China is a developing country. Due to its limited financial capacity, it has to buy some commercially worthwhile second-hand equipment with less advanced technological level but at a low price. However, such normal commercial activities were regarded by Cox and others as China's "theft" of technology from the United States. Chapter 10 of the Cox Report describes at great length how the China National Aero-Technology Import-Export Corp. (CATIC) purchased second-hand equipment from the US McDonnell Douglas Corp. in 1994, giving enormous publicity to these normal commercial activities. It also links these pure commercial activities with US national security, which is totally unreasonable.
In fact, in February 1994, CATIC and McDonnell Douglas signed a second-hand equipment purchase contract, to the effect of importing over 200 sets of machining equipment and instruments. China bought these second-hand equipment totally out of a commercial consideration. They had all been used for years, and could no longer be considered advanced. Of the 200-odd pieces of equipment, 19 needed a US Government export license. In advance of the import, the Chinese Government provided the Importer Statement on End-User and End-Use for 18 of the items at the request of the US side, and the Chinese user filled out the enterprise guarantee on the spot for the remaining one. Table 2 illustrates in detail the year the 19 pieces of equipment were made and their technical status.
Conditions of the 19 Sets of Second-Hand Equipment Requiring Export LicenseNumber |
Equipment Code |
Name |
Year Made |
Actual Situation |
1 |
04000192 04000214 |
5-axis machining center, horizontal |
made in 1983 |
NC system, servo system and spindle motor of 04000192 have been retrofitted. Running. As to equipment 04000214, except retrofitting of NC system, servo system and spindle motor, the parts for movement and transmission also need repairing and the mechanic and electronic parts need to be upgraded. |
3 |
04000241 |
5-axis machining center, horizontal |
made in 1967 and retrofitted in 1985 |
In bad conditions, the main transmission parts need repair. Control parts, the mechanic and electronic parts need to be upgraded. |
4 |
04000239 |
4-axis machining center, horizontal |
made in 1966 and retrofitted in 1985 |
Equipment 04000243 can be pilot-run after retrofitting. The other two are in bad conditions, the control parts and the mechanic and electronic parts need to be upgraded. The moving parts need repair. |
7 |
04002324 |
4-axis milling machine |
made in 1968 and retrofitted in 1988 |
Now the whole system is in retrofitting, the NC, servo systems and spindle power supply have been changed. Lack of some parts was found in the retrofitting. |
8 |
04002045 |
3-axis milling machine, horizontal |
made in 1968 and retrofitted in 1985 |
Now the whole system of equipment 04002048 is in retrofitting, the NC and servo systems have been changed. The balls, guiding screw and the spindle motor were damaged. Lots of malfunctions were found in hydraulic systems. The other equipment needs to be re-built. |
10 |
04001862 |
3-axis milling machine, vertical |
made in 1967 and retrofitted in 1984 |
04001864 and 04001866 have been retrofitted. Wear and tear of the spindle is heavy. The NC and servo systems have been changed. 04001862 needs change in servo and NC systems. Other systems also need to be repaired. |
13 |
04002044 |
3-axis measuring machine |
made in 1985 |
The whole equipment has been rebuilt, except for granite workstation that is now in use. |
14 |
04002046 |
3-axis measuring machine |
made in 1983 |
Has been retrofitted. The precision level is low. Now in use. |
15 |
04000132 |
41,000-ton hydraulic stretch press |
made in 1983 |
Now in packaging, but preparation for installation and rebuilding has been finished. Owing to lack of funds, there is no way to implement. |
16 |
G11.12 |
5A3P gantry profiler |
made in 1983 |
Now leased by US Monitor Corp. |
17 |
G9.1A |
5A3P gantry profiler |
made in 1983 |
Now leased by US Monitor Corp. |
18 |
G9.1 |
5A3P gantry profiler |
made in 1983 |
Now leased by US Monitor Corp. |
19 |
G11.12A |
5A3P gantry profiler |
made in 1983 |
Now leased by US Monitor Corp. |
The table shows that though all the items needed the US Government export license, they had run for many years and most of the spare parts had been worn-out and their precision had declined. In order to be put into operation, a large number of parts had to be replaced. Since the 19 sets of equipment were second-hand, the price was only 25 to 30 percent of new ones.
The Cox Report says that China purchased these machine tools for the purpose of manufacturing military equipment. This is quite ridiculous. In fact, China purchased the equipment for use in the trunk airliner program in consultation with McDonnell Douglas and for the contracted plane parts program in consultation with both McDonnell Douglas and Boeing. For this purpose, CATIC planned to set up a machining-oriented joint venture with the Monitor Corp. of the United States. But the plan was dropped for commercial reasons. Four of the most advanced 5A3P (5-axis and 3-spindle) gantry profilers among the 19 items that had acquired US Government export license were not shipped back to China and were leased to the Monitor Corp. on site. If China intended to divert the equipment to the military use, it would have surely arranged to get the four most advanced pieces of equipment rather than leasing them to Monitor. This shows that Chinese users imported this batch of equipment purely for commercial profit.
The Cox Report seizes upon the fact that the Nanchang Aircraft Manufacturing Co. opened ahead of time the hydraulic stretch press package of the 19 sets of equipment, trying to prove that China imported the equipment for military purpose. In fact, the hydraulic stretch press was also second-hand equipment made in 1983, and the technology used is not advanced. China could purchase and has already purchased new and more advanced machine tools with similar properties in the international market.