be interested in antitank and antiaircraft weapons to help defend its northern border where Soviet troops have a large advantage in equipment.
U.S. officials have said they are willing to consider sales of defensive weapons to China but draw the line on offensive arms.