American firms funded by the Pentagon are selling their technology to Chinese companies involved in hypersonic missiles, according to a new analysis.
Under U.S. law, the sale of American products to China is banned if there is knowledge or even reasonable suspicion that they will be used for developing a missile.
Yet an investigation by The Washington Post, published on Monday, found numerous examples of U.S. firms supplying Chinese entities with their software or equipment – often with the use of middlemen.
The Washington Post uncovered evidence of more than 300 sales since 2019 of U.S.-origin technology to dozens of entities involved in China’s hypersonics or missile programs, carried out by almost 50 firms.
Even more concerning, analysts said, was many of the U.S. firms were frequently funded by the Pentagon and working with the U.S. military, while selling the sought-after goods and programs to Chinese companies.
‘It’s very disturbing, because the bottom line is that technology that can be used for military hypersonics was funded by U.S. taxpayers, through the U.S. government, and ended up in China,’ said Iain Boyd, director of the Center for National Security Initiatives at the University of Colorado at Boulder, speaking to The Post.
The Chinese military is pictured on August 4 testing its long-range missiles. On Monday, The Washington Post reported that Pentagon-funded technology was being sold through intermediaries to China
A Hypersonic Air-breathing Weapons Concept (HAWC) missile in seen in an artist’s conception. China and the U.S. are engaged in an arms race to built the best hypersonic weapons
Boyd conducts computational research on hypersonics – technology through which missiles travel at greater than five times the speed of sound, and potentially evade current defenses.
The United States and China are currently locked in an arms race to create the most cutting-edge weapons, Pentagon officials have said.
In July and August 2021, the Chinese military launched a rocket that used a ‘fractional orbital bombardment’ system to propel a nuclear-capable ‘hypersonic glide vehicle’ around the earth for the first time.
The test left the United States stunned, showing that China’s capability was far beyond what was previously known.
In October 2021 General Mark Milley, the chairman of the Joint Chiefs of Staff, acknowledged the test for the first time, and said the missile – designed to evade American nuclear defenses – was ‘very close’ to a ‘Sputnik moment’ for the United States.
The Washington Post team uncovered evidence that U.S. firms had sold equipment, through intermediaries, to a Chinese company they described as being ‘instrumental’ in the design of the 2021 test.
General Mark Milley, the chairman of the Joint Chiefs of Staff, in October 2021 said the U.S. was deeply concerned by the Chinese missile test, and was watching closely
One of the companies was Arizona-based Zona Technology, which sold technology through resellers to the Chinese Academy of Aerospace Aerodynamics (CAAA).
The academy, CAAA, was highly involved in the 2021 test.
Zona Technology has contracts for research and development services with the U.S. Air Force and received $31.6 million in grants from the Pentagon’s Small Business Innovation Research program (SBIR).
Ping-Chih Chen, the chief executive of Zona Technology, said he had no knowledge of a sale of its aeroelasticity simulation software — a type of aerodynamics software — directly to CAAA, but said they had sold to another company that according to sales contracts then passed it on to CAAA.
Zona’s China distributor, Jon Ding, said he licensed Zona software to a Beijing-based firm, Hifar, in 2019.
Ding told The Washington Post that he trusted his clients would not violate the rules, and so did not check whether the technology was being sold on.
‘I didn’t, because they promised me and I trust them, so I don’t do this kind of tracking,’ he said, adding that he warned Hifar not to sell to restricted groups.
Chinese soldiers are pictured carrying out drills in Shenyang, northeastern China’s Liaoning Province. China is racing the U.S. to get the best hypersonic missiles
Zona Technology, in Arizona, is funded partially through Pentagon grants and has sold equipment and technology to middlemen who sold it on to China
Another Arizona firm, 4D Technology, is also selling technology through intermediaries to Beijing
Another of the companies selling through middlemen to CAAA was California-based Metacomp Technologies which, like Zona, works with the U.S. military and received a SIBR grant – in Metacomp’s case, of $13.9 million.
David Habib, legal counsel for Metacomp, told The Washington Post the firm has ‘no knowledge of whether or how those companies have acquired Metacomp software or transferred it to others.’
He said the firm is ‘scrupulous in complying with U.S. export control laws and demands its customers comply as well.’
Another Arizona-based firm, 4D Technology Corp, manufactures an instrument used to gather data in hypersonic tests, called an interferometers.
The company received more than $2.5 million in Pentagon SBIR grants from 2010 to 2017, and in January sold through its distributor in the country interferometer technology, which went to the China Air to Air Missile Research Institute.
They have not commented on the sale.
Even Siemens, the household name German firm, has been involved in the sales, according to The Washington Post.
The paper reported that an American division of the tech giant, Siemens Digital Industries Software, sold via a reseller technology to the Beijing Institute of Technology in December 2020.
In a statement, Siemens said it ‘is committed to compliance with applicable national export controls regimes.’
The company said: ‘We monitor our customer base to facilitate compliance with these regulations and proactively and routinely discontinue selling our software portfolio to entities subject to U.S. government restrictions.’
Siemens Digital Industries Software announced an agreement in July to acquire Zona Technology, and the deal remains pending.
Officials at the Pentagon are watching China’s progress very closely
The value of the U.S. technology to China is clear.
‘In this case the American technology is superior — we can’t do certain things without foreign technology,’ said one Chinese scientist, speaking to The Post, who the paper said works in a university lab that conducts testing for hypersonic vehicles.
‘There isn’t the same technical foundation.’
One U.S. researcher said the purchase of the software and technology would save the Chinese teams a huge amount of time and expense.
‘I’m going to design [a hypersonic missile] with these software tools,’ the researcher said.
‘I’m going to fly it in a computer and analyze it with these tools. And once I’ve gotten the model to the point where it flies my mission, I can go test it in a wind tunnel.’
Matthew S. Borman, the Commerce Department’s deputy assistant secretary for export administration, said that the U.S. companies could not just blame the problem on their intermediaries.
Even an exporter seeking to ship a pencil made in the United States to a known missile end user in China would be denied a license, he said.
‘What we’ve always told companies is you cannot self-blind,’ he said.
‘You can’t just say, ‘Oh, I’m selling it to a distributor, I don’t know what they’re going to do with it.’
‘Especially if it’s a party where it’s readily ascertainable that they are a supplier to the Chinese military.
‘The first responsibility is on the company. And if they don’t exercise that responsibility, they run the risk that they will be committing a violation.’