The arrest of the man, identified as Yao Yi, comes at an embarrassing moment as the US Secretary of State, Madeleine Albright, pays an official visit to Peking. Claims that China has tried illegally to obtain sensitive US weapons technology is a delicate issue between the Chinese and US governments.
It was not clear whether Mr Yao, who was arrested last week in California and brought yesterday to Boston, was attempting to smuggle the goods - fibre-optic gyroscopes - on his own behalf or for the Chinese military.
The gyroscopes can be fitted to long-range missiles to enhance accuracy. They can also be fitted to smart bombs and aircraft guidance systems.
According to police charges, Mr Yao tried to buy the gyroscopes from a Massachusetts firm but approval for the sale was denied by the State Department. He apparently then approached another supplier; but that company was a dummy corporation set up by Customs for the purpose of entrapping Mr Yao.