(UNTITLED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88-00434R000400980003-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: January 12, 2017
• Document Release Date: April 6, 2011
• Sequence Number: 3
• Publication Date: July 25, 1986
• Content Type: MEMO

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secret
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I I / J~
Central Intelligence Agency
ILLEGIB
DIRECTORATE OF INTELLIGENCE
25 July 1986
Li Xu'e: Launching Beijing Into the International Space Arena
Summary
Minister of Astronautics Industry Li Xu'e is leading an ambitious
drive to make China competitive in the international launch services
market. Since his appointment in June 1985, he has moved swiftly to
complete a series of experimental satellite launches and demonstrate the
program's openness to foreign inspection. A proponent of multilateral
space cooperation, Li appears to believe that the quickest way to
modernize his Ministry is through joint participation with more
technologically advanced space programs, such as those of NASA and the
European Space Agency. His efforts have put Beijing in a position to
capitalize on recent failures in Western launch programs and offer the
Chinese space program as a cheaper--and, in the short run, the
only--alternative.
This memorandum was prepared by I Office of Leadership Analysis.
Information available as of 25 July 1986 was used in its preparation. Comments and
queries are welcome and may be directed to the Chief, China Branch, Asia/Near East
Division, LDA
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A Technocrat in Charge
Li Xu'e has guided China's space program since 1982, when he became a vice
minister in the Ministry of Astronautics Industry (MOAI). 1 As the foremost of four vice
ministers and the chief assistant to then Minister Zhang Jun, a sexagenarian military
officer with little technological expertise, he supervised the Ministry's daily activities.
Despite Li's strong roots in China's military space program, he helped oversee a shift
from an emphasis on overt military applications to one more supportive of civilian
modernization goals. For example, since 1982 the Ministry has conducted eight civilian
and no military launches, although the military has subsequently used some of the
satellites orbited during this time.
Li's promotion to Minister of Astronautics Industry in June 1985 was part of a
wave of changes designed to replace less qualified, aging ministerial-level officers with
technically competent, younger officials. Unlike his predecessor, whose strength was his
strong Chinese Communist Party and public security background, Li is a leading space
scientist. Only 56, he has been involved in the development of China's space
capabilities since the inception of the program in the early 1950s. Because of the
traditional shroud of secrecy surrounding China's military and scientific programs, we
have little specific information about where Li trained or in which program applications
he participated. After his 1985 appointment, however, the Chinese press, in one of its
first public identifications of a scientist associated with these programs, shed some light
on his technical background, noting his involvement in ballistic missile and warhead
research throughout the 1950s and 1960s. The media said that he trained as an
aeronautical engineer and served with the Third Ministry of Machine Building (Aviation)
before being transferred in 1956 to the newly established Seventh Ministry of Machine
Building.
Marketing China's Launch Services
The 1986 failures in the NASA and European Space Agency launch programs gave
China a unique marketing opportunity as an available, alternative launch services
program. Although Li and other senior Ministry officials have told the press that their
efforts are not meant to capitalize on Western misfortunes, they have moved quickly to
take advantage of the situation.2 Beijing is offering prices at least 15 percent lower than
1983.
In May 1982 the State Council reorganized the Seventh and Eighth Ministries of
Machine Building into the Ministry of Space Industry and assigned a new minister and
four vice ministers. Of the other three vice ministers appointed at that time, one
retains his position, another is now the chairman of the State Science and
Technology Commission, and the third is the secretary of the Shanghai Municipal
Chinese Communist Party Committee. The Ministry was given its current name in
2 In 1986 the Soviet Union also announced that it intended to enter the commercial
launch services market. We believe, however, that its efforts will be severely
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those of Ariane, the space sales company for the European Space Agency, which has
traditionally undercut the lowest prices offered by the United States. In February 1986
MOAI made its services even more attractive by offering payload insurance at what it
advertises as "low premium rates." (Li's reluctance to risk his Ministry's limited assets
insuring foreign customers had created a major impediment to sales until the People's
Insurance Company of China agreed in late 1985 to underwrite the Chinese launch of
any foreign satellite.)
Li's Ministry entered the highly competitive worldwide space services market in
October, when Li launched an aggressive marketing campaign aimed at the United
States, Europe, and Third World countries. Using the Great Wall Industrial Corporation
(GWIC)--an MOAI front company--as a marketing agent, Ministry officials have held
discussions with scientific and corporate officials from over a dozen countries, including
Argentina, Australia, Indonesia, Italy, and the United States; given negotiations to date,
they appear likely to conclude several launch agreements during the next year. During
the past three months MOAI officials have negotiated (but not yet signed) contracts for
the launch of US and Swedish satellites.
Beijing's marketing effort is built on its vigorous and rapidly growing space
program. During the past 15 years MOAI has designed, built, and orbited
communications, scientific, and land-mapping/surveying satellites. In February 1986 it
successfully launched its 18th satellite--the third from the Xichang Launch Services
Complex, China's newest and most technologically advanced launch facility. The
complex, which will serve as the primary launch site for foreign satellites, has been
described by senior NASA officials as comparable to the older single-pad launch areas
at Cape Canaveral. As part of his publication of Beijing's entrance into the worldwide
launch services market in February 1986, Li--in an unprecedented move--opened
Xichang to visiting US and other Western scientists.
The Future: Expanding China's Capabilities
Li has initiated a press blitz to outline the Ministry's future goals, emphasizing
MOAI support for China's economic development.3 The chairman of the Ministry's
Science and Technology Committee stated in May 1986 that during the next decade the
hampered by US export laws prohibiting the launch on a Soviet rocket of any satellite
containing US-derived components. US space officials say that virtually all satellites
constructed outside the Soviet Bloc contain such components.
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Ministry would launch indigenous satellites in order to:
? Provide television coverage across the entire country.
? Extend the country's antiquated telecommunications system.
? Afford accurate weather forecasting, surveying, and reconnaissance capabilities.
Li's long-range goals appear even more ambitious. Senior MOAT officials have said that
China plans to develop a small, two-man version of the space shuttle, the basic purpose
of which would be to aid in the construction of a modular space station.
China's current level of technology and ability to fund Ministry projects probably
make Li's long range goals overly ambitious. We believe he has sought to surmount
these difficulties by signing a series of bilateral space science and technology
cooperation agreements. Under his guidance, for example, the MOAT has during the last
two years:
? Signed a comprehensive agreement with Brazil for the exchange of space
technologies.
? Initialed a memorandum of understanding with Great Britain calling for an
exchange of scientists and engineers and the joint development of ground
launching bases and carrier rockets.
? Signed a five-year protocol with France providing cooperation in the exchange of
personnel and joint research in the development of satellites and launching
systems.
? Announced its intention to continue negotiations with Hughes Aircraft
Corporation for the design and construction of a joint launch facility located in
the Hawaiian Islands.
Implications for the United States
Li's commitment to foreign involvement in the development of China's national
space program affords more opportunities for bilateral cooperation in space than existed
under former Astronautics Minister Zhang Jun, who strictly limited contacts with the
West. An admirer of the US space program, Li told the Chinese press that the
Challenger accident did not reduce China's confidence. He remains supportive of
ongoing discussions with NASA officials to place a Chinese astronaut aboard a future
US shuttle flight.
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Bilateral cooperation would also provide the technology the Chinese need to
speed the development of their space program. Exchanges that help the Chinese
overcome deficiencies in the development and production of computerized circuitry,
telemetry and tracking equipment, and sophisticated lighter launch vehicles--all current
technology in the US inventory--would move the Chinese space program ahead much
more rapidly than MOAI could do independently. Such improvements would, however,
aid efforts to undercut NASA and European Space Agency launch service marketing
programs and to enhance the military ballistic missile program. Improved technology
would further strengthen MOAI efforts to design and/or launch satellites for European
and Third World countries that are now valuable clients of Western space organizations.
Moreover, the technology acquired through civilian bilateral cooperation could be used
to increase the range of both intermediate and intercontinental missiles
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Unclassified
In an exclusive interview with China News Services (Zhongguo Xinwen She) last October,
Minister Li Xu'e announced China's intention to enter the international space arena. Li
said, "The successful development, launching, and recovery of our satellites signifies a
new success China has achieved in promoting national economic development by means
of the astronautics industry. China will now undertake an overseas satellite launching
business. We will provide preferential prices for foreign customers requesting satellite
launching services and will be responsible for training technicians."
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SUBJECT: Li Xu'e: Launching Beijing into the International Space Arena
DISTRIBUTION:
NATIONAL SECURITY COUNCIL
Copy 1 Mr. James Kelly, Senior Staff Member, East Asia,
EOB Room 302
Copy 2 Don Gregg, Special Assistant to the Vice-President,
EOB, Room 298.
Copy 3 David Laux, Senior Assistant for China, Taiwan,
and Hong Kong, EOB Room 302
Copy 4 Dr. Richard G. Johnson, Acting Presidential Science Advisor,
Office of Science and Technology Policy, EOB, Room 358
DEPARTMENT OF STATE
Copy 5 James Lilley, Deputy Assistant Secretary, EAP, Room 6205
Copy 6 AMB Morton Abramowitz, Director INR, Room 6531
Copy 7 Richard Williams, Director, EA/CHINA, Room 4318
Copy 8 AMB H. Alan Holmes, Director, Bureau of Political and
Military Affairs, Room 7327
Copy 9 Doug Paal, Policy Planning Staff, Room 7330
Copy 10 Tom Fingar, INR/EAP/CHINA Room 8840
Copy 11 Jack Sontag, INR/EAP/CHINA, Room 8840
Copy 12 Chris Clarke INR/EAP/CHINA, Room 8840
Copy 13 Chris Symanski, EA/CHINA Room 4318
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DEPARTMENT OF DEFENSE
Copy 14 Rear Admiral Baker, Deputy Assistant Secretary for East Asia,
ISA, Room 4E817, Pentagon
Copy 15 Mr. Gerald D. Sullivan, Assistant Deputy Under Secretary
for International Programs, Defense Research and Engineering,
Room 3D161, Pentgon
Copy 16 Major General Schuyler Bissell, Air Force Assistant Chief
of Staff for Intelligence, Room 4A932, Pentagon
Copy 17 Major William Suggs, Office of the Army Assistant Chief
of Staff for Intelligence, DAMI-FII, Rm 2A474, Pentagon
Copy 18 Lieutenant Colonel Eden Wo,on, Office of the Joint Chiefs
of Staff, China Plans and Policy, FESA J-5, Rm 2E973 Pentagon
Copy 19 Lieutenant Colonel Gary Weis, ISA, Room 4C849, Pentagon
Copy 20 Ron Montaperto, JSI-3A, Room 1C945, Pentagon
Copy 21
Copy 22
DIA/DB-2B, Room C2837, DIAC 25X1
~DIA/AT-3/China
Room 1120, Pompano Plaza West
Copy 23 Chief, NSA/B-Group, Rm 3W106, Fort Meade
Copy 24 Chief, NSA/G-Group, Rm 4A140 Fort Meade
Copy 25 Lt. Colonel Larry Mitchell AF/IXOXXP Plans and Operations,
Pentagon
Copy 26 Colonel Bill Belk, AF/INER, Room 4B879, Pentagon
Copy 27 Melvin Searles, Deputy Assistant Secretary, EAP, Rm 3820, Main
Commerce
Copy 28 Charles Burch, Commercial Space Programs, Rm 6877
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Copy 29 Carl Rappaport, Office of Commercial Space Transportation,
Room 10401, Main Commerce
Copy 30 Carol Minor, Office of Intelligence Liaison, Room 6854,
Main Commerce
Copy 31 James Fletcher, Office of the Administrator, Room 7118,
Building 6
Copy 32 William Graham, Deputy Administrator, Rri 7137, NASA HQS.
Copy 33 Margaret Finaselii, Room 7084, Building 6
Copy 34 DD I (7E44)
Copy 35 C/ACIS (6F20)
Coov 36 NIO/EA (7E62)
Copy 38 L;/DDO/EA
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8)
39 NIC/Analytical Group (7E47)
40 PDB Staff P F30)
41 CPAS/ILS (7050)
42-46 CPAS/IMC/CB (9G07)
47 D/OGI
48 D/OSWR (5F46)
49 D/DO/PPS (3D01)
50 C/OEA/CH (4G32)
51 C/OEA/CH/DEV (4G32)
52 C/OEA/CH/DEF (4G32)
53 C/EA (5DOC)
54 DDO/DCEA (5D0106)
55 000/EAT (5D38)
56 C/LDA (1H19)
57 RD/LDA (1H19)
58-64 LDA/AN/China (1H18)
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