Tuesday, August 01, 2006

Bush authorizes graphite export to China

Bush authorizes graphite export to China

WASHINGTON (Reuters) - President George W. Bush on Monday authorized the export to China of 2 million pounds (907,200 kg) of bulk graphite for making plastics and said he did not believe it would prove detrimental to the U.S. space launch industry.

Bush notified the leaders of the U.S. House of Representatives and the Senate of the move in a letter.

He said he had certified that the export of the graphite and processing equipment "is not detrimental to the United States space launch industry. He also said the material and equipment would not measurably improve China's missile or space launch capabilities.

In this case, Chinese firms plan to use the bulk graphite, a refined form of carbon, to make electrodes, dies and molds that will in turn be used to produce plastic, rubber, copper, tin and iron components.

The deal required special review by the U.S. government because graphite can also be used to produce the nozzle for a solid-rocket motor, which can be used on a long-range intercontinental ballistic missile or to add power to a space launch vehicle, according to defense analyst John Pike.

Pike said China's aggressive development of rockets to launch satellites into space had aroused concerns in recent years among U.S. launch companies, which have been struggling to stay afloat in a flagging commercial market.

He said there was "certainly a lot of sensitivity in the U.S. launch industry about Chinese launch competition because it's just not that big of a market, and the Chinese are cheaper."

In the end, Pike said, U.S. officials probably realized China already had access to the technology used in the graphite processing equipment, or could easily get it elsewhere.

"If we don't sell it to them, they'll get it from the French," Pike said.

U.S. defense analyst Loren Thompson said traditional trade barriers with China were falling rapidly.

"Republican administrations traditionally have been reluctant to sell militarily sensitive technologies to any communist regime, however the Bush administration needs China for various diplomatic initiatives and China needs America as an export market," said the Lexington Institute analyst.

"The Bush administration is learning that in a globalized economy there isn't much that you can withhold from countries that have bustling economies," he said.

The United States has large and growing trade ties with China, but U.S. lawmakers remain uncomfortable about exporting any sensitive technologies to the communist country.

Earlier this month, lawmakers threatened to hold up the sale of F-16 fighter jets to Pakistan unless the deal was modified to include tough safeguards on any possible transfer of technology to China.

(Additional reporting by Andrea Shalal-Esa)