O 050735Z SEP 06
FM AMEMBASSY BEIJING
TO SECSTATE WASHDC IMMEDIATE 5910
INFO CHINA POSTS COLLECTIVE

S E C R E T BEIJING 18589 
 
 
DEPT FOR T, ISN, EAP/CM 
 
E.O. 12958: DECL: 08/07/2026 
TAGS: PARM ETTC PREL MTCR CH
 
SUBJECT: PRC EXPERT ON EXPORT CONTROL ENFORCEMENT 
INADEQUACIES 
 
Classified By: Charge d'Affaires David S. Sedney.  Reasons 1.4 (b/d). 
 
¶1. (C) Summary: Chinese firms must export to survive and may 
view export control laws and regulations as an impediment to 
profitability, China Institute of Contemporary International 
Relations (CICIR) Senior Research Professor and Deputy 
Director Ouyang Liping told Poloff.  (Note: CICIR is 
affiliated with the Ministry of State Security.  End Note.) 
PRC enforcement agencies are unable to punish these firms 
because of the close, personal connections between company 
officials and senior Chinese leaders and because Chinese 
culture eschews public humiliation, she said.  According to 
Ouyang, an internal document sent to "relevant agencies" 
details Chinese firms' export control violations.  She stated 
that PRC inter-agency coordination, although much improved, 
is still inadequate.  Export control seminars and training 
programs create awareness, but are not causing Chinese firms 
to implement internal control procedures, Ouyang said.  End 
Summary. 
 
¶2. (C) Poloff met CICIR arms control and disarmament expert 
Ouyang Liping on August 31 to gauge her views on China's 
efforts to enforce its export control laws and regulations. 
 
Profit Motivation 
----------------- 
 
¶3. (C) Ouyang began by acknowledging that the PRC is not 
adequately enforcing its export controls, which she 
attributes to the "profit motive" of Chinese firms and to the 
country's still developing export control system.  If Chinese 
firms are unable to export, she said, they cannot survive. 
PRC officials, particularly provincial leaders, are under 
pressure to ensure that GDP figures remain high and that 
workers remain gainfully employed.  As a result, Ouyang 
explained, Chinese firms must export and may view export 
control laws and regulations as an impediment to 
profitability.  PRC enforcement agencies are unable to punish 
these firms because of the close, personal connections 
between company officials and senior Chinese leaders, she 
claimed.  In the United States, law enforcement officials 
would also find it hard to punish a cabinet secretary's son, 
she quipped.  Poloff provided her with several examples to 
the contrary. 
 
¶4. (C) According to Ouyang, Chinese culture, which eschews 
public humiliation, complicates enforcement, making it 
difficult to publicly punish individuals and firms.  She 
claimed even publishing the name of a company in a public 
document would violate these norms.  Ouyang volunteered that 
"relevant agencies" receive an internal document that 
describes export control violations by Chinese firms.  This 
document, which she referred to as an internal memorandum, 
names names, she said.  "I can promise you," Ouyang asserted, 
"We are investigating and punishing violators." 
 
Growing Pains 
------------- 
 
¶5. (C) The nascent nature of China's export control system 
further complicates effective enforcement, according to 
Ouyang.  China is trying to establish a "modern export 
control system" in a short period of time, compared to the 
decades afforded the United States and European countries, 
she added.  Ouyang believes that PRC export control 
enforcement officials need training to improve their 
technical capabilities and that PRC inter-agency 
coordination, although much improved, is still inadequate. 
 
¶6. (C) Continuing, Ouyang said that many Chinese companies 
are unaware that China even has export control laws.  She 
mentioned that she is encouraging Chinese ministries to 
create websites that contain user-friendly information for 
exporters, including an explanation of the policies behind 
China's export control laws.  According to Ouyang, export 
control seminars and training programs are useful at 
spreading awareness, but may not be leading to changed 
behavior at Chinese firms.  She said the Ministry of Commerce 
often "orders" firms to send representatives to these 
training programs and many company officials attending such 
events are simply there to fill seats.  The attendee may 
"take a few notes," but will probably not implement new 
internal export control policies when they return to work, 
she noted.  At large firms, she said, senior officials may 
thoroughly understand PRC export control laws and 
regulations, but do not feel compelled to translate this 
knowledge into internal control procedures affecting sales 
and export decisions made by officials at the firm's lower 
ranks. 
SEDNEY 
 
 
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