PRE-LICENSE CHECK: D357208 DEVELOPMENT AND

S E C R E T SECTION 01 OF 03 BEIJING 019683

SIPDIS

SIPDIS

USDOC FOR 532/BIS/OEA/TANDRUKONIS/MOBRIEN/LLAUCIUS
USDOC FOR 532/BIS/OEE/JSONDERMAN
USDOC FOR OIO/ADESSARAN
AMCONSUL HONG KONG FOR FCS/PANKEL
STATE FOR EAP/CM
STATE FOR EB/ESP
NSC FOR PROSTRATE
NSC FOR ASIA
DEPARTMENT OF HOMELAND SECURITY FOR ICE/NATIONAL SECURITY
UNIT

E.O. 12958: DECL: 09/19/2016
TAGS: BEXP CH ETRD ETTC PREL
SUBJECT: PRE-LICENSE CHECK: D357208 DEVELOPMENT AND
RESEARCH CENTER OF CHINA GEOLOGICAL SURVEY

REF: USDOC 3978 (07/10/06)

BEIJING 00019683 001.3 OF 003


Classified By: Minister-Counselor Barry Friedman


1. (U) Unauthorised disclosure of the information provided
below is prohibited
by Section 12(c) of the Export Administration Act.


2. (U) REFTEL requested a Pre-License Check (PLC) to be
conducted at the facilities of
the DEVELOPMENT AND RESEARCH CENTER OF CHINA GEOLOGICAL
SURVEY (CGS),No. 40 Xue Yuan Road,
Haidian District, Beijing, China (86-10-6230-3040) to
determine the reliability of CGS to
receive U.S.-controlled items and technology. BIS License
Application D357208 lists the
DEVELOPMENT AND RESEARCH CENTER OF CHINA GEOLOGICAL SURVEY
(CGS) as the potential ultimate
consignee of two optically pumped magnetometers with a
sensitivity of 8 PT (RMS) per square
root HZ at a frequency of 1 HZ. These items are classified
under ECCN 6A006, valued at
$45,250, and are controlled for national security reasons.
GEOMETRICS INC., 2190 Fortune
Drive, San Jose, CA 95131 (408-428-4249) submitted this
license application. The foreign
purchaser is LAUREL TECHNOLOGIES COMPANY LTD, Room B&C, 5/F,

E. Commercial Centre, 83 Nam
On Street, Shau Kei Wan, Hong Kong (85-2-3110-3380). The
intermediate consignee is CHINA
NATIONAL INSTRUMENTS IMPORTER, Room 618 Instrimpex Building,
No. 6 Xizhimenwai Street,
Beijing, China (86-10-8831-6634).


3. (U) On August 8, 2006, ECO requested that the Department
of Mechanical, Electrical
and High-Technology Industries of the Ministry of Commerce
(MOFCOM) arrange a pre-license
visit to the DEVELOPMENT AND RESEARCH CENTER OF THE CHINA
GEOLOGICAL SURVEY (CGS) in
accordance with the Exchange of Letters on End-Use Visit
Understanding. On August 16,
2006, MOFCOM scheduled this visit for August 18, 2006.


4. (U) On August 18, 2006, ECO and Commercial Specialist
ZHAO Peining, accompanied by
MOFCOM official WEI Jie, met Dr. ZHANG Minghua, Senior
Geophysicist, YAN Guangshen,
Chief Geophysicist, and others at the temporary premises of
CGS. Drs. ZHANG and YAN
explained that that the main offices of CGS are currently
being renovated and that
various departments have been temporarily dispersed to other
locations.


5. (U) Drs. ZHANG and YAN stated that the CGS engages in
geological research including
mapping of land formations other geological phenomena for
basic research, oil and mineral
exploration, and environmental research purposes. Drs. ZHANG
and YAN will also lead a
delegation of scientists from CGS to the United States in
September 2006 to meet with
their counterparts at the U.S. Geological Survey and discuss
global resource management
issues.


6. (U) The CGS used to be under the Ministry of Homeland
Resources but is currently
under the direction of the China Geoogical Survey Bureau.
CGS receives national-level
funding from various sources including the National Natural
Science Foundation. CGS
currently employs approximately 190 employees, of which
one-thirds are senior researchers.
All research is considered open and results are published on
the CGS website,

BEIJING 00019683 002 OF 003


www.cgs.gov.cn. As well, CGS maintains a library of
publications and other materials
relating to geological research, which is open to the public.


7. (U) According to Drs. ZHANG and YAN, CGS currently
possesses magnetometers, though
not as precise as the ones sought in this license
application. CGS also possesses other
equipment of a similar nature and purpose including gravity
meters. CGS officials took
ECO CS and MOFCOM officals to view equipment currently stored
at No. 45 Fu Wai Da Jie,
2/F, which will also be the permanent location of CGS after
renovations are completed.
The equipment room is clearly marked as such and appears to
be locked when not in use.
ECO observed various pieces of equipment, which appeared to
exhibit wear consistent with
field use for geological research. If this export license is
approved, the magnetometers
would be stored at this location when not deployed for field
research. This location also
houses the research library for CGS.


8. (S) Drs. ZHANG and YAN stated that the magnetometers will
be used in field research
in Tibet and other locations. They provided ECO with a brief
description in Chinese of
their proposed research projects in the Qing-Tibet Plateau,
and identified two field
research sites: Ke Ke Xi Li Basin located at E93 degrees
21.1, N35 degrees 52.2 and
E92 degrees 53.5, N34 degrees 43.5; and Dong Cuo Dong located
at E85 degrees 14, N32
degrees 24 and E85 degrees 06, N30 degrees 49. Drs. ZHANG and
YAN described the field
research projects as oil and magnetic surveys, stating that
they will attempt to obtain
data on geological layers, gravity and magnetic properties of
the Earth in these areas.


9. (S) THIS IS AN ACTION REQUEST (N/F - STRICTLY PROTECT):
Post resources have not been
able to identify whether the coordinates for the proposed CGS
research projects would
be of concern to USG interests. ECO therefore respectfully
seeks BIS/OEA and OEE
assistance in forwarding these coordinates to appropriate USG
agencies to verify
that deployment of U.S.-controlled magnetometers would not be
detrimental to
USG interests. ECO further conditions PLC recommendation upon
favourable outcome of
this information.

10.(U) ACTION FOR AMCONSUL HONG KONG: CGS officials stated
that their contract is
with CHINA NATIONAL INSTRUMENTS IMPORTER and further advise
that this contract was
secured through an open-bidding process. CGS officials deny
any knowledge of the
foreign purcher, as does MOFCOM. CO-Beijing did not receive
any derogatory
information regarding either the foreign purchaser or
intermediate consignee. Per
REFTEL, ECO-Beijing understands the foreign purchaser, LAUREL
TECHNOLOGIES LTD, to
be authorised regional sales representative for the license
applicant, GEOMETRICS INC.
ECO-Hong Kong is respectfully requested to provide any
appropriate information
regarding the foreign purchaser directly to BIS/OEA.

11.(U) RECOMMENDATION - FAVOURABLE. Based upon the
information available during this
Pre-License Check and conditioned upon favourable outcome of
action requests, ECO

BEIJING 00019683 003 OF 003


recommends the DEVELOPMENT AND RESEARCH CENTER OF THE CHINA
GEOLOGICAL SURVEY as
likely to be a reliable recipient of U.S.-contrlled items and
technology as described
in REFTEL, to be used as described above.

RANDT