Testimony: American Trade Relations with China

Testimony of Gary Milhollin

Professor, University of Wisconsin Law School and
Director, Wisconsin Project on Nuclear Arms Control

Before the House Committee on Foreign Affairs
Subcommittee on Economic Policy, Trade and the Environment
Subcommittee on International Security, International Organizations and Human Rights and Subcommittee on Asia and the Pacific

May 20, 1993

I am pleased to be able to address these subcommittees today on the question of American trade relations with China–and more specifically, on whether China should continue to enjoy the status of a most favored nation.

I believe that China should lose that status unless it stops sabotaging Western efforts to curb nuclear and missile proliferation. Unless China changes its export behavior, the proliferation problem can’t be solved. China is now the leading supplier of nuclear weapon and ballistic missile technology to the developing world. During the 1980s and 1990s, China supplied billions of dollars’ worth of nuclear and missile technology to South Asia, South Africa, South America and the Middle East. It did so in the teeth of U.S. protests, and despite repeated promises to stop. The exports are still going on today. And while they do, they make it virtually impossible for the United States and the West to halt the spread of weapons of mass destruction–a trend that endangers everyone.

North Korea

The North Korean A-bomb program now threatens to start a nuclear arms race in Asia. Instead of cooperating with the rest of the world in pressuring North Korean dictator Kim Il Sung to give up the bomb, China is in favor of coddling him. On March 12, North Korea declared that it was withdrawing from the Nuclear Nonproliferation Treaty because inspectors from the International Atomic Energy Agency insisted on visiting two suspected nuclear waste sites. North Korea refused the inspections, violating its Treaty pledge. On April 2, when the IAEA voted to refer the violation to the U.N. Security Council, only China and Libya voted against it. China also warned that it would oppose Security Council sanctions if the matter came to a vote there. The Chinese Foreign Ministry said that “it is a question mark” whether Pyongyang is building nuclear weapons and claimed that “dialogue is more effective than pressure”–ignoring the fact that China is North Korea’s biggest trading partner.

North Korea’s withdrawal becomes effective June 12. China remains the biggest roadblock to sanctions. Despite its claim that it does not want a nuclear North Korea, Beijing’s threat of a using its U.N. veto boils down to shielding Pyongyang’s nuclear bomb program.


According to a stream of news reports, U.S. intelligence recently spotted Chinese M-11 missiles, or at least their components, moving through the Pakistani port of Karachi. The M-11 flies over 186 miles with a nuclear-sized payload, so by selling it China is violating its promise to abide by the Missile Technology Control Regime. The Regime is an agreement among supplier nations to prohibit the sale of this sized missile to a country like Pakistan. Since Pakistan can also make nuclear warheads, China is taking India and Pakistan another step closer to a possible nuclear war.


In early 1992, U.S. officials said that China had delivered about 30 tons of ingredients for making solid missile fuel to Syria, and that China planned to send 60 more tons soon afterward. These deliveries may be related to a reported agreement in 1989 to sell its 360-mile M-9 missile to Syria. To avoid getting caught selling entire missiles to Syria, China appears to be selling missile components and the means to make missiles.


In September 1992, China agreed to sell a 300-megawatt power reactor to Iran, and has also considered selling a 25 to 30-megawatt research reactor. Each of these reactors would give Iran its first access to bomb quantities of plutonium, the nuclear weapon material that destroyed Nagasaki.


China is now building a nuclear reactor in Algeria, which was begun in secret in the 1980s and revealed by U.S. intelligence in 1991. The reactor is at a remote location, has no electric power lines, is too small to be plausible for electricity, and too large to be necessary for research. At its announced power of 15 megawatts, the reactor could make enough plutonium for about two A-bombs every three years. At a power of sixty megawatts, which has also been mentioned, it could make over two bombs per year. Since power levels in heavy water reactors of this type can readily be scaled up, the reactor moves Algeria, which has not signed the Nuclear Non-Proliferation Treaty, much closer to the bomb.

Other dangerous exports

Nobody should be surprised by this pattern of exports. It has been going on for a long time. In 1983, U.S. intelligence discovered that China had given Pakistan the design of a tested nuclear weapon. And in 1991, U.S. officials confirmed that China had also given Pakistan something even worse–enough weapon-grade uranium to fuel the bomb. With the Chinese design, Pakistan was able to manufacture and test nuclear weapon parts one by one and then test the whole design with a dummy nuclear core. Pakistan could thereby avoid an overt test, which would have cut off American aid. According to a news report unchallenged by U.S. officials, Pakistan now has a workable bomb weighing only four hundred pounds.

Despite China’s outrageous nuclear aid to Pakistan, U.S. officials initialled a nuclear trade agreement with China barely a year later, in April 1984. The accord was based on a famous White House toast in January 1984, in which Premier Zhao declared that China does not “engage in nuclear proliferation ourselves, nor do we help other countries develop nuclear weapons.”

But China continued to help Pakistan. In 1986, according to West German officials, China sold Pakistan a quantity of tritium, used to achieve thermonuclear fusion in hydrogen bombs and to boost the yield of fission (atomic) bombs. With a supply of tritium, Pakistan could make its current fission bombs powerful enough to destroy entire cities.

Meanwhile, from 1982 to 1987, China secretly sold India at least 130 to 150 tons of “heavy water.” Heavy water looks and tastes like ordinary water but is used to operate reactors that make plutonium. The Chinese could have been under no illusions about where the water was going. Ton quantities of heavy water are needed only for reactors, and in the mid-1980s only Indian reactors needed multi-ton quantities.

China sold the water secretly, with no strings attached, allowing India for the first time to start a reactor entirely free of international controls–meaning that the plutonium the reactor made would be free to go into atomic bombs. Chinese heavy water sales continued until 1987, enabling India to start at least one and possibly three reactors free of international controls. Running at full capacity, these three reactors can make enough plutonium for up to 40 atomic bombs per year.

In South America, U.S. officials began to contend with Chinese shipments in the early 1980s. In 1982, China sent at least 50 tons of heavy water to Argentina, enough to help build a few atomic bombs per year if Argentina wanted. This occurred after China had been told in 1981 that the shipments were being diverted. The French, who had asked for explanations because the shipments went through Paris, seem to have found the real motive: “One receives the impression that…each Chinese department tries in its own way to bring in the much sought-after foreign exchange….”

In 1984, China also supplied Argentina’s rival, Brazil. Secretly, and without requiring international inspection, China sold Brazil enriched low-uranium useful for bomb-making. China also agreed in 1985 to help Brazil with liquid fuel technology and missile guidance in return for Brazil’s solid fuel rocket technology. This may help Brazil build its first strategic missile, projected to have a range of over 2,000 miles, from its VLS space rocket.

China also helped South Africa’s nuclear efforts. In 1981, China secretly sent Pretoria two large shipments of low-enriched uranium. The sale happened just as the United States was trying to cut off enriched uranium supplies in order to get South Africa to join the Nuclear Nonproliferation Treaty. U.S. officials protested that the Chinese shipments “would weaken the American potential to influence South African policies.”

I have already mentioned China’s current deals in the Middle East. In addition to its reactor sales to Algeria and Iran, and its missile deal with Syria, China sold the 1,500-mile range CSS-2 missile to Saudi Arabia. This missile is almost useless as a conventional weapon because of its low accuracy, but it becomes a real threat when armed with a nuclear warhead.

American attempts to stop China’s dangerous exports have consistently failed. The American policy has been to complain, and then to do nothing when its complaints are ignored. There is a saying that “you don’t change a winning game.” But you do change a losing game, and a losing game is what we have with China.

How do we change it? I think we must convince China that it has more to lose from these sales than it has to gain. And the best way to convince China is to put its trade surplus with the United States at risk. China’s surplus is now reported at about $18 billion per year. Its nuclear and missile deals with the third world are only a fraction of that. If forced to chose, China is likely to prefer its trade relation with the United States to selling weapons of mass destruction to developing countries.

I recommend that China’s MFN status be removed unless China does the following:

  • Joins the Missile Technology Control Regime as a full member and publicly renounces and halts its sales of M-11 and M-9 missiles. China should also renounce and halt the sale of any components, materials or manufacturing equipment useful for making missiles covered by the Regime.
  • Cancels its reactor sales to Iran and scales back the reactor being sold to Algeria to ensure that its power cannot be increased.
  • Joins the Nuclear Suppliers Group, the consulting organization through which supplier countries structure their nuclear sales according to nonproliferation guidelines. This would help stem the flow of sensitive exports to countries like Iran.
  • Supports sanctions against North Korea in the U.N. Security Council if North Korea does not abandon its nuclear weapon program.