PRC EXPERT ON EXPORT CONTROL ENFORCEMENT

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 NNNN End Cable Text