Although Beijing has taken important steps to strengthen its
nonproliferation laws and policies, it needs to be more effective and
consistent about enforcing them, says Stephen G. Rademaker, the assistant
secretary of state for arms control.

"Unacceptable proliferant activity continues," Rademaker told the
U.S.-China Economic and Security Review Commission (USCC) during a hearing
March 10. The USCC was created in 2000 by the U.S. Congress to investigate
and report on national security implications of trade and economic
relations between the United States and China.

Among the persistent problems Rademaker listed are: continued
interactions between Chinese entities and Iranian and Pakistani entities
with ties to nuclear establishments; transfers by Chinese entities of
items destined for Iran's chemical weapons (CW) and missile programs;
Chinese entity assistance to missile programs in Pakistan; and Chinese
entity supply of conventional weapons to Iran, Sudan and other areas of
instability. Chinese entities have provided dual-use missile items, raw
materials, and assistance that have helped Iran become more
self-sufficient in the production of ballistic missiles, as well as
dual-use CW-related production equipment and technology, according to
Rademaker.

"It is particularly mystifying as to why the Chinese authorities have
been unable to halt the proliferation activities of Q.C. Chen, an
individual under U.S. sanctions since 1997 who has repeatedly provided
material support to the Iranian chemical weapons program," Rademaker said.

While the behavior of some Chinese entities remains problematic, China
has taken some important steps within the past two years to improve its
nonproliferation commitments, Rademaker said. In December 2003, China
issued its first White Paper on nonproliferation -- the first
authoritative and comprehensive articulation of China's international
nonproliferation commitments and its nonproliferation policies. In doing
so, China, for the first time, instituted a measure of transparency in its
nonproliferation policies, Rademaker said.

China has improved its nonproliferation behavior well enough to become a
new member in 2004 of the Nuclear Suppliers Group (NSG). By doing so,
China has thus committed to applying the Nuclear Suppliers Guidelines to
its own export control policies, including requirements for International
Atomic Energy Agency (IAEA) safeguards, physical protection, and
retransfer consent rights, Rademaker said. "Most significantly, China has
committed not to engage in nuclear supply to any state that does not have
full-scope safeguards, that is, states that do not have IAEA safeguards on
all nuclear material and facilities," he said.

"China can do and should be doing more to prevent the spread of WMD
[weapons of mass destruction], missiles and conventional weapons,"
Rademaker said. He noted that the Bush administration does not hesitate to
implement U.S. sanctions laws against Chinese entities that engage in
proliferation activities. "In the first four years of the Bush
Administration, we imposed such sanctions against Chinese entities on over
sixty occasions," he said.

According to Rademaker, the policy of simultaneously engaging China in
dialogue and pursuing "the aggressive imposition of sanctions where
required" may be "bearing some fruit." He noted China's cooperation in the
interdiction of a shipment of chemicals bound for North Korea's nuclear
program in 2003. Additionally, in 2004 China announced that it had for the
first time ever imposed administrative penalties on two Chinese companies
for violating China's missile and missile-related technology regulations.

Regarding North Korea's nuclear weapons program, Rademaker said that
China needs to "bring to bear the full weight of the significant influence
it has with North Korea" to help end North Korea's nuclear program "in a
permanent and verifiable way."

Following is the text of Rademaker's remarks:

(begin text)

[U.S. Department of State]
Stephen G. Rademaker, Assistant Secretary of State for Arms Control
Washington, DC
March 10, 2005

Remarks to U.S.-China Economic and Security Review Commission

Thank you, Mr. Chairman and members of the U.S.-China Commission, for
the opportunity to appear before you today. Mr. Chairman, your letter of
February 10 noted that you wish to focus today's hearing on China's
proliferation record and its role in the Six Party Talks. I am pleased to
address these issues as well as other questions that you or Commission
members may have.

The President is committed to working toward a relationship with China
that enhances America's security and that of our friends and allies. We
are engaging China constructively and candidly, and President Bush has led
the way. On December 9, 2003, on the occasion of the visit of Premier Wen,
President Bush stated:

"America and China share many common interests. We are working together
in the war on terror. We are fighting to defeat a ruthless enemy of order
and civilization. We are partners in diplomacy working to meet the dangers
of the 21st century."

President Bush has also made it a top national priority to ensure that
the world's most dangerous weapons do not fall into the hands of the
world's most dangerous regimes. It follows naturally that the
nonproliferation of weapons of mass destruction (WMD), their means of
delivery, and related technology is a key element of our maturing
relationship with China.

This does not mean, however, that we will shy away from frank
discussions of issues where we have disagreements with China. While we are
working cooperatively with China in the area of nonproliferation, there is
no doubt that we feel China can do and should be doing more to prevent the
spread of WMD, missiles and conventional weapons.

As a manifestation of our concerns regarding proliferation, President
Bush and Jiang Zemin launched the U.S.-China Security dialogue at the
Crawford Summit in October 2002. Under Secretary of State for Arms Control
and International Security John Bolton leads this dialogue for the United
States. I have been participating in this dialogue with my Chinese
counterparts in my capacity as the Assistant Secretary for Arms Control.

Proliferation is a common threat to the United States and China and
requires common efforts. Over the past several years, the United States
and China have worked hard together to further those efforts. At the same
time, however, challenges remain in our nonproliferation relationship,
predominantly over significant proliferation activities by Chinese
entities, including some government-related entities. The Bush
Administration takes such activities very seriously, and does not hesitate
to make its views known to Beijing, or to implement U.S. sanctions laws
against Chinese entities that engage in such activities. We have candidly
urged China to strengthen its laws, commitments and export controls, and
to take more vigorous action to enforce its regulations against
proliferation.

Our longstanding practice of imposing sanctions against Chinese entities
demonstrates the seriousness with which this Administration confronts
Chinese proliferation-related activities. The Administration has
aggressively imposed sanctions on Chinese entities under CBW and missile
sanctions laws, the Iran Nonproliferation Act (INPA), the Iran-Iraq Arms
Nonproliferation Act, and Executive Order 12938. In the first four years
of the Bush Administration, we imposed such sanctions against Chinese
entities on over sixty occasions, in contrast to the eight times sanctions
were imposed on Chinese entities during the eight years of the Clinton
Administration. As President Bush stated regarding sanctions we imposed
earlier this year, "The (Chinese) have heard us loud and clear. We will
make sure to the best extent possible they do cooperate. We'll make it
clear not only to China but elsewhere that we'll hold you to account -- we
want to have friendly relations but do not proliferate."

Our bottom line is this: while Beijing has taken important steps to
strengthen its nonproliferation laws and policies, more work remains to be
done by Beijing toward effective and consistent implementation and
enforcement of its laws and policies. Unacceptable proliferant activity
continues. Until China's nonproliferation policies and practices fully
meet international standards, the United States will continue to encourage
China at high levels and through diplomatic channels to move its policies
in the right direction, while using sanctions to deter further proliferant
activities by Chinese entities.

While China's nonproliferation behavior remains problematic, China has
taken some important steps within the past two years to improve its
nonproliferation commitments. In December 2003, China issued its first
White Paper on nonproliferation -- the first authoritative and
comprehensive articulation of China's international nonproliferation
commitments and its nonproliferation policies. In doing so, China, for the
first time, instituted a measure of transparency in its nonproliferation
policies. The paper publicly acknowledged that China employs country
specific considerations for export license approvals. Rather than basing
an export license approval solely on the end-use or end-user, China also
considers whether the importing country has a program for the development
of WMD or missiles, whether it supports terrorism or has links to
terrorist organizations, whether it has close ties to a country with a WMD
program, whether it is subject to sanctions under a UN Security Council
resolution, and whether it has the capability to exercise its export
controls. This is in marked contrast to previous Chinese statements that
country-specific considerations are inherently discriminatory.

China's progress on nuclear nonproliferation was recognized when China
became one of four applicant states welcomed as new members of the Nuclear
Suppliers Group (NSG) in May 2004. China has thus committed to applying
the Nuclear Suppliers Guidelines to its own export control policies,
including requirements for IAEA safeguards, physical protection, and
retransfer consent rights. Most significantly, China has committed not to
engage in nuclear supply to any state that does not have full-scope
safeguards, that is, states that do not have IAEA safeguards on all
nuclear material and facilities. By doing so, China effectively agreed to
not enter into any new nuclear cooperation with Pakistan beyond those
"grandfathered" projects that had started before its membership in the
NSG: construction of the safeguarded Chasma II power reactor and supply of
fuel and related services for the safeguarded reactors at Chasma, Karachi,
and the research reactor at the Pakistan Institute of Nuclear Science and
Technology (PINSTECH). This was a fundamental political shift for China,
given the decades-long history of close Chinese-Pakistani nuclear
cooperation.

Over the last year, China has also worked alongside the United States to
support international nuclear nonproliferation efforts. It has supported
nonproliferation initiatives at the ASEAN Regional Forum and endorsed the
Asia Pacific Economic Cooperation's (APEC) efforts to introduce security
issues, including nonproliferation, into APEC's work agenda. Furthermore,
since joining the NSG, China has been generally supportive of proposals to
enhance the effectiveness of the Group. In addition to its more recent NSG
membership, for several years now China also has been a member of the NPT
Exporter's Committee, or Zangger Committee, in which it has played a
positive role. China has also played an important leadership role in
improving the prospects for the adoption of an important amended
Convention on the Physical Protection of Nuclear Material (CPPNM). China
helped to end the three-year long deadlock over CPPNM negotiations by
proposing a well-received bridging amendment, which mitigated some of the
controversies surrounding the original CPPNM amendment proposal.

At the same time, persistent problems include the following: continued
interactions by Chinese entities with Iranian and Pakistani entities with
ties to nuclear establishments; transfers by Chinese entities of items
destined for Iran's chemical weapons (CW) and missile programs; Chinese
entity assistance to missile programs in Pakistan; and Chinese entity
supply of conventional weapons to Iran, Sudan and other areas of
instability. Chinese entities have provided dual-use missile items, raw
materials, and assistance that have helped Iran become more
self-sufficient in the production of ballistic missiles, as well as
dual-use CW-related production equipment and technology. Much of this
activity is associated with the so-called "serial proliferators," that is,
Chinese entities that repeatedly proliferated missile- and
chemical-related items to programs of concern, as well as conventional
weapons. We are particularly concerned about continued transfers of CBW-
and missile-related technology by Chinese entities to Iran, despite the
imposition of sanctions.

We have approached the Chinese Government at all levels with our
concerns about the activities of Chinese entities and have asked the
Chinese Government to closely scrutinize these entities. Their inability
to take action against serial proliferations calls into question China's
commitment to truly curb proliferation to certain states. One particularly
problematic "serial proliferator," for example, is China North Industries
Corporation, known as NORINCO. NORINCO has been particularly active in
WMD-related transfers to Iran, resulting in the imposition of U.S.
sanctions five times. Notwithstanding our numerous complaints to the
Chinese Government about the proliferation activities of NORINCO and other
"serial proliferators," such as China Precision Machinery Import and
Export Corporation (CPMIEC) and Zibo Chemical, we are not aware of any
actions taken by the Chinese Government to end these activities. These
continuing problems and the continued need to impose sanctions against
Chinese entities clearly indicate that more work remains to be done to
move China toward more effective and consistent implementation and
enforcement of its nonproliferation laws and policies. It is particularly
mystifying as to why the Chinese authorities have been unable to halt the
proliferation activities of Q.C. Chen, an individual under U.S. sanctions
since 1997 who has repeatedly provided material support to the Iranian
chemical weapons program.

Our policy of simultaneously engaging China in dialogue and pursuing the
aggressive imposition of sanctions where required may be bearing some
fruit. China has been willing to cooperate with the United States in
investigating some proliferation-related transfers. In the fall of 2003,
for example, Chinese authorities worked with us to interdict a shipment of
chemicals bound for North Korea's nuclear program. And in the spring of
2004, China officially announced that it had imposed administrative
penalties on two Chinese companies for violating China's missile and
missile-related technology regulations. This was the first time that China
had announced sanctions on a Chinese firm for violating Chinese export
control laws. While this step of increased transparency was welcome, it is
worth noting that China did not publish either the names of the punished
companies nor the exact amounts fined. This underscores the fact that
China still needs to take strides in bringing its export control practices
in line with international norms, and we have communicated this to China.

Another encouraging indicator has been China's willingness to engage
with the United States in an export control dialogue. From May 19-21,
2004, the United States and China engaged in the first comprehensive
export control talks since the late 1990s. The talks focused on general
export licensing, implementation, enforcement and industry outreach
issues, and concluded with a nuclear-specific export control workshop.
During that dialogue, the Chinese delegation admitted to some shortcomings
and proposed to institutionalize regular consultations and exchanges
between counterpart agencies. A follow-on Nuclear Technical Experts Export
Control Workshop was subsequently held in Beijing from December 15-17,
2004. Plans to arrange a series of Nuclear Commodity Identification
Workshops for Chinese enforcement personnel are ongoing.

This Administration attaches great value to further cooperation with
China on export controls. In all of our meetings, the Chinese have asked
thoughtful questions that demonstrated they were listening to and thinking
carefully about the issues. We judge that further sustained dialogue
between experts and practitioners on detailed export control issues will
be particularly useful in encouraging China's movement in the right
direction on export controls.

Mr. Chairman, although the North Korean nuclear issue is not the main
subject of my testimony today, I am aware of the Commission's interest in
the Six-Party Talks and China's role. Therefore, I would like to make a
few remarks on this subject. This Administration is deeply concerned by
North Korea's pursuit of nuclear weapons and the actions it has taken and
the statements it has made on this issue. The North's recent public
statement that it has manufactured nuclear weapons and has indefinitely
suspended participation in the Six-Party Talks only serves to further
isolate it from the international community and runs counter to the
efforts of the other parties concerned. The recent North Korean statement
also reflects a history of North Korean disregard for its international
commitments and obligations. For these reasons, the United States
continues to call for the permanent, thorough and transparent
dismantlement of North Korea's nuclear program that would result in a
complete, verifiable and irreversible end to the D.P.R.K.'s nuclear
program. Dismantlement would have to include the D.P.R.K.'s uranium
enrichment program�� the existence of which the D.P.R.K. continues to
deny, despite earlier admissions of such a program in October 2002 and
evidence of assistance by A.Q. Khan to that program.

The Six-Party Talks are the best opportunity for North Korea to chart a
new course with the international community. We have repeatedly expressed
our readiness to return to the table without preconditions and hope North
Korea will reconsider its recent statements and return as well.

The United States has insisted on the Six-Party format for discussing
this problem in order to underscore to Pyongyang that its pursuit of
nuclear weapons is not a bilateral issue between the United States and the
D.P.R.K., but a matter of great concern to its neighbors in East Asia and,
indeed, to the entire world. China has made important contributions as
host and coordinator of the Six-Party Talks, and has been an active
participant in working groups and formal plenary discussions. Since North
Korea's announcement to suspend its participation in the Talks
indefinitely, China has been actively engaged with all Six-Party members
to secure an early resumption of the talks. Like the United States, China
is publicly committed to ending the North's nuclear ambitions permanently
and has said that it will continue to do its part to seek a peaceful
settlement of the nuclear issue and a lasting peace on the Korean
Peninsula.

We think it imperative, however, that China bring to bear the full
weight of the significant influence it has with North Korea in order to
secure the furtherance of our common goals: an end to all of North Korea's
nuclear program in a permanent and verifiable way. China's constructive
role as host and facilitator of the Six-Party Talks needs also to include
a substantial leadership role in ending North Korea's nuclear program.

Mr. Chairman and members of the Commission, let me conclude by
reiterating that nonproliferation has become an area of increasing
cooperation between the United States and China, as exhibited by our
cooperation on the North Korea nuclear issue. Indeed, proliferation is a
common threat and requires common efforts. But, while China's
nonproliferation record is gradually developing in a positive direction
and the United States will continue to take proactive measures to
encourage that development, I believe that I have made clear today that
China still poses many proliferation challenges. There are implementation
issues. There are enforcement issues. China needs to do a consistently
better job in identifying and denying risky exports, seeking out potential
violators, and stopping problematic exports at the border.

These issues matter to us because China's success in ending
proliferation by Chinese entities is critical to ensuring that weapons of
mass destruction do not end up in the hands of terrorists or rogue states
prepared to use them. In the meantime, the Bush Administration will
continue to pursue an aggressive sanctions policy and will utilize other
nonproliferation tools as necessary to ensure U.S. national security and
that of our friends and allies. We are making progress with China, but
there is much more to do.

Thank you.

(end text)

(Distributed by the Bureau of International Information Programs, U.S.
Department of State. Web site: http://usinfo.state.gov)
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