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The Rediff Special/ Philip Saunders and Jing-dong Yuan with Gaurav Kampani

If you thought that China had become a serious missile nonproliferation convert, then think again. New evidence produced by US intelligence agencies suggests that Chinese ballistic missile-related technology transfers to Pakistan remain a serious proliferation concern. Between 1988-1994, China sold approximately 34 complete M-11 ballistic missiles to Pakistan; in this period China also allegedly built a turnkey missile plant for Pakistan at Tarwanah, a suburb of Rawalpindi.

During the 1990s, the United States used a combination of sanctions and incentives to persuade China to halt missile exports and related technology transfers to Pakistan. For a while it appeared the US had succeeded in achieving the above goals. However, it is now clear that China, despite assurances to the US government to the contrary, has resumed missile-related technology assistance to Pakistan.

To be fair to China, there is no international law or treaty that bans the trade in missiles or missile-related technologies between sovereign countries. The only restrictions that exist are the consequence of the US-led Missile Technology Control Regime, MTCR, to which China is an informal and partial adherent. Nevertheless, because China interprets its MTCR obligations very narrowly and treats missile proliferation as a function of its larger strategic and commercial interests, the question of regime compliance continues to dog US-China relations.

What is the MTCR?

The United States and its G-7 partners formed the MTCR in 1987. The MTCR is an informal cartel which seeks to ban the export of ballistic missiles, cruise missiles and rocket systems capable of delivering a 500 kg payload over a range greater than 300 km.

The MTCR's annex of controlled equipment and technologies is divided into two categories. Category I items, which include complete rocket and ballistic missile systems, cruise missiles, their production facilities and complete sub-systems, are subject to a presumption of export denial. On the other hand, Category II items, which cover a wide range of missile parts, components, and subsystems such as propellants, structural materials and flight test instruments, can be exported at the discretion of an MTCR partner government on a case-by-case basis for acceptable end uses.

The MTCR initially focused on nuclear capable delivery systems; but in 1993, after the experience of the 1990-91 Gulf War, the guidelines were amended to cover all delivery systems capable of delivering weapons of mass destruction -- nuclear, biological, and chemical.

MTCR and the M-11 controversy

China reportedly began negotiating the sale of M-11 ballistic missiles with Pakistan in the late-1980s and signed a sales contract in 1988. In 1991 US intelligence discovered that China had begun transferring the M-11s to Islamabad. Despite Chinese denials, the United States imposed sanctions against Chinese and Pakistani entities engaged in the trade in May 1991. In November 1991, Chinese Foreign Minister Qian Qichen and US Secretary of State James Baker reached a verbal agreement whereby China agreed to "informally abide by the guidelines and parameters of the Missile Technology Control Regime, MTCR" in exchange for the lifting of US sanctions. After China sent a letter to the US State Department in February 1992 affirming the agreement, sanctions were lifted.

China's 1991 commitment to informally adhere to the MTCR guidelines did not end the M-11 controversy. In December 1992, reports surfaced that China had transferred 34 complete M-11 missiles to Pakistan in violation of its 1991 pledge. As a result, in May 1993, the Clinton administration re-imposed MTCR-related sanctions on Chinese entities after determining that Beijing had engaged in missile trade with Pakistan.

During post-sanctions negotiations with the United States, China argued that the deal did not violate the MTCR as the M-11 could deliver only a 500 kg payload over an advertised range of 280 km; in a narrow technical sense therefore, the missile's capabilities did not exceed the MTCR parameters. But the Clinton administration held its ground.

The impasse was resolved in October 1994 when the United States agreed to lift sanctions in return for a Chinese pledge that it would abide by Category I of the MTCR and ban exports of all ground-to-ground missiles exceeding the primary parameters of the MTCR. More significantly, China also agreed to the concept of "inherent capability" which binds it from exporting any missile that is inherently capable of delivering a 500 kg payload over 300 km. For example, the Chinese M-11 can deliver a 500 kg payload over a range of 280 km; but the missile's range can be extended to cover distances beyond 300 km with a reduced payload. Hence, by agreeing to the inherent capability clause, China agreed to prohibit future exports of the M-11 missile and other longer-range missile systems.

Persistent US diplomatic efforts since then led China to reaffirm its 1994 pledge. China also agreed to actively consider joining the MTCR. In June 1998, after India and Pakistan conducted nuclear tests, China and the United States issued a joint statement affirming that they would strengthen their export control laws to "prevent the export of equipment, materials or technology that could in any way assist programmes in India and Pakistan for nuclear weapons or ballistic missiles capable of delivering such weapons."

However, several issues pertaining to China's missile export policy remain unresolved. According to US government sources, China has interpreted its missile export controls very narrowly. Although Beijing has complied with the MTCR's Category I restrictions and had stopped the transfer of complete missile systems, it has not extended the ban to cover specific missile components and related technologies covered under Category II of the MTCR. In addition, China has kept the precise scope, content and extent of its internal missile export control list a secret. It is also unclear if this control list approximates MTCR guidelines.

Continuing Chinese Transfers?

New US intelligence reports suggest China has violated its 1994 pledge and has resumed missile-related technology transfers to Pakistan. Suspicions persist that Pakistan's Shaheen-1 and II medium-range ballistic missiles correspond closely to China's M-series of ballistic missiles, although there is no concrete evidence that Pakistan obtained either missile from China.

For example, a CIA report on global weapons sales submitted to the US Congress in August 2000 states, "Chinese missile-related technical assistance to Pakistan increased during the reporting period (July-August 1999)." Similarly, another CIA report made public in February 1999 stated, "Chinese and North Korean entities continued to provide assistance to Pakistan's ballistic missile programme during the first half of 1998. Such assistance is critical for Islamabad's efforts to produce ballistic missiles..." This allegation was repeated in a February 2000 CIA report to the US Congress which said, "Some [Chinese] ballistic missile assistance [to Pakistan] continues."

Predictably, China has dismissed these reports as "groundless." However, an alarmed Clinton administration recently dispatched John D Holum, senior advisor for arms control and international security affairs in the State Department, to take up the matter with the Chinese. But Holum failed in his mission and admitted, "The issue remains unresolved."

Another senior US official who also attended the talks was more candid and told The New York Times that the two-day talks, "Did not allay concerns about recent Chinese help to Pakistan's ballistic missile programme."

Explaining Chinese Behavior

Why does China continue to transfer missile related technologies to Pakistan? Some analysts argue that the Chinese are the ultimate realists. China's proliferation and nonproliferation policies are governed by strategic and commercial interests. Even more significantly, China calibrates its proliferation behaviour and compliance with global arms control regimes and cartels to gain bargaining leverage in negotiations with the United States over Taiwan.

Pakistan is China's "all weather" ally in South Asia and the two countries are united by their rivalry with India. In negotiations with the United States, China has described Pakistan as its "Israel." Therefore, China is committed to Pakistan's security. In the context of the nuclear arms competition in the region, China views Pakistan as the underdog and has therefore accepted the task of underwriting Pakistan's security against advances in the Indian nuclear and missile programme. The Chinese have also probably calculated that aiding Pakistan with nuclear and missile technologies will divert India's military attention and prevent it from focusing on China. This goal might have assumed added priority after May 1998, when India decided to deploy a minimum deterrent with China as its primary target.

But China's policies are not monocausal. China also uses missile sales and the ambiguity of its commitment to MTCR standards as a bargaining chip to achieve other foreign policy goals with the United States. For example, during negotiations with American diplomats, China linked the M-11 transfers to Pakistan with the US sale of 150 F-16s to Taiwan. Similarly, continuing technological assistance to Pakistan may be linked to US threats to transfer theater missile defense systems and other sophisticated conventional arms to Taiwan. China probably hopes to use the threat of ballistic missile proliferation and the carrot of full MTCR compliance to persuade the United States to forego any potential transfer of theater missile defense systems currently under development to Taiwan.

Finally, commercial motives often merge with strategic concerns to determine Chinese decisions about arms sales. After Chinese leader Deng Xiaoping launched his modernisation drive in the 1980s, state-owned firms came under enormous pressure to adhere to market principles and operate on profit principles. Exports of dual-use nuclear technologies, ballistic and cruise missiles, especially those that were regulated by international cartels or subject to export denials by other countries, became a lucrative means of generating profits. For example, China earned nearly $ 3 billion from its CSS-2 intermediate-range ballistic missile sales to Saudi Arabia in the 1980s. Similarly, Chinese cruise missile sales to Iran and short-range ballistic missile sales to Libya and Syria were primarily guided by profit motives.

Policy Implications

Continuing Chinese missile proliferation to Pakistan will have the unfortunate effect of accelerating the nuclear domino dynamics in South Asia. During the 1980s China helped Pakistan acquire a nuclear weapons capability. It followed up this policy in the 1990s by proliferating ballistic missiles to Islamabad. India's own nuclear and ballistic missile advances played a role in China's decision to help Pakistan develop missile capabilities; but India cited China's policy of covert proliferation as one of the principal reasons why it made its own nuclear capability overt. Renewed Chinese missile assistance will not only help Pakistan weaponise its nuclear forces, but it will also increase pressures in New Delhi to operationalise India's proposed minimum deterrent.

Weaponisation and deployment of nuclear forces by India and Pakistan will further obstruct the US goal of arranging a formal cap or nuclear "restraint regime" in the region. Fledgling nuclear arsenals are usually characterised by complex organisational and management problems such as weak command and control, poor real-time surveillance and intelligence gathering, force stability, etc. These problems will increase the chances of a dangerous nuclear crisis in South Asia significantly.

Regardless of whether Pakistan's ballistic missile programme is the result of India's own advances, analysts in New Delhi have interpreted the Chinese transfers as another example of Beijing's attempts to contain India. In the United States, conservatives and China-bashers have begun citing China's recurring missile transfers in apparent violation of its earlier pledges as an example of Chinese perfidy. They have used the episode to press their case for robust theater and national missile defenses and have threatened to enact a China nonproliferation law that would mandate sanctions if China continues its recent proliferation behaviour.

As a result, the emerging nuclear and missile race between India and Pakistan has the potential to damage US-China relations and affect both regional and global stability. Indeed, unraveling the proliferation connection between China and Pakistan remains one of the most important and difficult challenges for global nonproliferation efforts.

Phil Saunders is Director of the East Asia Program at the Center for Nonproliferation Studies, Monterey, CA. Jing-dong Yuan and Gaurav Kampani are Senior Research Associates at the Center.

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