Machine tool and jet engine technologies are priority acquisition targets for the PRC. This chapter presents two case studies relating to the PRCís priority efforts to obtain such technology ó its 1994 purchase of machine tools from McDonnell Douglas, and its efforts in the late 1980s and early 1990s to obtain jet engine technology from Allied Signalís Garrett Engine Division.
McDonnell Douglas Machine Tools
In 1993, China National Aero-Technology Import and Export Corporation (CATIC) agreed to purchase a number of excess machine tools and other equipment from McDonnell Douglas, including 19 machine tools that required individual validated licenses to be exported. CATIC told McDonnell Douglas it was purchasing the machine tools to produce parts for the Trunkliner Program, a 1992 agreement between McDonnell Douglas and CATIC to build 40 MD-82 and MD-90 series commercial aircraft in the PRC.
During the interagency licensing process for the machine tools, the Defense Technology Security Administration sought assessments from the Central Intelligence Agency and from the Defense Intelligence Agency, because of concerns that the PRC could use the McDonnell Douglas five-axis machine tools for unauthorized purposes, particularly to develop quieter submarines. Since the PRC wishes to enhance its power projection capabilities and is making efforts to strengthen its naval forces, the five-axis machine tools could easily be diverted for projects that would achieve that goal.
Initially, CATIC told McDonnell Douglas it planned to sell the machine tools to four factories in the PRC that were involved in the Trunkliner commercial aircraft program. When those efforts reportedly failed, CATIC told McDonnell Douglas it planned to use the machine tools at a machining center to be built in Beijing to produce Trunkliner parts for the four factories.
In May 1994, McDonnell Douglas applied to the Commerce Department for licenses to export the 19 machine tools to the PRC. Even after it became apparent that only 20 of the 40 Trunkliner aircraft would be built in the PRC, the U.S. Government continued to accept McDonnell Douglasí assertion that the machine tools were still required to support the Trunkliner production requirements. Accordingly, Commerce approved the license applications in September 1994 with a number of conditions designed to limit the risk of diversion or misuse.
In April 1995, the U.S. Government learned from McDonnell Douglas that six of the licensed machine tools had been diverted to a factory in Nanchang known to manufacture military aircraft and cruise missile components, as well as commercial products. However, Commerceís Office of Export Enforcement (OEE) did not initiate an investigation of the diversion for six months.
The Commerce Department declined an Office of Export Enforcement Los Angeles Field Office request for a Temporary Denial Order against CATIC. The case remains under investigation by OEE and the U.S. Customs Service. With the approval of the U.S. Government, the machine tools have since been consolidated at a factory in Shanghai.......
PRC Targeting of U.S. Jet Engines and Production Technology
The PRCís acquisition of aerospace and defense industrial machine tools from U.S. and foreign sources has expanded its manufacturing capacity and enhanced the quality of military and civilian commodities that the PRC can produce.78 These acquisitions will support the PRCís achievement of a key goal: the development of an aerospace industrial base that is capable of producing components and structural assemblies for modern manned aircraft and cruise missiles.79
To meet combat mission requirements, modern military aircraft and cruise missiles require advanced jet engine systems.80 The PRC does not have an indigenous production capability for advanced jet engines. Thus, acquiring such a capability has been a national priority for the PRC throughout the 1990s.81 Development of new commercial and military jet engines is also a priority. The PRC is also likely to be focused on production of jet engines similar to those used for both commercial aircraft and for cruise missiles.
The PRCís activities indicate that Beijing has a particular interest in the acquisition of jet engine production technologies and equipment from U.S. sources. Moreover, the PRC has reportedly sought to compensate for shortfalls in its indigenous capabilities by acquiring complete jet engines from U.S. sources.82
In the mid-1980s and early 1990s, the PRC apparently adopted a three-track approach to acquiring U.S. equipment and technologies in order to advance its own military jet engine capabilities:
* The diversion of engines from commercial end uses
* Direct purchase
* Joint ventures for engine production
The PRCís acquisition targets suggest that it planned to acquire several families of jet engines that could be adapted to various military and commercial applications.83
The PRC has been particularly interested in acquiring "hot section" technology from U.S. sources.84 The United States is the world leader in hot section technology for turbojets and turbofan engines. As a result, U.S. military aircraft can outlast and outperform foreign-built military aircraft.85 In this regard, the PRC seeks:
Technology such as materials and coatings inside the turbine that can withstand extreme heat and associated cooling systems, and could be used to increase power and durability of Chinese aero-engine designs.86
In 1983, the PRC legally acquired two General Electric CFM-56 jet engines, ostensibly to analyze the engines for a potential civil aircraft upgrade program. In the course of the export licensing process, the Defense Department insisted on restricting the PRCís use of the engines. Under the terms of the licensing agreement:
No technical data was to be transferred with the engines; the Chinese were not to disassemble the engines; and finally, if the Trident [civil aircraft] retrofit program had not begun within 1 year of the enginesí arrival, the engines were to be repurchased by the manufacturer. In addition, the Chinese offered to retrofit engines at a Shanghai commercial aircraft facility where GE personnel would be able to monitor Chinese progress.87
Defense Department officials were concerned because the CFM-56 hot sections are identical to those used in the engines that power the U.S. F-16 and B-1B military aircraft.88
The PRC later claimed that the CFM-56 engines were destroyed in a fire.89 More likely, however, is that the PRC violated the U.S. end-use conditions by reverse engineering part of the CFM-56 to develop a variant for use in combat aircraft.90
Despite the suspected reverse engineering of the two General Electric jet engines that were exported in 1983, G.E. reportedly signed a contract in March 1991 with the Shenyang Aero-Engine Corporation for the manufacture of parts for CFM-56 engines.91 According to one source, Shenyang "put in place quality and advanced manufacturing systems to meet US airworthiness standards." 92
The PRC aggressively attempted to illegally acquire General Electricís F404 engine, which powers the U.S. F-18 fighter.93 The PRC likely intended to use the F404 jet engine in its F-8 fighter.94 The PRC succeeded in acquiring some F404 technology through an indirect route by purchasing the LM-2500, a commercial General Electric gas turbine containing the F404 hot section.95
In addition, G.E. has reportedly proposed a joint venture with the PRC to manufacture the so-called CFM-56-Lite. The engine could power the PRCís planned AE-100 transport.96
The PRC also has targeted large engines for aerospace and non-aerospace applications. The PRCís acquisition plans reportedly include Pratt & Whitney JT-8 series engines and technology to support its large aircraft projects, as well as marine derivatives of the G.E. LM-2500 for naval turbine propulsion projects.97 Regarding the JT-8 series:
In August 1986, CATIC licensed the technology for the U.S. Pratt and Whitney FT8 gas turbine engine, including joint development, production and international marketing rights. The FT8 is a development of the JT8D-219 aero-engine (used to power Boeing 727, Boeing 737, and MD-82 aircraft), and can produce 24,000 kW (33,000 hp), [it] represented another significant technical leap for Chinaís gas turbine capability . . . Chinese students were also sponsored by Pratt and Whitney for graduate level aerospace training in the United States.98
The PRCís efforts to acquire compact jet engines can be traced to 1965, when the Beijing Institute of Aeronautics and Astronautics launched a project to copy the U.S. Teledyne-Ryan CAE J69-T-41A.99
The Teledyne engine powered the U.S. Air Force AQM-34N Firebee reconnaissance drone, a number of which were shot down over the PRC during the Vietnam conflict.100 The PRCís copy of the U.S. turbojet, dubbed WP-11, began ground testing in 1971 and currently powers the PLAís HY-4 "Sadsack," a short-range anti-ship cruise missile.101
The PRC began work on cruise missile engines in the 1980s. The PRCís interest in developing long-range cruise missiles increased dramatically after the 1991 Persian Gulf War, when the performance of U.S. Tomahawk cruise missiles demonstrated the effectiveness of precision missile strikes using conventional warheads. However, technical challenges slowed Beijingís efforts. For this reason, the PRC has attempted to acquire foreign-built engines for technical exploitation. If the PRC succeeds in building cruise missile propulsion and guidance systems, then it would probably not have difficulty marketing cruise missiles to third world countries.102
In 1990, the PRC attempted to advance its cruise missile program by purchasing the Williams FJ44 civil jet engine.103 This compact turbofan was derived from the engine that powers the U.S. Tomahawk cruise missile.
The FJ44 engine might have been immensely valuable to the PRC for technical exploitation and even direct cruise missile applications.104 But the PRCís effort to acquire FJ44 engines was rebuffed.105