The US administration has been adopting a strict export control policy on hi-tech exports to China for "security reasons", which has hindered China's imports from the country. Washington drafted a new rule in July [of 2006], stipulating license requirements for additional items defined as "military end-use", and making the procedure of applying for licenses more complicated. Wu noted trade protectionism is on the rise in the US. Some overstate the US trade imbalance with China and blame China for the problems that have arisen as the US adjusts its economic structure to respond to challenges posed by economic globalization. Some have even advocated trade protectionism.America's main fear is that so-called "dual use" (civilian and military) technologies may be used to bolster China's military ambitions. After all, its military budget has increased substantially as of late--but not to worry, of course, says China Daily. Operation Retake Quemoy (Taiwan) is America's main fear, for it is implicated in Taiwan's defense by the Taiwan Relations Act of 1979 "to consider any effort to determine the future of Taiwan by other than peaceful means, including by boycotts or embargoes, a threat to the peace and security of the Western Pacific area and of grave concern to the United States." The rather paranoid Heritage Foundation has this to say:
The U.S. faces serious security challenges from China. On May 23, the Pentagon issued its report on China’s military power. The same day, the Under Secretary of Commerce announced a tightening of controls on the export of goods with dual military and civilian use to China. Moreover, China has an active program of espionage in the U.S. to gather industrial and military secrets. China’s capacity for espionage in the U.S. is broad. There are more than 130,000 students [great way to attract foreign students, Heritage Foundation] from China in the U.S. at any time, and 3,000 front companies engage in gathering intelligence and industrial secrets.
China poses a challenge to the United States from economic, diplomatic, and military standpoints. Beijing has adopted a strategy that focuses on the accumulation of strategic resources and the development of a productive capacity that attracts vast amounts of foreign capital, modernizes its industry, leaps its technological base forward, and strengthens its military...
A Bureau of Industry and Security undersecretary's testimony describes the situation thusly:
From a security standpoint, the U.S. Government remains concerned about China 's modernization of its conventional military forces and the risk of diversion of sensitive dual-use items and technology to Chinese military programs. For example, building state-of-the-art semiconductor plants could increase China 's ability to apply this technology and equipment in military programs. Advanced telecommunications equipment – if illegally diverted to military end-users – could provide the Chinese missile, nuclear weapons and other military programs with the means to enhance performance capabilities in military radar applications. China has also had limited success in the areas of building and enforcing their export control system and effectively meeting U.S. nonproliferation objectives. The U.S. Government has imposed sanctions on a number of Chinese entities that have exported sensitive items to countries of concern.
Accordingly, the Administration has promoted both our security and our economic interests in controlled trade with China . We seek to implement a policy that ensures that U.S. exports are not diverted to end-uses within China that we do not support, and are not re-exported to other foreign government or terrorist weapons programs that are adverse to our interests. BIS and its interagency export control partners carefully evaluate proposed exports of dual-use items to China on a case-by-case basis, taking into account the type of item to be exported, and the proposed end-user and end-use. BIS does not issue licenses for sales of dual-use items and technology to China if the item or technology will make a direct and significant contribution to the PRC's electronic and anti-submarine warfare, intelligence gathering, power projection, or air superiority. We also deny all items controlled for missile technology reasons that enhance China 's Missile Technology Control Regime (MTCR) Category I missile or weapons of mass destruction (WMD) delivery capabilities.
Moreover, this Administration does not approve licenses for military end-users or end-uses within China , consistent with the long-standing U.S. arms embargo. In the coming months, the Department of Commerce will propose a new “catch-all” regulation that will require a license for otherwise uncontrolled exports that could materially assist the Chinese military, and we will review any application that supports the advancement of Chinese military capabilities under a general policy of denial.
You can also read the provision's fine print if you are interested.
