(S) CHINA STILL INVESTIGATING LIMMT; URGES THE

S E C R E T BEIJING 000886

SIPDIS


DEPT FOR ISN AND EAP

E.O. 12958: DECL: 03/11/2033
TAGS: PARM MTCRE PREL ETTC CH IR

SUBJECT: (S) CHINA STILL INVESTIGATING LIMMT; URGES THE
UNITED STATES NOT TO IMPOSE SANCTIONS

REF: A. BEIJING 716

B. BEIJING 481

C. STATE 14066

Classified By: Political Minister Counselor Aubrey Carlson. Reasons 1.
4 (b),(c) and (d).


1. (S) China continues to investigate the export control
activities of LIMMT and urges the United States not to impose
sanctions on this Chinese firm, MFA Arms Control and
Disarmament Department Missile Division Deputy Director Wang
Daxue told PolOff on March 11. Recalling the recent U.S.
information shared with China on LIMMT and the U.S. request
that China provide an update on its investigation by February
29 (reftels),Wang said he was instructed to share the
following four points:

-- First, China continues to investigate LIMMT. China
understands the United States "might be disappointed" that
"no final result" has been reached, but China is still
carrying out a "serious investigation."

-- Second, China attaches "great importance" to this matter
and since 2003 has imposed administrative measures against
LIMMT and its head, Karl Lee. China continues to monitor Lee.

-- Third, Lee and "his companies" operate under the authority
of Chinese law. China is concerned about Lee and now has a
clearer picture of his firms' export activities. This matter
should be dealt with in accordance with Chinese law.

-- Fourth, if the United States imposes sanctions on LIMMT,
it will jeopardize bilateral nonproliferation cooperation and
politically complicate China's internal investigation and any
punishment the Chinese Government might impose on Lee and his
firm. China urges the United States, on the basis of our
larger bilateral nonproliferation cooperation, not to impose
sanctions on LIMMT.


2. (S) When asked when China might complete its
investigation, Wang said he is unable to provide an estimated
date, saying this is the "most complicated" inter-agency
investigation he has ever seen in his MFA experience. The
MFA, the Ministry of Commerce, Customs and "intelligence
officials" are all working very hard and have expended a lot
of resources on this investigation, he said. However, Lee is
"clever and smart" and very knowledgeable about Chinese
export controls. Because Lee exported dual-use items that
fall into a "grey area" of Chinese law, China is trying to
find "solid legal evidence" to use against him, Wang stated.


3. (S) Wang said Beijing is still searching for all of the
entities that Lee used to carryout his export activities and
has been unable to uncover any information on Dalian Sunny
Industries. China welcomes any additional information the
United States can share on this particular entity, he added.
RANDT


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