China Deals May Have Hurt U.S.

A special House committee investigating satellite deals between U.S. companies and China concluded Wednesday that China has gotten far more than just space technology out of the deals, reports CBS News Correspondent Jim Stewart.

"Those transfers were not limited to missile satellite technology, but cover militarily significant technology," said Rep. Christopher Cox, chairman of a special House committee investigating military and commercial deals with China.

"Based on unclassified information, we have found that national security harm did occur," said Cox, R-Calif.

China Thursday blasted the reports and urged the U.S. not to put up more obstacles to trade.

The business deals at issue date back to 1989 when first former President Bush - and later President Clinton - approved waivers allowing U.S. satellites to be launched aboard Chinese rockets.

After one of those satellites exploded shortly after liftoff in 1996, two U.S. companies sent specialists to help the Chinese solve the launch problems, a move that the Pentagon later said may have helped the Chinese make their own ICBM guidance systems as capable as those in the U.S. arsenal.

Although much of its report is classified, the select committee hinted Wednesday that the People's Republic of China Army - already formidable by any standard - may have been helped further by technology transfers from several other U.S. firms as well.

"Without question, the PRC's technical acquisition efforts directed against the United States have been ongoing for more than two decades," Cox says.

At least two more shoes are set to drop in this matter. Still unanswered is whether any of the trade waivers were influenced by campaign contributions to the Clinton administration and the outcome of a Justice Department investigation into whether any U.S. companies broke the law when they gave the Chinese perhaps too much advice.

The committee makes 38 recommendations for legislation and executive action to remedy the situation. Cox said more details of the report would be provided to the administration and Congress as appropriate, and unclassified portions of the report would be made public as soon as possible.

Cox noted the committee of five Republicans and four Democrats worked closely through holidays and in the weeks around elections to come up with the bipartisan finding.

When it was formed in June, the committee was given broad subpoena powers and special authorization to look into tax records of individuals and businesses it considers pertinent to its investigation.

Several federal and congressional probes looked into whether China was provided with restricted information that could be used to improve missiles and military satellites.

On Thursday, China blasted the Congressional report as "groundless and irresponsible".

"We express our strong resentment over this," said Foreign Ministry spokesman Zhu Bangzao.

Zhu added hat the normal exchange of trade and technology is "in the interest of both sides" and he urged Washington to help smooth the way for future cooperation.

"We hope the United States will take into consideration the overall development of ties and take measures to remove obstacles to the normal development of economic and trade relations between the two countries," he said.

Reported By Jim Stewart