DODs 2005 report on Chinas military power is actually pretty level-headed. I was expecting something more along the lines of the old Soviet Military Reviews, which routinely attributed astounding technical advances to the Soviets. The noise level in Washington over the yuan and CNOOC also led me to expect something more vociferous.
One development regarding Chinas military that hasnt gotten as much attention is a proposed Commerce Department regulation that would restrict U.S. high tech trade with China. In nonproliferation terms, this would be a catch-all rule for exports that could make a significant contribution to the PLA. The export wouldnt have to go directly to the PLA itself to be caught.
The catch-all was developed in the late 1980s in reaction to an episode where Iraq was buying a highly-specialized industrial tool for its WMD programs and the US found it had no way to stop the sale. The regulation implementing the catch-all is called the Enhanced Proliferation Control Initiative (EPCI), which gives the government the ability to stop any sale by a U.S. company when it thinks that the export might contribute to the proliferation of WMD. Companies hate EPCI, but its been used with restraint.
The U.S. already blocks military exports to China, so a new catch-all for the PLA would apply only to commercial goods. The scope of a catch-all might be more limited than EPCI, in that it might apply only to a list of high tech goods, but even this could still have a pretty broad reach, particularly as it would likely focus on commercial high tech products. The Chinese blame the trade imbalance on U.S. technology restrictions and say the catch-all will only make things worse, but this is nonsense. Its not supported by the numbers, which suggest that U.S. exports to China would not increase very much if all sanctions were lifted.
Most people recognize that a catch-all wont stop PLA modernization. China cant make advanced weaponry, but while it tries to build a modern defense industry, it can buy from Russia. It also gets military technology from Israel and it would like to add Europe to its suppliers (and some Europeans would love to sell). The catch-all wont affect the arms purchases that are the basis of Chinas military modernization, although it raises the stakes for the EU if it tries again to lift its own arms embargo.
The catch-all might be aimed at Information Technology. China envies the U.S. military and is trying to duplicate the progress in information warfare/netcentric operations/C4ISR that is at the core of transformation. Since IT exports from Taiwan, Japan, Korea and Europe wont be affected, its not clear how much benefit well get from the catch-all, but we cannot dismiss the possibility of conflict with China as completely improbable. I still think its better to focus on making sure that the U.S. maintains technological leadership rather than worrying about how to slow Chinese economic growth.
Links to the report and a story on the catch-all.
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