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19-04-06, 23:04
Hu’s US visit highlights China-Iran ties

By Guy Dinmore in Washington

Published: April 19 2006

China’s close relationship with Iran’s defence industry will come under the spotlight when Hu Jintao arrives in Washington on Thursday, with at least one major state-owned conglomerate sending a delegation to lobby for the lifting of sanctions against Chinese companies allegedly involved in weapons proliferation.

President George W. Bush intends to discuss arms control when the two leaders meet, the White House said.

The US would urge China to play a constructive and responsible role and be aware that the way Chinese companies behaved could harm China’s international reputation.

But the visitors include representatives from China North Industries Corporation – Norinco – a company singled out in 2003 for the most punitive US sanctions against a Chinese entity for its alleged aid to Iran’s ballistic missile programme.

All exports by Norinco and its subsidiaries to the US – believed to run into hundreds of millions of dollars – were banned. The measures raised a storm shortly before Mr Bush met Mr Hu in Europe.

Pressure from China and lobbying by big US customers for a range of Norinco products – from optical fibre to hunting rifles – led to a removal of the import ban last year. The US kept milder sanctions under the Iran Non-Proliferation Act. Norinco and five other Chinese companies were barred last December from receiving US government contracts or assistance, or engaging in military trade or receiving sensitive US exports.

Norinco’s status highlights what American officials describe as a difficult balancing act in penalising Chinese companies for helping Iran’s military industry, while seeking Beijing’s support for international sanctions aimed at curbing the Islamic republic’s nuclear programme.

Chinese companies are the most widely subject to sanctions by the US in connection with weapons proliferation. According to the Arms Control Association, an independent information group, the Bush administration has imposed proliferation sanctions 134 times against 81 foreign entities. Of these, 33 Chinese entities account for 68 of the sanctions. North Korea is the next leading offender.

The issue is dogging China as it seeks respectability and acceptance on the international stage. In 2004 it was allowed into the Nuclear Suppliers Group, which sets guidelines for the transfer of nuclear technology. But the US and others have denied it entry into the Missile Technology Control Regime, a similar grouping that acts to restrain missile exports.

“Norinco is the poster child for serial proliferators,” commented Wade Boese, research director of the Arms Control Association, referring to its missile activities. However, he said China had dramatically improved its behaviour on the nuclear side. Norinco denies aiding Iran’s missile programme.

Asked about the Norinco delegation in Washington, an assistant to the company’s president, Zhang Guoqing, said: “I don’t know about this matter. If things are as you say then it would be very secret. I suggest you do not ask any more questions.”

He Xiadong, Norinco’s vice-president, is due to address the American Bar Association on Thursday on how Norinco adheres to China’s export controls. State Department officials said they had no plans to meet him.

Norinco’s wide-ranging business with Iran includes development of the Tehran subway. Some US analysts suggest its trade with Iran is worth more than its US business and question whether it would sacrifice that to comply with US law.

Additional reporting by Mure Dickie in Beijing

http://news.ft.com/cms/s/d545304a-cfcd-11da-80fb-0000779e2340,s01=1.html