Feeding the dragon: The case of Chinese attack helicopters and implications for export control reform

By Dean Cheng

Best Defense department
of corporate intelligence

This past week, a remarkably disturbing case of arms export control
violations came to light, and one which comes at a terrible time for the administration. 

From the various accounts, it would appear that a subsidiary of United
Technologies Corporation (UTC) was exporting software that was used in China's new
Z-10 attack helicopter program. Worse, according to the U.S. Attorney for Connecticut, where the
parent company is headquartered, this was not a case of technology diversion by
the Chinese, but a case where the company, Pratt and Whitney Canada (PWC), deliberately
engaged in violations of the Export Control Act.

The apparently deliberate nature of this violation makes it distinct
from something like the Loral-Hughes problems of the late 1990s which led to
the Cox Commission report on China-related security issues and the shift of
satellites and aerospace technology to the Munitions List for export controls.
In the Loral and Hughes cases, the really important technology wasn't even
technology, it was "know-how," in the form of failure analysis in the
wake of several failed Chinese space launches. The Chinese had very little
understanding of how to conduct a proper failure analysis, which involves
systems analysis, systems integration (almost in reverse), and a willingness to look
objectively at problems, without allowing "guanxi" to divert
criticism or blame. (Note that the latter aspect is not necessarily restricted
to the Chinese, but they have had far more problems in this regard than we
have.)

By contrast, the more recent case was not one of dual-use technologies,
but clearly military ones. The Z-10 attack helicopter is patterned on the U.S.
AH-64, Russian Mi-28, Eurocopter Tiger model, with a classic two-man
fore-and-aft crew disposition. There is no mistaking it for a passenger
helicopter. PWC  was apparently willing
to violate U.S.
export control laws, so as to gain access to the large Chinese civilian
helicopter market. 

For the administration, which has been striving to modify and modernize
the U.S.
export control regime, the case may raise questions about how carefully this
task much be approached. PWC's illegal exports occurred under the current
system, one which has been patched and modified but not truly overhauled.
Indeed, the administration's proposed changes would rationalize much of the
current system, allowing clearer oversight rather than the current patchwork of
sometimes contradictory lines of reporting and responsibility.

The UTC case demonstrates the continued need for export controls on
advanced, sensitive technology, but it would be unfortunate if it discouraged,
rather than encouraged, badly needed reforms to protect that technology better.

Dean Cheng is a research fellow
at the Heritage Foundation for Chinese political and security affairs.