New sanctions may set back Sino-U.S. ties

By staff and wire reports

WASHINGTON -- Sino-U.S. ties are poised for another setback after Washington's decision to slap sanctions on a quasi-governmental company for shipping missile components to Pakistan.

The U.S. State Department has announced sanctions on the Beijing-based China Metallurgical Equipment Corporation (CMEC) and the National Development Complex of Pakistan, the alleged recipient of the missile parts.

"The sanctions were imposed on these entities for their involvement in the transfer of missile technology… that contributed to Pakistan's missile programs," the State Department said.

The State Department said the shipments had violated an agreement between the U.S. and China late last year that barred Beijing from exporting missile technology.

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The development came less than two months prior to President George W. Bush's visit to Shanghai and Beijing.

The sanctions will bar American companies from transferring technology to China and from using Chinese rockets and other facilities to launch commercial satellites.

U.S. intelligence reports have claimed that CMEC, a weapons maker, had provided parts that would be used for developing Pakistan's Shaheen-1 and Shaheen-2 missile programs.

These two missiles are capable of bearing nuclear warheads.

U.S. spy satellites spotted trucks, which were apparently carrying the parts, making their way into Pakistan by road.

The Chinese Foreign Ministry and CMEC have denied Washington's allegations.

The matter was taken up during U.S. Secretary of State Colin Powell's recent visit to Beijing.

Analysts said the announcement of the sanctions meant Powell had been unsuccessful in getting a commitment from Beijing on stopping future shipments.

Beijing and Islamabad have consolidated their ties, including cooperation in technological developments, during recent exchanges of visits by top leaders.

Diplomatic sources in Beijing said while the sanctions would heighten tension between the two countries, it would unlikely torpedo the upcoming summit between Chinese President Jiang Zemin and Bush.

They said Beijing was still anxious to mend fences with Washington and that Jiang was hopeful that a successful October summit with his U.S. counterpart would bolster his domestic position.