China Boosts Arms Sales In Mideast; WaPo; Apr 4, 1988

China Boosts Arms Sales In Mideast
The Washington Post; Apr 4, 1988
pg. A1

By Daniel Southerland
Washington Post Foreign Service
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BEIJING—China's sale of intermediate-range ballistic missiles to Saudi Arabia is only one of a growing series of arms sales that earns Beijing much-valued foreign exchange and political influence, underscoring what diplomats believe is its position as at least the fifth largest weapons supplier to the Middle East.
Only nine years ago, China was a minor actor in the divided, oil-rich region, selling less than 1 percent of all the weapons pouring into the region. Today, the Chinese sell arms to a number of antagonistic nations, such as Iran and Iraq, without seeming to lose favor in any one of them.
"They probably look more benign than either the Soviets or the Americans," said a western diplomat. "I suspect the Chinese are going to get away with this in a way that the superpowers never could."
China's military budget has declined in relative terms because the country is putting most of its funds into economic development. Instructed to pay for much of its own modernization, the military has engaged some of the country's best brains and well-connected sons in its drive to earn foreign exchange by selling weapons abroad.
Western diplomats who have studied the issue say that when it comes to deciding who is allowed to buy Chinese weapons, a key factor in most cases is whether the buyer can pay for the weapons.
According to one estimate, weapons sales represented 8 percent of China's total export earnings in 1986. Overseas arms sales totaled
	See CHINA, A20, Col.l


China Expands Arms Sales in Mideast

CHINA, From A1
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at least $2 billion in 1986, with most of that derived from Middle East sales.
But as a western diplomat pointed out, dollars are not Beijing's sole determinant for sales. "China is also seeking long-term influence and recognition as a major player."
China's Communist Party chief Zhao Ziyang and other Chinese leaders have stressed repeatedly that "China will never get involved in the superpowers arms race."
This may be true when it comes to nuclear weapons, but China has entered the race to sell conventional weapons with a vengeance.
China is still far from being in the same class with the world's top arms salesmen—the Americans, Soviets, French, and Britons. But China competes well in poor nations because it can offer durable, easy-to-use arms at much lower prices than those charged for sophisticated western weapons.
According to experts, the Chinese have made their biggest sales to Iran and Iraq, and recently became the largest arms suppliers to Iran. They have sold weapons to Libya, and at one time, even made a short-lived deal with Lt. Col. Oliver L. North, the fired National Security Council aide, to send weapons to the contra forces in Nicaragua.
The Far Eastern Economic Review, a Hong Kong-based magazine, reported that North negotiated the deal in late 1984 at a meeting with a Chinese defense attache in Washington. The Chinese later reversed themselves and cut off the contra aid after deciding to befriend the Sandinista government, a diplomat
said.
Chinese spokesmen have denied selling Silkworm missiles to Iran or small arms to the contras, but in both cases, diplomats say they have conclusive evidence of the deals.
Under the late Chairman Mao Tse-tung, China sought political influence among developing countries by donating arms rather than selling them. But once Beijing launched its economic development drive following Mao's death, the
country became more concerned with earning hard cash.
Western experts are still uncertain, however, as to where all the money from the weapons sales goes. They do know that some of it is used to purchase western technology for the Chinese armed services.
In the Middle East, the turning point for Chinese arms sales came in the summer of 1979 when President Anwar Sadat disclosed that Egypt was buying 50 jet fighters from the Chinese. The Egyptians subsequently purchased Chinese
missiles, patrol boats, and submarines. Egypt eventually developed a strong military relationship with the United States, and became less dependent on Chinese arms.
But the Chinese found new opportunities with the outbreak of the Iran-Iraq war in 1980 and made their first sale of tanks, artillery and small arms to Iraq in 1981.
By the mid-1980s, China had developed half a dozen corporations that now compete aggressively with each other for overseas arms sales. Western experts believe that the most successful of these is Poly Technologies Inc., a subsidiary of CITIC, China's largest and most independent investment organization.
Some sources believe that it was deeply involved in arranging the sale of Silkworm missiles to Iran. Its president is Hu Ping, the son-in-law of senior leader Deng Xiaoping. Hu is said to work closely with He Pengfei, who is director of the equipment department of the People's Liberation Army and son of the late marshal He Long, one of China's foremost generals.
The two form part of an informal network of politically well-connected executives who give added clout to China's overseas arms sales drive to at least 30 nations.
Western experts say Latin America may become the new frontier for Chinese arms salesmen. Beijing has been trying to break into this market for several years and has had initial successes in Chile, experts say.
A European arms dealer said that in the coming years, the Chinese are likely to expand their sales of naval equipment, including frigates, which are much larger ships than what the Chinese normally sell.
The same dealer said the Chinese have succeeded in selling their lowcost fighter planes to a number of developing countries, cutting into the American and West European share of that market.
"For the price of one American F16, they can buy maybe eight or ten Chinese F7s," he said.
At the same time, several of the experts say the Chinese sometimes fail to provide adequate after-sales services, including maintenance, spare parts, and pilot training.
Despite such difficulties, some western experts believe the Chinese can buy more influence and good will through arms sales than the superpowers, partly because the Chinese appear to be less threatening. Contact with the Chinese could lessen the dependence on the superpowers by some countries in the Middle East.
As Francois Heisbourg, director of the International Institute for Strategic Studies, pointed out in a recent article published in the International Herald Tribune, "it is easier for China to make diplomatic incursions in a region like the Middle East, where it has no declared enemies, than in its own backyard..."
The Chinese have long been driven by a desire to minimize Soviet involvement in the Middle East.
One of China's foreign policy weaknesses, however, has been a lack of diplomatic relations with Israel. The Chinese cannot be full partners in prospective Middle East peace negotiations without more contact with Israel, some diplomats say.