Report to Congress

U.S. China Science and Technology Cooperation (S&T Agreement):

Washington, DC
April 15, 2005
Full Document available at: http://www.state.gov/g/oes/rls/or/44681.htm
Executive Summary

Signed in 1979 by President Carter and Premier Deng Xiaoping, the U.S.-China Agreement on Cooperation in Science and Technology (the S&T Agreement) began an era of robust government-to-government science and technology (S&T) collaboration between the two countries. The Agreement is among the longest-standing U.S.-China accords and has been broadly endorsed by U.S. Federal agencies through their participation in cooperative exchanges. These exchanges have helped advance cooperative research in an incredibly diverse range of fields, including fisheries, earth and atmospheric sciences, basic research in physics and chemistry, a variety of energy-related areas, agriculture, civil industrial technology, geology, health, and disaster research.

As in 2002, State finds no direct evidence that the S&T Agreement has contributed to the development of China’s military capabilities in a significant way. Any derived benefits to the Chinese military establishment resulting from government-to-government scientific cooperation would be overshadowed by the overall value of the program to U.S. scientific interests and the window it provides into Chinese science. There is no denying that China seeks to improve its military capabilities, but the vast majority of military technologies acquired by China from abroad are from sources other than the U.S. As amply documented in the 1998 Cox Report, instances of militarily-sensitive transfer of U.S. technology to China have indeed occurred, and while State has not identified any clearly military-related transfers that have taken place in the course of S&T cooperation under the 1979 Agreement, a small minority of programs were deemed to pose some degree of risk of transfer of militarily-sensitive dual use technology. No direct link between any of the entities involved in these projects and the People’s Liberation Army (PLA) has been established. However, given the complex nature of Chinese societal, business, and military networks, civil-military linkages cannot be ruled out entirely.

PRC military capabilities have undoubtedly benefited indirectly from China’s overall economic and scientific expansion and transformation, to which the S&T Agreement has made some small contribution. Any improvement in the level of Chinese science as a result of U.S.-China S&T cooperation and exposure to U.S. scientific standards and practices quite likely also has had some benefit for the PRC military. With the exceptions cited above, however, State’s examination of the voluminous data supplied by the U.S. technical agencies involved in S&T cooperation has not pinpointed any specific instances of transfer of U.S. dual use technology to China in violation of stringent export controls.

China has many alternative means of acquiring military and industrial technologies that are of far greater significance than the S&T Agreement. Among these is a network of Chinese agreements for military, commercial, industrial and S&T cooperation with virtually every advanced industrial nation.

Many of the latter are eager to sell, license, share or otherwise transfer their technologies to China. The lure of China’s potentially gigantic consumer market also attracts massive private foreign investment from around the globe. Many U.S. firms are among those seeking to establish footholds in the Chinese market. While China committed to eliminating technology transfer requirements as a condition of foreign investment, many local governments and individual firms continue to apply great pressure on foreign partners to share technology. (However, state-owned enterprises are still allowed to require technology transfers per WTO accession rules. For example, the PRC government imposed a requirement for 100% technology transfer as a condition for the sale of nuclear power reactors.) U.S. firms, in general, remain willing to pay this price for admission and as such have become a major source of advanced technology for the PRC. China successfully employs these and other approaches to garner scientific data, as well as industrial and military technologies from industrial nations around the globe, including the U.S. Compared to other technology-gathering tools at China’s disposal, however, the 1979 S&T Agreement, in State’s estimation, does not represent a significant threat to protecting U.S. technological advantage.

This is true in no small part because the United States also has benefited significantly from this interaction. The U.S. research establishment – academia, industry and public research institutions – relies on educated scientific and engineering talent from overseas to make up for the shortage of young Americans graduating in the sciences. China is one of the leading sources for this indispensable foreign brainpower without which U.S. research and development would slow, posing significant consequences for U.S. competitiveness and economic prosperity. The tens of thousands of Chinese students, scholars, researchers and skilled technicians who work in U.S. laboratories throughout the academic and private sectors make an enormous and vital contribution to U.S. research efforts across the entire scientific spectrum. While these students and researchers represent a powerful tool that the PRC can exploit to gather information on virtually every sector of U.S. science and technology development, they also form an important avenue for the U.S. in turn to exert influence on the PRC and advance social change in China.

As China continues to advance technologically, growing domestic technology innovation could profoundly influence China’s economic growth and military modernization efforts. This is clearly one goal of China’s S&T policies. But activities under the S&T Agreement have not been the primary thrust behind China’s recent transformation into an emerging science and technology power. China’s national efforts to promote research and development plans in strategic advanced technologies, implement market-oriented reforms of its S&T infrastructure, generate large numbers of highly-skilled scientists, engineers and researchers, and attract capital and technological know-how from foreign companies have been the driving forces behind China’s rapid advancement in science and technology.

While the U.S.-China S&T Agreement itself has had only a minor and ancillary role in contributing to China’s remarkable economic buildup, it clearly provides the context for numerous mutually beneficial exchanges of information, ideas, data and scientific personnel and continues to facilitate such exchanges. Benefits to the U.S. resulting from activities under the S&T Agreement include: sharing of data, e.g. satellite, meteorological, climate, and seismic; enhanced nuclear power plant safety in China; access to joint fusion experiments and data; new fossil fuel technologies; precise subatomic particle measurements in energy regimes unavailable in the U.S.; advances in regional water management; aquaculture; the successful conversion of Chinese industry away from ozone-layer destroying CFC’s to more environmentally-friendly substitutes; computer software development; promotion of the U.S. system of measurements and standards; improved climate data forecasts; testing and development of US environmental monitoring technologies and agricultural market analysis. Collaboration under the Agreement has set the stage for U.S. entry into China’s 207-million-person cellular telephone market, potentially significant U.S. access to deposits of mineral resources and rare earths crucial to today’s high-tech industries, access for American companies to China’s developing petroleum and natural gas industry, creation of market opportunities for U.S. energy suppliers of renewable energy technologies in China and the introduction into U.S. society and subsequent acceptance of traditional Chinese alternative medicines, such as acupuncture. As China’s technological capacity continues to catch up with advanced nations, U.S. scientists will increasingly find it beneficial to use the complementary strengths of their Chinese counterparts through bilateral cooperation, thereby leveraging U.S. investments in research and development.

More broadly, over the past two decades, the 1979 Agreement has exerted a stabilizing influence on the U.S.-China relationship. It has provided an avenue for rational dialogue and communication regardless of other tensions in the often-volatile bilateral political relationship, while giving an influential segment of Chinese society – the science community -- a stake in maintaining a peaceful, constructive relationship with the U.S.
This report is based on information requested by State from all the U.S. technical agencies identified as having conducted bilateral S&T cooperation with China during 2002-2003. The legislative mandate for this report stated its scope to be those activities conducted under the auspices of the 1979 S&T Agreement; however State determined that it would be reasonable and useful to report on all cooperative activities with China which were 1) conducted or funded by a U.S. government agency other than the Department of Defense; 2) scientific or technological in nature; and 3) done bilaterally—cooperation through multilateral institutions is not included. These materials were submitted to the Intelligence Community for independent analysis, and their findings will be submitted as a classified annex to this report. The entire submission in response to the Congressional request thus has three components: State’s unclassified report; a compendium of unclassified attachments as submitted by the agencies; and a summary of the classified assessment by the Intelligence Community.