From Financial Times:
World Trade February 24 1999
Washington tries to reassure exporters over China trade
By James Kynge and James Harding in Beijing and Stephen Fidler in Washington
The US yesterday sought to calm fears among US exporters that its rejection of a $450m satellite sale to China on national security grounds would herald stricter curbs on exports to the country.
The Commerce Department was due to send a formal letter on Tuesday night to Hughes Space and Communications International advising that its application for a licence to sell the satellite to a Chinese-Singapore consortium had been rejected.
The satellite was to be launched from China on a Long March rocket. Hughes said it faced a $100m default penalty following the deal's cancellation.
US officials said the administration was sensitive to gathering concerns in Congress about transfers of US technology to China that could be useful to the Chinese military.
But James Foley, US State Department spokesman, said the decision yesterday to reject the satellite sale on national security and foreign policy grounds did not imply a change in policy towards the launch of US satellites in China.
"The US intends to authorise launches of US satellites from China in the future," he added. "We will continue to review such export requests on a case-by-case basis."
The Hughes satellite licence was denied because the purchasing consortium changed to involve the Chinese military more heavily. US policy was to support civilian launching of US satellites on Chinese rockets. "In this case - subject to review - we determined that the purchasing body was not of a civilian nature," Mr Foley said. The satellite and launch were given the go-ahead in 1996 but later modifications meant that the application had to be filed again.
Kenneth Lieberthal, the US National Security Council's senior director for Asia, said in Beijing that there could be "minor adjustments" in the conduct of US technology trade with China, but did not say what these adjustments might be.
Joe Lockhart, White House spokesman, said he did not expect that the decision would have a significant impact on the relationship with China.
A Hughes representative told a satellite industry conference in New York that the company was considering re-structuring the deal in an effort to overcome the ban.
Although the Commerce Department favoured the sale, it was overruled by the national security concerns of other agencies, notably the State and Defence departments. The State Department had separate concerns about the launch which, US officials said, were likely to lead to its rejection.
The rejection, disclosed as imminent in the Financial Times on Monday, has aroused concerns that Washington is implementing a de facto ban on selling satellites to any entity with China ties.
US businessmen in Beijing complained that a recent House of Representatives report on the transfer of military-related technology to China threatened to delay sales of a range of products.
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