Originally created 03/10/99

China exploits U.S. computer advances



BEIJING -- The American-made supercomputer that crowds Liu Zhi's fourth-floor office at the Institute of Geology here is bigger than a mid-size van and cost more than $300,000. It sits under a large blue tarp, obsolete and unused.

Last year, the institute bought a new computer made by Palo Alto, Calif.-based Sun Microsystems Inc. that is 562 times faster, cost just $20,000 and is the size of a desktop unit. Liu linked it to the Internet, and now scholars can perform complex calculations that were previously unthinkable in the privacy of their offices.

The two computers, sitting in the same room in a concrete-slab building off the Third Ring Road, Beijing's equivalent of an outer beltway, are monuments to the benefits that China -- and U.S. high-tech companies -- have reaped from the brisk trade in American know-how. The computers also underscore the complexities of a U.S. policy that, in fits and starts, has attempted to prevent China from acquiring advanced U.S. technology that can be used for military purposes.

Computers like the Sun machine are powerful enough to be used in designing nuclear weapons, yet it is legal under U.S. law to sell them to China. Such a sale would be illegal if it were for Chinese military use, but Liu, an engineer who runs the institute's network, was once a communications officer in the Chinese army -- an illustration of the often blurred lines between the civilian and military here.

Moreover, while the U.S. Commerce Department in theory has the right to monitor the use of major U.S.-built computers in China, there is only one person assigned to the Beijing embassy to perform this enormous task. And if illegal work is being undertaken on American computers from a remote location, there is almost no way he can find that out.

Recent disclosures of Chinese government efforts to buy dual-use technology from the United States and steal U.S. weapons secrets have sparked a passionate -- and sometimes ugly -- debate in Washington and Beijing.

On one hand, American businesses and a number of government officials worry that such revelations could disrupt one of the most successful sectors of the U.S. economy. On the other hand, some officials worry that sales of American high performance computers to China and other countries could erode the ability of the U.S. military to maintain its lead in high-tech weaponry.

"We have here the beginning of a debate we should have had a long time ago," said Bates Gill, director of the Center for Northeast Asian Policy Studies at the Brookings Institution and an expert on China and weapons proliferation. "In the post-Cold War era, in a globalized, international environment, how do we strike the right balance between high-tech trade and national security?"

A House committee chaired by Rep. Christopher Cox, R-Calif., has documented examples of illegal transfers of sophisticated American equipment to China and of espionage by Chinese agents and has called for tighter controls on satellite and missile technology, improved security at U.S. nuclear laboratories and greater restrictions on sales of high-speed computers to China.

But U.S. computer firm executives say exponential increases in computer performance have made the existing rules an unacceptable burden. They warn that if current regulations are not loosened within the next few months, 90 percent of their business in China, the fastest growing market for computers in the world, would be affected adversely. More restrictions, they say, would create commercial chaos because of the enormous bureaucracy that would be needed to enforce new trade curbs.

U.S. law currently requires American companies to obtain permission from the government before they can export computers that run at speeds above 2,000 MTOPS, or millions of theoretical operations per second, the industry speedometer. The rules are intended to prevent foreign nuclear-weapons designers from acquiring powerful computers, and the United States applies them to 50 countries viewed as proliferation risks -- including Russia and Israel. But the impact of the rules in China's case is magnified by the massive size of its market and U.S. concerns about China's rise on the world stage and its military intentions.

For sales of computers with speeds above 2,000 MTOPS, companies must provide the Commerce Department's Bureau of Export Administration with information on the background of the computer's end-user and describe the intended purpose of the computer. Government agencies, including the departments of State and Defense, have 10 days to object to such a sale. Sales of individual computer chips faster than 1,200 MTOPS also require such permits. For computers with speeds greater than 7,000 MTOPS, exporters must apply for formal licenses, which have more stringent reporting standards both before and after the sale.

Over the past 13 months, the U.S. government received 512 requests to export high performance computers to China, 70 of which were denied, according to the Commerce Department. Several of the denials were reversed on appeal. The actual number of shipments to China was substantially lower because some deals fell through, bringing the total number of deliveries last year to 191.

Powerful U.S. computers are used here for everything from sorting mail to running e-mail businesses. The problem is that American computers and the tiny microchips that drive them are getting faster every day -- and cheaper.

The U.S. government has concentrated its efforts on controlling exports of the 500 fastest American-made computers -- supercomputers that cost tens of millions of dollars each. These are the kinds of machines that the Department of Energy uses to manage the U.S. nuclear arsenal and that could pose the greatest danger in foreign hands, said William Reinsch, the undersecretary of commerce for export administration and an outspoken advocate of increased high-technology sales abroad.

"The problem is, No. 500 keeps going up in capability," he said, adding that the calculating speed of No. 500 will nearly double this year from 11,000 to 20,000 MTOPS. "When the high end is going up that rapidly, you have to make adjustments to continue your ability to do that. Otherwise, what we are doing is controlling low-end PCs."

For example, Intel Corp. says that its Pentium III microprocessors, which will be sold in top-of-the-line personal computers in the United States this spring, will be so fast that export permission will be needed to sell them to China. By the end of the year, most PCs sold to China will have speeds above the government threshold and will require permits, industry estimates say.

Increasingly, personal computers are being designed so they can be upgraded with additional high-speed chips -- a technology known as parallel processing -- and it is becoming easier to cluster groups of computers together to work on one task. This means that individual computers or components that fall below export speed limits can be exported legally to China, then linked together here into more powerful units.

A Stanford University study commissioned by the Defense and Commerce departments in 1998 concluded that export controls on computers "can remain viable for the next several years (but are) much weaker than in the past. ... The control regime will leak."

Another problem computer experts point out is that physicists do not need supercomputers to make a better bomb. According to the Stanford study, most of the U.S. nuclear arsenal was built using computers that are "at or below the performance" of many present day computer workstations.

"There are national security implications to exporting personal computers," Reinsch said. " ... We have to weigh costs and benefits. We also have to weigh controlability."

Reinsch's critics say his brand of pragmatism is dangerous -- that U.S. computer companies are basically more concerned with the bottom line than national security. is one of those critics.

"By simply decontrolling these things in response to technological development," said Peter Leitner, an official with the Pentagon's Defense Threat Reduction Agency, "there is a real cost ... that is going to be borne by the taxpayer, going to be borne by young people who are going to be killed unnecessarily in the future when they come up against a weapons system that is more sophisticated than it had to be."

At the Institute of Geology here, Liu Zhi, 51, said he is baffled by fears in Washington that China and its military are a threat to the United States. Liu said China's army is meant for defense, not offense, and that the Chinese people have witnessed too much fighting at home in the political campaigns of the last several decades to want war abroad.

The institute's new Sun Ultra 30 Creator workstation, which did not require an export permit, allows scientists to map movements of the Earth's crust and monitor earthquakes using data from a series of ground-based sensors and a sophisticated satellite system, Liu said.

"This year, we will buy a more powerful Sun server ... for $50,000," he said. "We learn a lot from American computers."