US Imposes New Sanctions on China

The US on Thursday accused China of failing to enforce a weapons proliferation agreement, and imposed tough sanctions on Norinco, one of China's biggest and most prestigious state-owned conglomerates, for supplying missile technology to Iran.

Analysts in Washington said the targeting of the North China Industries Corporation - a key supplier to Wal-Mart of the US - and of all of its subsidiaries would shake US-China relations. It comes just days before President George W. Bush is due to meet Hu Jintao, China's new president, in Russia on May 31.

US officials said the sanctions bar all exports by Norinco and its subsidiaries to the US, estimated at over $100m last year. The measures also bar any contracts between US government agencies and the Beijing-based company, which has close ties to the Chinese leadership.

Norinco's exports to the US range from teddy bears to hunting rifles. Through a web of subsidiaries, it also sells chemicals, construction materials and optical goods. Norinco said its import and export trade has exceeded $25bn since 1980.

A US official expressed frustration that China had not properly implemented new regulations it announced last August, during a visit to Beijing by Richard Armitage, deputy secretary of state. Those agreements tightened export controls on weapon and military technology.

They were the outcome of an agreement reached with the US in November 2000, under which the US decided to waive sanctions in return for a commitment by China "to stop its proliferation behaviour", the US official said.

The regulations contributed to a successful visit last year by Jiang Zemin, then Chinese president, to Mr Bush's Texas ranch.

The Iranian company identified as benefiting from China's weapons technology is the Shahid Hemmat Industrial Group, believed to be an arm of the Islamic republic's defence ministry. Shahid Hemmat was also placed under sanctions.

The US has previously imposed sanctions on Chinese entities suspected of involvement in weapons proliferation, but a US official said Norinco was the largest ever targeted. Richard Bush, a China analyst at the Brookings Institution, said it was likely that China would deliver a "robust response" but would not endanger its improving relationship with the US over the issue.

Officials at the Chinese embassy in Washington did not return calls.

China provided Iran with missiles during its 1980-88 war with Iraq. But US concerns have been heightened by the recent disclosure that Iran's nuclear programme was more advanced than previously thought.