U.S. officials Thursday imposed new restrictions on nuclear exports to China after concluding that Beijing was seeking to illicitly acquire the technology to bolster its military and to undermine U.S. industry.
The policy change is the latest bid by the Trump administration to thwart China’s pursuit of critical U.S. technology, following a recent measure to strengthen reviews of Chinese investment in Silicon Valley and other sensitive industries. It also comes amid rising security tensions between the two military powers.
Officials said recent activity by Beijing and Chinese state-owned firms prompted a National Security Council-led review of U.S. nuclear policy toward China that concluded a change was necessary. They said they found evidence China was accelerating efforts to illicitly gain the technology for both military and commercial use, including on islands in disputed waters in the South China Sea, for floating nuclear power plants with the potential for rapid deployment, and for aircraft carriers and submarines. They said they also found that China was improperly diverting U.S. nuclear technology to other countries.
The new rules, which take effect immediately, include a presumption of denial for the export of nuclear goods to China’s largest nuclear power company, the state-backed China General Nuclear Power Co., or CGN, officials said. CGN was the subject of a 2016 indictment—that also targeted U.S. citizen, Szuhsiung “Allen” Ho—that said the company was developing “special nuclear material” outside the U.S. without required U.S. authorization. Mr. Ho pleaded guilty in January 2017 for unlawfully enlisting U.S.-based nuclear experts to assist CGN and was sentenced to 24 months in prison.
The restriction isn’t a blanket ban on sales, but it means that the U.S. will require a much higher degree of assurance that the technology wouldn’t be used improperly. The U.S. will review sales to non-CGN entities on a case-by-case basis, the officials said.
Defense Secretary Jim Mattis canceled a trip to China, and President Trump accused China of election interference. The WSJ’s Gerald F. Seib explains how U.S.-China tensions are rising. Photo: Getty
U.S. officials said that, while they understand U.S. industry will take a hit in the short-term, in the long-run, they believe the policy is essential to protecting national security and the integrity of the U.S.’s nuclear industrial base. They added that they will continue to try to open up other export markets for U.S. firms.
State Department official Christopher Ashley Ford acknowledged the challenge of balancing national security and economic concerns with regard to nuclear policy in a July speech, noting the U.S. share of the international nuclear energy market has fallen to 20% from 90% over the last 30 years with many believing participation in the Chinese market will be key to the industry’s future viability.
“The hard question, of course, is: To what extent can we pursue such cooperation without providing China with technological tools that will help it achieve its goal of seizing a geopolitical role for itself that displaces U.S. influence?” he said.
In 2017 the U.S. exported $170 million in nuclear technology to China, officials said. China is one of the few countries making big investments to expand its nuclear-power sector, and nuclear-industry leaders have said the market could eventually be worth billions, government officials said.
While Westinghouse Electric Co. currently plays the biggest role of U.S.-based nuclear companies in China, the most stringent of the new restrictions doesn’t appear to cover its more traditional style of nuclear reactor. Most of the changes apply to the oncoming generation of nuclear technology that can be miniaturized and is potentially more susceptible to being militarized for power generation at far-flung outposts and for propulsion on watercraft.
Officials said the Justice Department’s CGN indictment, the 2014 indictment of Chinese military officers for allegedly stealing proprietary information from Westinghouse, along with other intelligence that officials said they were not able to disclose all contributed to the decision to implement the new restrictions.
Earlier Thursday, before the Energy Department’s announcement of the new nuclear export restrictions, a former Defense Department official highlighted nuclear issues as an overlooked potential flashpoint between the U.S. and China.
“The level of dialogue between the U.S. and China on nuclear issues is basically nonexistent,” said Abraham Denmark, director of the Asia Program at the Woodrow Wilson International Center for Scholars. Speaking at a Jamestown Foundation event, Mr. Denmark added that few experts on China have an in-depth knowledge of nuclear issues, and vice versa.