OFFICE OF THE SECRETARY OF DEFENSE
Annual Report to Congress: Military and Security Developments Involving the People’s Republic of China
major end items that it has difficulty producing domestically, particularly from Russia. China is pursuing advanced Russian defense equipment such as the SA-21 (S-400) surface-to-air missile system and Su-35 fighter aircraft. Between 2011 and 2012, Russia agreed to sell China IL-76 transport aircraft and Mi-171 helicopters. Russia’s concerns about intellectual property protections will affect the types and quantities of advanced arms or associated production technologies it is willing to transfer to China. China also has signed significant purchase contracts with Ukraine in recent years, including contracts for assault hovercraft and aircraft engines. Espionage Supporting Military Modernization. China utilizes a large, well-
organized network of enterprises, defense factories, affiliated research institutes, and computer network operations to facilitate the collection of sensitive information and export-controlled technology, as well as basic research and science that supports U.S. defense system modernization. Many of the organizations comprising China’s militaryindustrial complex have both military and civilian research and development functions. This network of government-affiliated companies and research institutes often enables the PLA to access sensitive and dualuse technologies or knowledgeable experts under the guise of civilian research and development. The enterprises and institutes accomplish this through technology conferences and symposia, legitimate
contracts and joint commercial ventures, partnerships with foreign firms, and joint development of specific technologies. As in previous years, China utilized its intelligence services and employed other illicit approaches that involve violations of U.S. laws and export controls to obtain key national security technologies, controlled equipment, and other materials not readily obtainable through commercial means or academia. Based on investigations conducted by the law enforcement agencies of the Department of Defense, Department of Justice, Department of Homeland Security, and Department of Commerce, China continues to engage in activities designed to support military procurement and modernization. These include economic espionage, theft of trade secrets, export control violations, and technology transfer. >
In August 2010, Noshir Gowadia was convicted of providing China with classified U.S. defense technology. This assisted China in developing a lowsignature cruise missile exhaust system capable of rendering a cruise missile resistant to detection by infrared missiles.
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In September 2010, Chi Tong Kuok was convicted for conspiracy to illegally export U.S. military encryption technology and smuggle it to Macau and Hong Kong. The relevant technology included encryption, communications equipment, and Global Positioning System (GPS)
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