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U.S. hits major Chinese, Iranian companies with sanctions

Friday, May 24, 2003

The United States has imposed what officials described as the harshest sanctions on China for its export of missile components to Iran.

U.S. officials said the State Department has imposed new sanctions on state-owned companies from China and Iran in connection with their missile cooperation. The Chinese firm was identified as North China Industries, known as Norinco and a leading exporter of missiles and rockets to the Middle East. The Iranian firm was identified as the Shahid Hemmat Industrial Group.

Officials said the sanctions on North China Industries will prevent exports to the United States until 2005. Norinco has several subsidiaries in the United States and exports toys to American retail outlets, Middle East Newsline reported.

The sanctions imposed on Norinco was decided after a vigorous debate within the administration, officials said. They said the Commerce Department opposed the sanctions on Norinco, saying it would hurt U.S.-Chinese trade. The U.S. sanctions, imposed on May 9 and expected to be published in the Federal Register on Friday, will hardly affect Iran's Shahid Hemmat, which has been identified as a leading player in Iran's intermediate-range missile programs. Shahid was sanctioned in 2000 for acquiring missile-related items from North Korea.

Officials said Norinco has supplied components, expertise and technology for a range of Iranian missiles. They include the Shihab-3 intermediate-range missile and the C-802 anti-ship cruise missile. The Chinese company was also said to have been a major contributor to Iran's solid-fuel missile program.

In October 2002, Norinco was said to have provided Iran with specialty steel for missile production. China has denied this.

Norinco has marketed rockets, anti-tank missiles, ammunitions and armored fighting vehicles to the Middle East. Kuwait has been one client of the Chinese company.

In 2002, the State Department imposed sanctions on several Chinese firms in connection with the sale of weapons and missiles to Iran. Officials said the sanctions concerned Iran's program to produce chemical weapons warheads.

U.S. officials said Beijing has violated several pledges to honor the Missile Technology Control Regime, which prohibits the sale of missiles of a range of more than 300 kilometers. Last year, China announced export controls on missiles and other military systems.

"Firms in China have provided dual-use missile-related items, raw materials, and/or assistance to several other countries of proliferation concern such as Iran, Libya, and to a lesser extent, North Korea," a CIA report relayed to Congress in April 2003 said. "Since 1997, the U.S. has imposed numerous sanctions against Chinese entities for providing material support to the Iranian CW [chemical weapons] program. Evidence during the current reporting period continues to show that Chinese firms still provide dual-use CW-related production equipment and technology to Iran."

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