Grassley, Ernst Press State Department on Satellite Sales to China
Jul 01, 2019
WASHINGTON – Sens. Chuck Grassley (R-Iowa) and Joni Ernst (R-Iowa) are pressing the Department of State for information about the process through which Boeing has provided American-made satellites to Chinese-connected companies, which may be used to advance Chinese military development and in the course of human rights abuses by China.
“The use of American satellite technology by the Chinese military and police raises serious military, national security, and human rights concerns,” the senators wrote.
According to an April report, Boeing has built nine satellites and was in the process of building another for sale through a loophole in American export control laws that would allow the technology to be used by the Chinese government—raising significant national security concerns.
“Robust export control laws are critical to ensuring that sensitive technology does not fall into the hands of those who may use it against us,” the senators continued.
These satellites may be used in furtherance of Chinese military goals and technological development, raising significant national security concerns for the United States. The communications satellites may also be used in support of domestic efforts to suppress protests and the free exercise of religion among other human rights.
In a letter to Secretary of State Mike Pompeo, Grassley and Ernst seek the department’s assessment of whether these sales constitute a violation of the broad statutory prohibitions on selling satellite technology to China. The senators also want information on how to prevent circumvention of those export control laws and how to stop further transfer of American-built satellites that may be used to support human rights abuses and Chinese military development.
Full text of the letter from Grassley and Ernst follows or can be found HERE.
VIA ELECTRONIC TRANSMISSION
The Honorable Mike Pompeo
Secretary of State
U.S. Department of State
2201 C Street, NW
Washington, DC 20520
Dear Secretary Pompeo:
On April 23, 2019, the Wall Street Journal (WSJ) published an article entitled “China Exploits Fleet of U.S. Satellites to Strengthen Police and Military Power.” According to the WSJ, The Boeing Company (Boeing) has constructed nine communications satellites, with the construction of a tenth satellite halted since the release of this article. These satellites are allegedly “part of efforts to connect Chinese soldiers on contested outposts in the South China Sea, strengthen police forces against social unrest and make sure state messaging penetrates far and wide.” The use of American satellite technology by the Chinese military and police raises serious military, national security, and human rights concerns.
This is not the first time Boeing has engaged in controversial satellite transactions involving China. Earlier this year, Ranking Member of the House Financial Services Committee, Congressman McHenry, wrote a letter to Boeing seeking information on whether “a firm with
connections to the Chinese government may have used a complex financing arrangement in an attempt to skirt U.S. export controls related to national security.” This past December, Ranking Member of the Senate Foreign Relations Committee, Senator Menendez, wrote a letter to Treasury Secretary Mnuchin and Commerce Secretary Ross about the same issue. On December 26, 2002, the Department of State filed charges against Boeing and Hughes Electronics Corporation (Hughes), alleging 123 violations of export control laws resulting from impermissible transfers of data and detailed satellite technology to Chinese companies. In 2003, Boeing and Hughes agreed to pay a $32 million fine to settle the charges, and agreed to appoint special compliance officers to oversee the companies’ activities in China. Despite the fact that these data and technology transfers only related to commercial satellites manufactured by Hughes and Boeing, they nonetheless improved the capabilities of China’s intercontinental ballistic missile fleet and damaged U.S. national security.
U.S. law generally prohibits any satellite from being “exported, re-exported, or transferred, directly or indirectly” to the Chinese government or to “any entity or person in or acting for or on behalf of such government, entity, or person.” Additionally, satellites may not be “launched in [China] or as part of a launch vehicle owned, operated, or manufactured by the [Chinese government] or any entity or person in or acting for or on behalf of such government, entity, or person.” However, despite this broad statutory language and intent, the Chinese government appears to have evaded U.S. law through two loopholes that enabled it to have access to, and direct use of, American-built satellites. First, China reportedly rents bandwidth from satellites that it is otherwise prohibited from buying. According to the WSJ, despite the clear statutory prohibition on any direct or indirect transfer of satellites to the Chinese government or to persons or entities acting on behalf of the Chinese government, the U.S. “doesn’t regulate how a satellite’s bandwidth is used once the device is in space.” Second, Chinese-owned companies based in Hong Kong — including some which seem to act on behalf of the Chinese government — have been able to purchase satellites from American manufacturers. Under the U.S.-Hong Kong Policy Act of 1992, Hong Kong should be considered separate from China for export control purposes, but only “for so long as the United States is satisfied that [sensitive] technologies are protected from improper use or export.” Current U.S. policy has allowed companies such as Asia Satellite Telecommunications (AsiaSat), a Hong Kong-based company majority owned by the U.S.-based Carlyle Group (Carlyle) and the Chinese state-controlled Citic Group (Citic), to purchase, launch, and operate satellites from American manufacturers.
China’s past use of American-built satellites is deeply disturbing. In 2008 and 2009, China used satellites manufactured by Boeing to support police communications while suppressing protests in Tibet and Xinjiang. The Xinjiang protests were led by Uyghur Muslims voicing their opposition to China’s increasingly restrictive anti-Muslim laws. China’s treatment of Uyghurs in the decade following its quashing of these protests is nothing short of abhorrent. Since 2017, China has imprisoned between 800,000 and 2 million Muslims, most of them Uyghur, in detention camps across the country. Hundreds of these camps are located in Xinjiang, home to over 11 million Uyghurs. According to the WSJ, when asked, AsiaSat refused to comment on whether its satellites are still being used today by Chinese security forces to support its anti-Muslim campaign in Xinjiang. China’s flagrant human rights abuses are numerous and well-documented. It is impermissible for any American company to support or enable China’s brutal anti-Muslim campaign, or any other human rights abuses China may commit now or in the future.
Chinese companies using American-made satellites also raises serious military concerns since these satellites are used for more than commercial communication. Commercial satellites can be deployed “for military purposes such as imaging an adversary’s military installations for intelligence, surveillance, and reconnaissance (ISR) purposes.” China has recently pivoted toward a strategy of “military-civil fusion as a means to modernize the People’s Liberation Army (PLA), particularly in emerging sectors like space.” China has employed this same strategy to upgrade its commercial space industry. Military-civil fusion refers to China’s “push to enlist private enterprises to upgrade [its] defense industrial base through developing scale and efficiency in dual-use sectors like information technology, robotics, and aerospace.” Under the guise of supporting commercial space development, military-civil fusion enables China to “continue developing military space capabilities while publicly claiming to oppose militarization of space.”
AsiaSat’s purchase of American-made satellites is an excellent example of how China’s military-civil fusion works in practice since these satellites are used for both commercial and military purposes. AsiaSat frequently leases its satellites to the BeiDou Navigation Satellite System (BDS), a rapidly growing alternative to the U.S. Government-owned and -operated Global Positioning System (GPS). Currently, the only fully operational global alternative to GPS is Russia’s GLONASS, meaning that other countries are heavily dependent on the U.S. for satellite navigation services. In China, GPS accounts for 95 percent of the country’s $65 billion satellite navigation products market. However, China plans for BDS products to capture 70-80 percent of the market by 2020, by encouraging or requiring domestic companies to manufacture or adopt BDS enabled devices. As BDS’s market share grows in China and across the world, the demand for AsiaSat’s satellite bandwidth will increase, meaning AsiaSat’s demand to purchase and launch satellites from manufacturers such as Boeing will increase as well, giving manufacturers a strong financial incentive to continue skirting the intent of export control laws.
Just as GPS has significant military applications, so too does BDS. China is attempting to reduce its reliance on GPS by using BDS to support ballistic and cruise missiles, anti-satellite weaponry, and emerging weaponry such as hypersonic missiles and spaceplanes. This would enable China to use BDS to “guide a missile to its target if GPS were denied, and…attack an adversary’s access to GPS without disrupting its own capabilities.” China is using BDS to enhance the military capabilities of other countries as well. In 2018, Pakistan became the first country to receive “access to [BDS’s] military service, allowing more precise guidance for missiles, ships and aircraft.” By manufacturing satellites for AsiaSat, American companies such as Boeing are contributing to the development of BDS, and thereby assisting in the development of China’s military capabilities.
Robust export control laws are critical to ensuring that sensitive technology does not fall into the hands of those who may use it against us. In order to ensure compliance with export control laws and conduct oversight of satellite transactions involving China, please answer the following questions no later than July 10, 2019:
- Does the State Department dispute any of the facts or accounts in the WSJ article cited in footnote 1?
- Does the State Department consider any of the facts or accounts in the WSJ article cited in footnote 1 to represent a violation of any of the statutory prohibitions barring any satellite from being (i) “exported, re-exported, or transferred, directly or indirectly” to the Chinese government or to “any entity or person in or acting for or on behalf of such government, entity, or person” or (ii) “launched in [China] or as part of a launch vehicle owned, operated, or manufactured by the [Chinese government] or any entity or person in or acting for or on behalf of such government, entity, or person”?
- How can the U.S. prevent Chinese-owned companies organized outside mainland China (such as in Hong Kong) from evading or circumventing American export controls to procure or otherwise obtain access to regulated technology?
- How can we ensure that China does not obtain further access to or use of American-built satellites or other regulated technology to support its oppression and subjugation of religious and ethnic minorities, including the internment of the Uyghur population?
- How would China’s development of BDS be impacted by the loss of access to American-manufactured satellites?
 Brian Spegele & Kate O’Keeffe, China Exploits Fleet of U.S. Satellites to Strengthen Police and Military Power, Wall Street J. (Apr. 23, 2019), available at https://www.wsj.com/articles/china-exploits-fleet-of-u-s-satellites-to-strengthen-police-and-military-power-11556031771.
 Id.; see also Michael Sheetz, China Reportedly Uses Satellites Built and Financed by US Companies to Connect Military Operations, CNBC (Apr. 23, 2019), available at https://www.cnbc.com/2019/04/23/china-uses-us-built-satellites-for-military-operations-police-report.html; Def. Intelligence Agency, Challenges to Security in Space at 8 (2019), available at https://www.dia.mil/Portals/27/Documents/News/Military%20Power%20Publications/Space_Threat_V14_020119_sm.pdf (“Communication satellites provide voice communications, television broadcasts, broadband internet, mobile services, and data transfer services for civil, military, and commercial users worldwide.”).
 Brian Spegele & Kate O’Keeffe, supra note 1.
 Brian Spegele & Kate O’Keeffe, Boeing Backs Out of Global IP Satellite Order Financed by China, Wall Street J. (Dec. 6, 2018, 9:30 p.m. ET), available at https://www.wsj.com/articles/boeing-backs-out-of-global-ip-satellite-project-financed-by-china-1544142484; see also Sean Kelly, Opinion, China is Infiltrating US Space Industry with Investments, The Hill (Dec. 26, 2018), available at https://thehill.com/opinion/international/422870-chinese-is-infiltrating-us-space-industry-with-investments-and (cautioning American space companies about doing business with China).
 Letter from Rep. Patrick McHenry, Ranking Member, H. Comm. on Fin. Servs., to Dennis A. Muilenburg, Chairman, The Boeing Company (Feb. 1, 2019), available at https://republicans-financialservices.house.gov/news/documentsingle.aspx? DocumentID=404188.
 Letter from Sen. Robert Menendez, Ranking Member, S. Comm. on Foreign Relations, to Steven Mnuchin, Sec’y, U.S. Dep’t of the Treasury, & Wilbur Ross, Sec’y, U.S. Dep’t of Commerce (Dec. 11, 2018), available at https://www.menendez.senate.gov/imo/media/doc/12112018%20RM%20Letter%20to%20Mnuchin%20and%20Ross%20re%20China%20Orient.pdf.
 U.S. Department of State, Re: Investigation of Hughes Electronics Corporation and Boeing satellite Systems (formerly Hughes Space and Communications) Concerning the Long March 2E and Long March BE failure investigations, and other satellite-related matters involving the People's Republic of China (2002), available at https://web.archive.org/web/20030206212818/ http://softwar.net/hughes2.html.
 Jeff Gerth, 2 Companies Pay Penalties for Improving China Rockets, N.Y. Times (Mar. 6, 2003), available at https://www.nytimes.com/2003/03/06/world/2-companies-pay-penalties-for-improving-china-rockets.html; Jasper Helder et al., International Trade Aspects of Outer Space Activities, in Outer Space Law: Legal Policy and Practice 285, 290-91 (2017), available at https://www.akingump.com/images/content/6/1/v2/61872/Outer-Space-Law-International-trade-aspects-of-outer-space-act.pdf.
 Major Matthew D. Burris, Tilting at Windmills? The Counterposing Policy Interests Driving the U.S. Commercial Satellite Export Control Reform Debate, 66 A.F. L. Rev. 255, 262 (2010).
 See National Defense Authorization Act for Fiscal Year 2013, Pub. L. No. 112-239, § 1261(c), 126 Stat. 1632 (2012).
 Brian Spegele & Kate O’Keeffe, supra note 1.
 Hearing on China in Space: A Strategic Competition? Before the U.S.-China Econ. & Sec. Review Comm’n, at 163 (2019) (statement of Lorand Laskai, Visiting Researcher, Georgetown Center for Security and Emerging Technology), available at https://www.uscc.gov/sites/default/files/transcripts/April%2025%2C%202019%20Hearing%20Transcript%20%282%29_0.pdf (describing Hong Kong as “an exit way for [Chinese] state owned money”).
 Pub. L. No. 102-383, § 103(8), 106 Stat. 1448, 1451 (1992). Cf. Press Release, Nancy Pelosi, Speaker, House of Representatives, Pelosi Statement on Hong Kong Protests and Extradition Bill (June 11, 2019), available at https://www.speaker. gov/newsroom/61119-2/ (stating that Hong Kong may no longer be sufficiently autonomous to justify special legislative distinction from China); Huileng Tan, Proposed Extradition Bill Could Get Hong Kong Entangled in the US-China Tussle, Research Firm Says, CNBC (June 14, 2019), available at https://www.cnbc.com/2019/06/14/extradition-bill-could-get-hong-kong-entangled-in-us-china-analyst.html (stating that Hong Kong relinquishing its autonomy to China is at the heart of protests against a proposed law authorizing extradition of Hong Kong residents to China).
 Brian Spegele & Kate O’Keeffe, supra note 1.
 See Lindsay Maizland, China’s Crackdown on Uighurs in Xinjiang, Council on Foreign Rel. (Apr. 11, 2019), available at https://www.cfr.org/backgrounder/chinas-crackdown-uighurs-xinjiang.
 Brian Spegele & Kate O’Keeffe, supra note 1.
 See generally Human Rights Watch, China and Tibet, in World Report 2019: Events of 2018 (2019), available at https://www.hrw.org/world-report/2019/country-chapters/china-and-tibet (listing numerous human rights abuses allegedly committed by China); See also Bradley A. Thayer & Lianchao Han, Opinion, China's Weapon of Mass Surveillance is a Human Rights Abuse, The Hill (May 29, 2019), available at https://thehill.com/opinion/technology/445726-chinas-weapon-of-mass-surveillance-is-a-human-rights-abuse (arguing that China’s mass surveillance of its citizens, especially religious and ethnic minorities, represents a widespread and systematic abuse of human rights); Nicholas Kristof, Opinion, China’s Orwellian War on Religion, N.Y. Times (May 22, 2019), available at https://www.nytimes.com/2019/05/22/opinion/china-religion-human-rights.html?rref=collection%2Ftimestopic%2FFreedom%20and%20Human%20Rights%20in%20China (detailing China’s surveillance of religious minorities); Maya Wang, Opinion, China’s Chilling ‘Social Credit’ Blacklist, Wall Street J. (Dec. 11, 2018), available at https://www.wsj.com/articles/chinas-chilling-social-credit-blacklist-1513036054 (detailing China’s oppressive social credit system); Amnesty Int’l, China: Human Rights Violations in the Name of “National Security” (Nov. 2018), available at https://www.amnesty.org/download/Documents/ASA1783732018ENGLISH.pdf (outlining the state-initiated harassment, intimidation, arbitrary detention, criminal prosecution, imprisonment, and enforced disappearance of human rights defenders in China); Ted Piccone, China’s Long Game on Human Rights at the United Nations, Foreign Pol’y Brookings (Sept. 2018), available at https://www.brookings.edu/wp-content/uploads/2018/09/FP_20181009_china_human_rights.pdf (explaining China’s activist role in the U.N. Human Rights Council as a means to “1) block international criticism of its repressive human rights record, and 2) promote orthodox interpretations of national sovereignty and noninterference in internal affairs that weaken international norms of human rights, transparency, and accountability”); Thomas Lum, Cong. Research Serv., R44897, Human Rights in China and U.S. Policy: Issues for the 115th Congress (2017), available at https://fas.org/sgp/crs/row/R44897.pdf (discussing various human rights abuses in China and potential legislative responses); Camila Ruz, Human Rights: What is China Accused Of?, BBC News (Oct. 21, 2015), available at https://www.bbc.com/news/ magazine-34592336 (listing various allegations of human rights abuses levied against the Chinese government by activists and watchdog groups).
 Major Matthew D. Burris, supra note 9, at 261.
 Hearing on China in Space, supra note 13, at 130.
 See Hearing on China in Space, supra note 13,
 Id. at 130.
 Alexander Bowe, China’s Pursuit of Space Power Status and Implications for the United States, U.S.-China Econ. & Security Rev. Commission, at 4 (Apr. 11, 2019), available at https://www.uscc.gov/sites/default/files/Research/ USCC_China%27s%20Space%20Power%20Goals.pdf.
 Hearing on China in Space, supra note 13, at 166 (statement of Lorand Laskai, Visiting Researcher, Georgetown Center for Security and Emerging Technology).
 Id.; see also Stephen Clark, Beidou Navigation Satellite Successfully Launched by China, Spaceflight Now (Apr. 22, 2019), available at https://spaceflightnow.com/2019/04/22/beidou-navigation-satellite-successfully-launched-by-china/ (describing BDS as “China’s analog to the U.S. military’s [GPS]”).
 Danny Crichton & Arman Tabatabai, The GPS Wars Have Begun, TechCrunch (Dec. 21, 2018), available at https://techcrunch.com/2018/12/21/the-gps-wars-have-begun/. See A Practical Introductory Guide on Using Satellite Technology for Communications, Intelsat (Dec. 2012), available at http://www.intelsat.com/wp-content/uploads/2012/12/SatellitePrimer-2010.pdf (defining global in the context of satellites as “the radiated power of the satellite beam is directed at the equator and spreads outward… provid[ing] widespread coverage”); Mahashreveta Choudhary, What Are the Various GNSS Systems?, Geospatial World (Mar. 28, 2018), available at https://www.geospatialworld.net/blogs/what-are-the-various-gnss-systems/ (stating that the EU’s GPS alternative will not reach full capability until 2020).
 Kevin Pollpeter et al., China Dream, Space Dream: China’s Progress in Space Technologies and Implications for the United States, U.C. Inst. on Global Conflict & Cooperation, at vii (2015), available at https://www.uscc.gov/sites/default/files/ Research/China%20Dream%20Space%20Dream_Report.pdf.
 See id. (“Beidou is first and foremost a military system that has extensive civilian applications… and is reportedly being integrated into weapon guidance systems.”); see also Def. Intelligence Agency, Challenges to Security in Space, at 19 (2019), available at https://www.dia.mil/Portals/27/Documents/News/Military%20Power%20Publications/Space_Threat_V14_020119_ sm.pdf (stating that BDS “provide[s] additional [command and control] capabilities for the PLA.”); Alexander Bowe, supra note 26 (noting that BDS is a critical component of China’s expanding military, commercial, and diplomatic influence through the Belt and Road Initiative as part of the Digital Silk Road).
 Alexander Bowe, supra note 26 at 4.
 Jordan Wilson, China’s Alternative to GPS and its Implications for the United States, U.S.-China Econ. & Security Rev. Commission, at 7 (Jan. 5, 2017), available at https://www.uscc.gov/sites/default/files/Research/Staff%20Report_China %27s%20Alternative%20to%20GPS%20and%20Implications%20for%20the%20United%20States.pdf.
 Maria Abi-Habib, China’s ‘Belt and Road’ Plan in Pakistan Takes a Military Turn, N.Y. Times (Dec. 19, 2018), https://www.nytimes.com/2018/12/19/world/asia/pakistan-china-belt-road-military.html.
 National Defense Authorization Act for Fiscal Year 2013, Pub. L. No. 112-239, § 1261(c), 126 Stat. 1632 (2012).