PRC Use of Middlemen to Circumvent US Government Export Controls: The Case of Suzhou Rebes Electronic

Publication: China Brief Volume: 24 Issue: 14

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Age: 5 months

A middleman handing over stolen technology to the People’s Republic of China (Source: AI-generated)

Executive Summary:

  • The People’s Republic of China (PRC) has been relying on middlemen to obtain US technology for military programs, including hypersonic weapons. These intermediaries provide a flimsy cover for direct sales to military end-users, with some even openly listing military clients on their websites.
  • Suzhou Rebes Electronic Technology, a PRC company, imports US-made radio frequency and microwave components, selling them to PRC defense entities and research institutions. Their marketing materials explicitly emphasize the military applications of these components.
  • Simple measures, such as employing Mandarin-speaking analysts to monitor PRC companies’ public statements, could significantly enhance enforcement. Greater scrutiny and due diligence by US companies regarding the end-users of their products is necessary to prevent unauthorized military use in the PRC.

As strategic competition between the United States and the People’s Republic of China (PRC) increases, the US Government has become more vigilant in its attempts to prevent the illegal export of sensitive technology to the PRC. This has included the addition of more PRC institutions to the Bureau of Industry and Security (BIS) Entity List, as well increased enforcement and legal action against individuals found to be violating export control measures (Federal Register, December 19, 2022; see Defense One, June 8, 2021). Despite this, sanctioned PRC entities have continued to find ways to circumvent these measures and acquire the critical foreign technologies they need to advance the PRC’s military modernization. This has included sanctioned PRC defense companies’ use of thinly veiled straw purchasers to acquire needed technology from the United States that would otherwise be off-limits to them. The recent indictment of two PRC nationals attempting to use a front company to purchase critical semiconductor manufacturing equipment on behalf of a blacklisted PRC entity shows that this continues to be a go-to method in the toolkit of any would-be smuggler hoping to circumvent US export control laws (US Department of Justice, April 25; Tencent, April 30).

In October 2022, a report in The Washington Post revealed that US technology was being used to advance the PRC’s hypersonic weapons program (Washington Post, October 17, 2022). The report put a spotlight on PRC use of middlemen, as the technology had apparently found its way from the United States to PRC missile research institutes via straw purchasers offering a very flimsy veneer of plausible deniability about the final destination for this technology. Even the most cursory check of the middleman’s website would have revealed that it was making zero effort to conceal its sales to military end-users:

“Hifar makes no secret that it sells software and consulting services to Chinese missile groups. It lists more than 50 military groups and suppliers as “cooperation partners” on its website, including CAAA, the China Air to Air Missile Research Institute, the China Academy of Launch Vehicle Technology, and the People’s Liberation Army’s missile group, the China Aerodynamics Research and Development Center.”

The cases described by The Washington Post, while concerning, are not unique. The PRC uses the same method to source key components needed for its radar, communications, and other military products, suggesting that the use of seemingly innocuous middlemen is likely a common tactic for circumvention of export controls.

Firm Imports US Tech, Sells to PRC Defense Industry

Suzhou Rebes Electronic Technology (苏州瑞贝斯电子科技有限公司), a PRC company formed in 2006, specializes in radio frequency (RF) and microwave components for mobile and satellite communications, quantum computing, radar, and other uses (Suzhou Rebes Electronic, accessed February 2023). While perhaps less eye-catching than hypersonic missiles, the advanced cable assemblies and other components sold by Suzhou Rebes are a critical piece of just about anything that requires high-speed and reliable data transmission. This includes military aviation, satellites, radar and air defense systems, communications systems, and high-performance computers, among many other applications. In short, the ability to transmit large volumes of data quickly, reliably, and in austere or degraded conditions that these cable assemblies provide is indispensable for modern warfare. Suzhou Rebes makes no secret of the fact that it sources many of these components from the United States and sells them to PRC defense companies and PLA research institutions—many of which are blacklisted by the US Government.

 

Suzhou Rebes’ advertisement for Micro-Coax products, citing their usefulness in, among other things, military communications, satellites, radars, and aviation. (Source: Suzhou Rebes Electronic)

Suzhou Rebes claims to have partnerships with multiple US companies, importing and re-selling their products in the PRC (Suzhou Rebes Electronic, Accessed February 2023). It also claims to serve as an official PRC representative for some of those US firms, many of whom are industry leaders in the field of RF and microwave cables and components (Marki Microwave, Accessed February 2023). Many also supply products to the US military, advertising their reliability and ruggedness in the face of modern combat. [1] Documents available on Suzhou Rebes’ website indicate that at least some of its US imports are indeed military-grade high-end cables (Suzhou Rebes Electronic, Accessed February 2023). [2]

Far from downplaying the military potential of these US imports, Suzhou Rebes cites their utility to the military as part of its pitch to PRC customers. Suzhou Rebes cites cables from one US company as well suited for, among other things, “military communications, radar, missile guidance, satellites, and aviation” (Suzhou Rebes Electronic, accessed February 2023). Another US product is marketed as being suitable for “satellites, phased array radars, electronic warfare, and signals intelligence,” among other applications (Suzhou Rebes Electronic, accessed February 2023). And a third company’s product is advertised as being suitable for use in supercomputers, which are currently restricted for export to the PRC (K&L Gates, October 21, 2022; Suzhou Rebes Electronic, accessed June 2023). A visit to the latter product’s website suggests that it is used in US Cray supercomputers (used by the US Department of Defense and the US Armed Forces), as well as in an array of advanced weaponry such as the F-35 fifth-generation combat aircraft and Tomahawk Missile (Custom Interconnects, Accessed June 2023).

Suzhou Rebes’ advertisement for Marki Microwave products, citing their usefulness in, among other things, satellites, phased-array radars, electronic warfare, and signals intelligence. (Source: Suzhou Rebes Electronic)

 

Deleted Press Release Burnishes Military Links

Suzhou Rebes makes clear that many of these imported products from the United States are sold on to military end users in the PRC. For example, in one since-deleted press release from its website, Suzhou Rebes celebrates the successful sale of a ka-band cable assembly to a PLA communications unit for use in a “radar project” (Suzhou Rebes Electronic, accessed June 2021). While the press release claims that Suzhou Rebes manufactured this piece of equipment itself, in the very next paragraph it claims that all of its cables utilize imported electrical cables from US and European companies, and even specifically names several of these: “All of our cables use imported electric cables from firms such as MICRO-COAX, TIMES, GORE, Harbour, ATM, Tensolite, Huber+ Suhner, and IW (线缆全部采用 [list of firms] 等进口电缆).”

The press release then claims that Suzhou Rebes has agreements to supply cable assemblies to numerous major PRC defense companies, including subsidiaries of military electronics conglomerate China Electronics Technology Group Corporation (CETC; 中国电子科技集团公司), military aviation conglomerate the Aviation Industry Corporation of China (AVIC; 中国航空工业集团公司), and several subsidiaries of the aerospace and ballistic missile giants the China Aerospace Science and Technology Corporation (CASC; 中国航天科技集团有限公司) and the China Aerospace Science and Industry Corporation (CASIC; 中国航天科工集团有限公司). Specifically, it names CETC’s 10th, 13th, 14th, 22nd, 29th, 38th, 54th, and 63rd Research Institutes, all of which are involved in the development of military electronic products, AVIC’s Shenyang and Harbin subsidiaries, CASC’s 5th, 8th, and 9th Academies, and CASIC’s 2nd Academy. It also claims to have agreements with two PLA academic institutions, the National Defense University and Naval University of Engineering, as well as several civilian academic institutions with close ties to the PRC military establishment. This latter group includes Beihang University, one of the “Seven Sons of National Defense,” a grouping of ostensibly civilian universities known for their close ties to the defense establishment and responsible for a high proportion of the PRC’s military research (ASPI, November 25, 2019).

Many of these institutions would have an obvious use for the kind of high-end cable assemblies Suzhou Rebes provides. For instance, the press release mentions supplying the CETC 14th Research Institute, which is one of PRC’s most important research institutes for military radars (Global Times, January 12, 2020). Likewise, the CETC 54th Research Institute is dedicated to research of tactical communications and other military electronics (SASAC, September 8, 2021). The two AVIC subsidiaries mentioned in the press release, the Shenyang Aircraft Corporation and Harbin Aircraft Industry Group, are responsible for many of the PLA’s combat aircraft and helicopters, respectively (CASI, January 22). Additionally, the listed CASC and CASIC subsidiaries are heavily involved in the development of missiles and air defense systems, as well as the PRC’s space program. This suggests that US technology may have contributed to the development of some or all of these military end products.

Perhaps most concerning, the press release claims that Suzhou Rebes also has an agreement to supply components to the “Mianyang 9th Academy,” a euphemism for the China Academy of Engineering Physics (CAEP; 中国工程物理研究院). CAEP is the primary research institute for the PRC’s nuclear weapons program (Suzhou Rebes Electronic, accessed June 2021). Suzhou Rebes’ involvement in nuclear weapons research is seemingly confirmed in another press release, celebrating a new contract that allowed it “to enter the high-end nuclear industry for national defense (进入了我国国防领域高端的核工业领域)” (Suzhou Rebes Electronic, accessed February 2023).

Conclusion

Suzhou Rebes’ own website and statements make clear that US companies are selling critical technology to the PRC that is destined for its defense complex. There is no evidence that any of the US companies with products being sold by Suzhou Rebes are aware of these secondary sales and, on their face, these companies appear to take US Government export controls seriously (see, for example, Marki Microwave, June 2018; ATM Microwave, accessed February 2023). Some brief due diligence would raise awareness of the likely endpoints of their sales, however. At least one US company advertises products on its PRC website that meet the US military’s MIL-DTL-17 standard (Times Microwave, accessed February 2023). [3] These companies may believe that Suzhou Rebes’ absence from any US export screening lists makes the sales unproblematic. While Suzhou Rebes itself is not listed on any US Government export screening lists, however, many of the institutions it partners with, including CETC, AVIC, CASC, CASIC, and CAEP, are on the US Department of Commerce Entity List for export control (BIS, March 2, 2023).

PRC companies often see the Chinese language as the “first level of encryption,” making public statements that, if translated, could get them in trouble. More often than not, they are correct in assuming that no one will translate these statements. As the US Government begins to enforce its export control regime with more stringency, cases such as that of Suzhou Rebes show that it still has a long way to go. Limited resources could nevertheless go a long way—a single Mandarin speaker with 15 minutes and an internet connection can easily uncover the facts necessary to make the link between US technology exports and their destinations in the PRC’s defense complex. While further work must be done to assess how widespread PRC circumvention of export controls via middlemen is, its emergence in cases involving a wide range of controlled products suggests that it is a common, and likely effective, tactic that should receive additional attention.

Notes

[1] See, for example:

[2] The product in this source is described as MIL-DTL-17 grade, the official designation for US military-standard cables. See: “MIL-DTL-17 Requirements for Hi-Rel/MIL-SPEC Coaxial Cable Assemblies and a Note on RG Coax,” Military and Aerospace Electronics, 3 March 2019, https://www.militaryaerospace.com/directory/blog/14059642/mildtl17-requirements-for-hirelmilspec-coaxial-cable-assemblies-and-a-note-on-rg-coax.

[3] An English version of the manual can be found at: https://web.archive.org/web/20230217220131/http:/www.timesmicrowave.cn/uploads/PhaseTrackFamiliy.pdf.

CB-V-24-Issue-14-July-12.pdf