The United States is imposing new export controls on high-tech goods ranging from aircraft to space communication systems that could be used by China's rapidly expanding military, the US Commerce Department said on Friday.
The new regulation, which takes effect on Tuesday, also creates a "trusted customer" program that will allow approved companies in China to import certain high-tech goods without having to get an individual license, the department said.
"This new rule strikes the right balance in our complex relationship with China," Commerce Secretary Carlos Gutierrez said. "It is a common sense approach that will make it easier for US companies to sell to pre-screened civilian customers in China, while at the same time denying access to US technology that would contribute to China's military."
Pentagon and US intelligence officials say China's total real military-related spending for 2007 could be between $85 billion and $125 billion, far higher than its stated $45 billion in 2007, up 17.8 per cent from the year before.
Military analysts believe China's forces will continue to get stronger and pose a growing challenge to the US military. China has recently unveiled a new fighter plane, blinded a US satellite using a ground-based laser, and blasted one of its own satellites out of orbit with a ballistic missile.
The conflicting defense spending figures have been a source of friction. Earlier this week, Chinese Foreign Ministry spokesman Qin Gang denounced US comments on China's defense spending as "irresponsible."
China also has been urging Washington for many years to loosen export controls, which they say are one reason the huge trade surplus it runs with the United States.
The Commerce Department scaled back its original July 2006 proposal for controls after consultations with the State and Defense departments, US trading partners, business groups and the Chinese government, Commerce Department officials said.
The final list of newly controlled categories was reduced to 20, from 27 originally proposed. It targets items that could boost China's military if put into weapons systems and is consistent with the long-standing US arms embargo on arms exports to China, department officials said.
They include certain aircraft and aircraft engines, underwater systems, avionics, inertial navigation systems, certain composite materials, lasers, depleted uranium and certain telecommunication systems related to space communications or air defense.
Generally available computers, semi-conductors, electronics, general purpose telecommunications equipment and general purpose chemicals were taken off the list.
Many US business groups objected to the original proposal, which they said would bar US companies from selling products the Chinese can already buy in their own market or easily purchase from other suppliers.
The United States consulted with European and other allies before finalizing the new regulation, but was unable to persuade any of them to follow suit.
"They did not in the end choose to do what we have done. But we have chosen to go forward because we think it's that important," a Commerce official said.
The Commerce Department hopes in the coming weeks to identify an initial list of validated end users in China that would be allow to import certain controlled goods after being approved by the United States, the official said.
"Clearly, a key criterion is whether they are a trusted customer -- do they have a demonstrative history of using these sensitive products in a responsible way," the official said.
"We'll likely look at ownership structure, but it's important to point out all companies will be permitted to apply -- Chinese companies, subsidiaries of US companies, subsidiaries of foreign companies in China," he said.