Page 1 of 2 US mum over China's links to Iran
By Peter J Brown
China and the United States have been down a rocky road together over the past
two decades with respect to China's missile technology transfers to Iran.
Today, China's ongoing contributions to the buildup of Iran's missile forces
warrant closer scrutiny.
The opening by Iran of a new missile production plant in March will enable Iran
to further quickly expand its supply of Nasr anti-ship missiles. Although no
Chinese officials attended the opening ceremony, there are Chinese footprints
all around this facility. 
In addition, Iran is preparing to launch several satellites. As in the case of
North Korea, each of these Iranian satellite launches will generate its own
shockwave in the West, and will spark further
debate about the inability of the US and its allies to deal effectively with
Iran and its significant technological advances.
In early 2008, Stephanie Lieggi, a research associate at the California-based
James Martin Center for Non-proliferation Studies, wrote a white paper entitled
"China's Trade with Iran under Western Scrutiny as Beijing Considers Next
She wrote in the report, "Many recent assessments of China's export control
system have pointed to positive movement in controlling sensitive dual-use
items and a recognition by Chinese authorities of the need to control the
transfer of such items to countries like Iran." 
At the time Lieggi's paper emerged, the next phase of an already planned
expansion of Iran's anti-ship missile production capabilities was already in
motion. This new missile plant suggests strongly that perhaps the "positive
movement" which Lieggi spoke of earlier has now ceased, but Lieggi disagrees
and labels China's efforts to control its companies' activities in Iran as
"Chinese export controls have come a long way in the last 10 years, but
the major problem with regards to trade with Iran is that China's leadership
does not have the political will to stop some deals, especially if there are
powerful companies like China Precision Machinery Import and Export Corporation
[CPMIEC] involved and if the technologies aren't necessarily on China's control
lists ... There is a notable difference with enforcement of export controls
when the company involved is not a powerful state-owned enterprise."
China's control lists cover ballistic missile technology, but there is still
debate about how far cruise missile technology should be controlled.
According to Jane's Information Group, CPMIEC is state-owned and oversees the
production for export of a variety of anti-ship missiles including the HY-1,
YJ-1/ C-80, HY-3/C-301 and YJ-2/C-802 medium-range anti-ship missiles, to name
just four. 
Last year, the New York County District Attorney's Office uncovered a
multinational funds transfer apparatus overseen by the Iranians and revealed
that a long-running supplier of banned missile components and weapons to Iran.
It listed a Chinese company known as LIMMT Economic and Trade Company Ltd,
along with various front companies, as providing Iran with many critical
materials in great quantity. Iran was close to obtaining sophisticated
equipment and tons of additional material for its nuclear and missile programs
when investigators put an end to this network. 
Keep in mind that we are talking about an enforcement action that took place in
2009, not 1999.
The US Treasury Department was active in this investigation as well.
"Today we are acting under our [United Nations] Security Council and other
international obligations to prevent these entities from abusing the financial
system to pursue centrifuge and missile technology for Iran," said US Under
Secretary for Terrorism and Financial Intelligence Stuart Levey.
A Chinese individual, Li Fangwei (also known as Karl Lee), the commercial
manager of LIMMT, "created front companies to access the global financial
system. In doing so, LIMMT had to juggle multiple aliases and confronted
operational difficulties and customer confusion.
"LIMMT instructed its customer, 'you are kindly required NOT to inform our
following previous identifying information to US bank or US Treasury Department
... What you should do is let them know that SINO METALLURGY & MINERALS
INDUSTRY CO, LTD is a company who is NOT related to LIMMT company and any other
Company on the Specially Designated National (SDN) list of US Department of the
Treasury's Office of Foreign Assets Control (OFAC)'", according to the US
Treasury Department. 
Besides LIMMT and its eight front companies, Khorasan Metallurgy Industries
(KMI), Kaveh Cutting Tools Company, the Amin Industrial Complex, Yazd
Metallurgy Industries and Shahid Sayyade Shirazi Industries were among the
Iranian companies targeted.
Another Iranian company, Niru Battery Manufacturing Company, was found to "be
owned or controlled by, or acting or purporting to act for, or on behalf of,
directly or indirectly, the Iranian Ministry of Defense and Armed Forces
KMI is a subsidiary of Iran's Ammunition Industries Group which is owned by
Iran's Defense Industries Organization (DIO), and has ties to Iran's ballistic
missile sector. Niru Battery provides power units for Iranian missile systems.
DIO and Iran's Aerospace Industries Organization which oversees missile-related
research and development as well as many ballistic missile entities - perhaps
even the new anti-ship missile plant - in Iran are controlled by MODAFL.
Lee, in effect, was just the tip of the iceberg.
Besides this case in the US last year, nuclear-related items are often being
brokered by Chinese companies for delivery to Iran via Taiwan in order to avoid
the licensing requirements in the Chinese system. The case of Yi-Lan Chen, a
Taiwanese businessman arrested in Guam earlier this year, may fit this pattern.
"This is somewhat telling," said Lieggi. "China's nuclear-related controls are
more solid than their missile-related controls. And in these cases it appears
that China's enforcement efforts were relatively successful, at least in
deterring domestic companies from trying to export out of China illegally."
In mid-May, US Deputy Secretary of State James Steinberg gave a speech at the
Washington, DC-based Brookings Institution entitled "US-China Cooperation on
Global Issues". Steinberg said nothing at all about the new missile plant in
Iran or China's contribution to the steady buildup of Iran's missile forces.
"The cat is out of the bag so nothing is being said about the US dropping the
ball in general when it comes to China's conventional arms exports to Iran
today especially dual-use exports," said John Pike, director of
GlobalSecurity.org, a private firm in Virginia which addresses emerging
Lieggi was not surprised that the plant was not mentioned "in such a public
forum - if for no other reason, there really has not been firm reporting on