China arms breach brings US sanctions: Action over the sale of missile parts threatens fast-growing export trade

THE troubled relationship between China and the United States came under further stress last night when the Clinton administration slapped economic sanctions on the Chinese, accusing them of breaching international arms-control guidelines.

The move follows weeks of investigation by US intelligence experts into whether the Chinese delivered components to Pakistan for M-11 missiles, a weapon with a 300-mile range that can be equipped with nuclear warheads. Yesterday it became clear they had concluded that the deal had gone through.

Under US law, sanctions have to be applied in cases of violations of the Missile Technology Control Regime (MTCR) - international guidelines intended to limit the spread of missile-related technology. This bars the transfer of equipment relating to missiles with a range over 186 miles, or a payload of more than 1,100lb.

Last month, Lynn Davis, the US under-secretary of state for international security affairs, visited Peking to ask the Chinese to adhere to the non-proliferation rules. The Americans say China denied the illicit sales. Washington now believes China was lying.

The sanctions were announced by the US State Department, which described them as a two-year ban on the export of sensitive US technology to China - a move officials claimed would cost American companies between dollars 400m-dollars 500m (pounds 266m-pounds 333m). A spokesman said the US repeatedly complained to the Chinese about the M-11 deal with Pakistan, but did not receive a 'satisfactory response'.

The US move is likely to cause alarm in some US business circles. China is the world's fastest- growing economy, and American companies are certain to worry that the Chinese may retaliate by blocking US firms from entering a potentially vast consumer market.

This issue may help explain why President Bill Clinton has been slow to follow through on campaign promises to take a hard line against Chinese human rights violations. In May, he granted a one-year extension to China's 'most-favoured nation' status.

The issue comes at a time when relations between the two nations have been under growing strain on a number of fronts.

On Monday, Washington criticised the Chinese for revoking the passport of a Chinese labour activist who met President Clinton earlier this year.