Identifier
Created
Classification
Origin
06BEIJING20073
2006-09-21 07:46:00
SECRET
Embassy Beijing
Cable title:  

POST-SHIPMENT VERIFICATION: D321423 AND D321151

Tags:  BEXP CH ETRD ETTC PREL 
pdf how-to read a cable
VZCZCXRO5499
RR RUEHCN RUEHGH RUEHVC
DE RUEHBJ #0073/01 2640746
ZNY SSSSS ZZH
R 210746Z SEP 06 ZFF4
FM AMEMBASSY BEIJING
TO RUCPDOC/USDOC WASHDC
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHMO/AMEMBASSY MOSCOW 8387
RUEHGH/AMCONSUL SHANGHAI 5866
RHMFISS/DEPT OF HOMELAND SECURITY WASHDC
RHEHNSC/NSC WASHDC
RUEHC/SECSTATE WASHDC 7616
S E C R E T SECTION 01 OF 03 BEIJING 020073 

SIPDIS

SENSITIVE

SIPDIS

USDOC FOR 532/BIS/OEA/TANDRUKONIS/LLAUCIUS
USDOC FOR 532/BIS/OEE/JSONDERMAN/MOBRIEN PLEASE PASS TO
BOFO AND WAFO
USDOC FOR 532/BIS/EA/ALOPES
STATE FOR EAP/CM
STATE FOR EB/ESP
MOSCOW FOR FCS/DPEARCE
SHANGHAI FOR FCS
SHANGHAI FOR CONS/CJESS/CMACHIN
SHANGHAI FOR POL/MTARNOWKA
NSC/PROSTRAT
DEPARTMENT OF HOMELAND SECURITY FOR IMMIGRATION AND CUSTOMS
ENFORCEMENT

E.O. 12958: DECL: CESSATION OF EXPORT CONTROLS TO CHINA.
TAGS: BEXP CH ETRD ETTC PREL
SUBJECT: POST-SHIPMENT VERIFICATION: D321423 AND D321151
CHINA OCEAN MINERAL RESOURCES RESEARCH AND DEVELOPMENT
ASSOCIATION

REF: A. A) USDOC 1803 (04/26/05) B) ANDRUKONIS-CHU
E-MAIL 05/25/05

B. C) BEIJING 9437 (06/09/04) D) USDOC 1768
(04/20/04)

BEIJING 00020073 001.2 OF 003


Classified By: Commercial Minister-Counselor Barry Friedman for reasons
1.5, b,d.e

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

S E C R E T SECTION 01 OF 03 BEIJING 020073

SIPDIS

SENSITIVE

SIPDIS

USDOC FOR 532/BIS/OEA/TANDRUKONIS/LLAUCIUS
USDOC FOR 532/BIS/OEE/JSONDERMAN/MOBRIEN PLEASE PASS TO
BOFO AND WAFO
USDOC FOR 532/BIS/EA/ALOPES
STATE FOR EAP/CM
STATE FOR EB/ESP
MOSCOW FOR FCS/DPEARCE
SHANGHAI FOR FCS
SHANGHAI FOR CONS/CJESS/CMACHIN
SHANGHAI FOR POL/MTARNOWKA
NSC/PROSTRAT
DEPARTMENT OF HOMELAND SECURITY FOR IMMIGRATION AND CUSTOMS
ENFORCEMENT

E.O. 12958: DECL: CESSATION OF EXPORT CONTROLS TO CHINA.
TAGS: BEXP CH ETRD ETTC PREL
SUBJECT: POST-SHIPMENT VERIFICATION: D321423 AND D321151
CHINA OCEAN MINERAL RESOURCES RESEARCH AND DEVELOPMENT
ASSOCIATION

REF: A. A) USDOC 1803 (04/26/05) B) ANDRUKONIS-CHU
E-MAIL 05/25/05

B. C) BEIJING 9437 (06/09/04) D) USDOC 1768
(04/20/04)

BEIJING 00020073 001.2 OF 003


Classified By: Commercial Minister-Counselor Barry Friedman for reasons
1.5, b,d.e

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


1. (U) REFTEL A requested a Post-Shipment Verification (PSV)
end-use check to be conducted at the
CHINA OCEAN MINERAL RESOURCES RESEARCH AND DEVELOPMENT
ASSOCIATION (COMRA) in order to determine
that COMRA is in possession of commodities shipped against
USDOC license applications D321523,
D321151 and D320998. Subsequent e-mail exchanges (REF B)
between BIS/OEA and ECO directed ECO to conduct two
Post-Shipment Verifications; one covering cameras licensed
under D321523 and D321151,
and a separate PSV on syntactic buoyancy foam licensed under
D320998. REFTEL C reported on a
favourable Pre-License Check conducted on COMRA as requested
in REFTEL D.

2) (SECRET N/F) STRICTLY PROTECT: COMRA is engaged in the
design and development of a deep-sea submersible, known as
the HOV (Human Occupancy Vehicle),to be placed on board the
DA YANG YI HAO,
an oceanographic research vessel. The DA YANG YI HAO is owned
by COMRA, which is under the control of China's State Oceanic
Administration (SOA). There is extensive reporting regarding
the possible intelligence collection capabilities and
suspected activities of the DA YANG YI HAO (see in
particular Coast Guard Intelligence Assessment CG-2232-005-06

dated April 12, 2006 (SECRET/NOFORN)). According to COMRA
officials and other reporting, the DA YANG YI HAO recently
completed a year-long
world-wide deployment to conduct surveys and mapping of sea
beds. According to COMRA officials,
the DA YANG YI HAO has recently been fitted with an A-frame
designed specifically to lift and
lower the HOV submersible. The DA YANG YI HAO, which makes
its home port in Qingdao, Shangdong Province, will be
deployed to the South China Sea in late 2007 for sea trials
to test the HOV.


2. (U) On May 9, 2005, ECO requested that the Department of
Science and Technology of the Ministry
of Commerce (MOFCOM),arrange a Post-Shipment Verification
visit to COMRA in accordance with the
Exchange of Letters on End-Use Visit Understanding (EUVU). In
subsequent protracted negotiations,
MOFCOM initially advised that the commodities had not been
received by the end-user and later
stated that the commodities had been detained by China
Customs. On August 12, 2006, MOFCOM
scheduled a Post-Shipment Verification visit for August 19,
2006, on items shipped against export licenses D321523 and
D321151 only. MOFCOM further advised that syntactic buoyancy
foam shipped
against export license D320998 are still not in the COMRA's
possession.


3. (SECRET) On August 19, 2006, ECO, accompanied by MOFCOM
official WEI Jie, conducted a site
visit at the CHINA SHIP SCIENCE RESEARCH CENTRE (CSSR)

BEIJING 00020073 002.2 OF 003


located at Tai Hu, Wuxi, and met with Dr. LIU Feng, the
director of the HOV (Human Occupied Vehicle) submersible
project and Dr. XU Qinan, the designer of the HOV
submersible. ECO observed a full-scale mock-up model of the
HOV submersible, which was constructed using a steel frame
and fiberglass panels. The model included a fiberglass
bathysphere, spherical ballast chamber and fins. Drs. LIU and
XU stated that the bathysphere, ballast chamber and frame on
the actual HOV submersible will be constructed of titanium
and further informed ECO that these components are currently
being manufactured in Russia at an unspecified facility. The
components will then be shipped to China for final assembly.
In response to specific questioning by ECO, COMRA officials
stated that China lacks the technical ability to fabricate
these parts out of titanium so had to source from Russia.
COMRA officials did not provide details regarding the extent
to which Russia may have cooperated in the design and/or
development of the HOV submersible, however, Dr. XU claimed
all credit for the design of this vessel. Additionally, the
syntactic buoyancy foam was also fabricated in England by
Emerson & Cuming Composite Materials, again because according
to COMRA, China lacks the technical ability to machine this
material correctly. The HOV submersible will measure eight
metres long upon completion and be capable of operating at a
depth of 7000 metres, The bathysphere will be capable of
sustaining a three-person research crew underwater for up to
twelve hours. Propellers will be made from fiberglass.


4. (U) ECO observed four video cameras and one still camera
mounted on the model HOV submersible. The still camera was
mounted in the center fore and the video cameras were mounted
on the port, starboard and keel of the submersible. In order
to for ECO to record the serial numbers on the cameras, COMRA
officials manually removed each camera from its mounting,
which appeared to be steel clamps. ECO noted the following:
one Ocean Imaging System still camera Model DSC4400 S/N 004,
depth 7000m; one Phoenix colour video camera S/N PHX 152, 50
Hz, depth 7000m; one Phoenix colour video camera S/N PHX 151,
50 Hz, depth 7000m; one Mercury black/white camera S/N MER
061, depth 7000m; one Atlas video camera S/N ATL 016, depth
7000m. In response to specific questioning by ECO, COMRA
officials stated that the cameras were received approximately
a year ago and were shipped directly to Shanghai where they
were transported to the CSSR in Wuxi (COMMENT: This is
consistent with information in para. 5 of REFTEL C, BEIJING
9437.). The cameras did not exhibit any signs of wear or tear
and do not appear to have been used.


5. (SECRET) COMRA officials stated that the purpose of the
HOV submersible to is to facilitate sea-bed research,
particularly to explore manganese nodules, hydrothermal
vents, cobalt crusts and
other deep sea phenomena. Dr. LIU stressed that his work is
purely research in nature with only civilian academic
applications. Dr. LIU provided ECO with a brochure describing
the HOV submersible project. According to this brochure, the
HOV submersible was approved by the Ministry of Science and
Technology as a National Key Project under the 863 Program.
This brochure also provides technical specifications for the
HOV submersible and numerous photographs, which can be made
available to interested persons through direct request to the
ECO.


6. (U) When pressed to explain why the cameras and syntactic
buoyancy foam could not be viewed before this visit, Dr. Liu
stated that China Customs strictly impounds in-bound
shipments destined for non-profit organisations such as COMRA
because these items enter duty-free. As a result, COMRA had
to secure approvals from various agencies including MOFCOM,

BEIJING 00020073 003.2 OF 003


China Customs and the National Development and Reform
Commission (NDRC),in order to have these items released.
COMRA officials estimate that the syntactic buoyancy foam
components may be released from China Customs within the next
sixty days.


7. (SECRET - N/F) STRICTLY PROTECT: Dr. LIU has traveled
several times to the United States for research exchanges
with the Woods Hole Oceanographic Institution (WHOI) and has
been invited again as part of a Chinese delegation to visit
WHOI in October, 2006. Dr. LIU sought ECO's assistance in
re-scheduling his visa interview appointment, noting that he
was originally to appear for his visa interview on September
19, 2006, but canceled in order to be available for this
Post-Shipment Verification visit. Dr. LIU provided the
following information regarding the proposed Chinese
delegation to WHOI:

LI Jiabiao, Deputy Director, Second Institute of
Oceanography, State Oceanic Administration,
passport P5340668, date of birth 04/24/1961

LIANG Chujin, Senior Scientist, Second Institute of
Oceanography, State Oceanic Administration,
passport P6218400, date of birth 09/22/1966

FENG Xuwen, Senior Scientist, Second Institute of
Oceanography, State Oceanic Administration,
passport P6754086, date of birth 12/17/1968

LIU Feng, Deputy Director, China Ocean Mineral Resources
R&D Association
passport P5448668, date of birth 03/02/1962

ZHOU Ning, Project Officer, China Ocean Mineral
Resources R&D Association
passport P6008326, date of birth 01/16/1957

All have previously traveled to the United States.


8. (SECRET - N/F) RECOMMENDATION - INCONCLUSIVE. ECO notes
that this is a partial Post-Shipment Verification. ECO was
able to observe the cameras shipped against export licenses
D321523 and D321151, but was not able to independently verify
where these items have been stored since shipment in late

2004. ECO was not able to independently verify COMRA's
claims that these items were impounded by China Customs for
almost a year, nor confirm where they have been stored since
to the end-user. ECO did find COMRA officials including Dr.
LIU Feng to be forthcoming and cooperative during the
Post-Shipment Verification. ECO further notes that the HOV
submersible is not yet complete nor has it been deployed.
MOFCOM and COMRA officials have agreed to permit ECO access
to the HOV submersible when it is installed on the DA YANG YI
HAO in order to conduct the Post-Shipment Verification on the
syntactic bouyancy foam shipped under export license D320998.
Accordingly, ECO reserves final recommendation on these
licenses until all Post-Shipment Verification activities can
be completed.
RANDT