By John Diamond
Associated Press Writer
Friday, June 12, 1998; 2:12 a.m. EDT

WASHINGTON (AP) -- While investigators try to determine whether aerospace companies helped China gain missile technology, those same companies quietly are helping U.S. intelligence expand its knowledge of China's rocket programs.

U.S. government and industry officials, speaking on condition of anonymity, describe a steady flow of intelligence about Chinese rocketry over the past three years from U.S. aerospace contractors. The intelligence has expanded U.S. knowledge of Chinese rocket capabilities. Previously, that knowledge was limited largely to what could be learned through remote collection methods such as spy satellites and telemetry intercepts.

The U.S. business contacts have provided substantial detail on linkages between payloads and their rockets, on guidance systems and the overall reliability of Chinese missiles, officials said.

The CIA's National Resources Division, which interviews businessmen and other U.S. citizens returning from foreign countries of interest to intelligence officials, regularly met with scientists and executives working with China on commercial satellite launches, according to a senior industry official.

``The fact is, yes -- all of this material now is in the hands of the U.S. government,'' that official said.

A congressional staff member familiar with the situation said such ``debriefings'' were routine.

Technical data on China's Long March commercial satellite launchers is highly valuable to U.S. intelligence because of their similarity to China's DF-5 long-range nuclear missile, also known as the CSS-4. Outside the former Soviet Union, the DF-5 is the only land-based strategic missile capable of striking the United States.

In Senate testimony Thursday, Gordon Oehler, retired director of the CIA's Nonproliferation Center, said China continues to be one of the world's worst offenders in terms of spreading nuclear-weapons technology. Pakistan could not have conducted its recent nuclear tests without nuclear materials and technology given it by China, Oehler testified.

Another witness, Gary Milhollin, director of the University of Wisconsin's Project on Nuclear Arms Control, told the panel, ``Whether or not our satellite policy has caused U.S. missile technology to go to China, it has certainly made it easier for Chinese missile technology to go to Pakistan.''

In large part because of these proliferation concerns, the CIA keeps close tabs on China's rocket programs.

A key breakthrough in this effort came in April 1996 when China agreed to cooperate with a review team of U.S. and European satellite and rocket experts. The team was assembled to look into the explosion and crash two months earlier of a Long March rocket carrying a U.S. communications satellite.

Although China had been conducting commercial satellite launches for Western customers as far back as the late 1980s, Western scientists were kept at a distance. But with the Long March explosion in 1996, China was anxious to show Western customers that its rockets were reliable, and so lifted the veil.

The review team consisted of engineers and scientists from Loral Space & Communications, whose satellite had gone down in the rocket crash, along with Hughes Electronics and other aerospace firms. As a result, the West got a look at China's own assessment of its rocket program.

In the action that touched off a Justice Department criminal investigation, a staff member of the review team faxed a sanitized copy of the team's conclusions to China Great Wall Industries Corp., the state-owned commercial rocket concern, in May 1996 -- before sharing it with the U.S. government.

The State Department eventually got the review team's unsanitized, and therefore far more detailed report, including information provided by the Chinese.

``The intelligence community has gotten hold of all these technical manuals'' for Chinese as well as Russian missiles, said Charles Vick of the Federation of American Scientists, a Washington-based intelligence watchdog group. By allowing access to technical manuals and other material on their rockets, ``they're revealing where their limits are,'' Vick said.

Last year the Pentagon concluded that the material sent to China might have been useful in improving long-range nuclear missiles. The CIA recently disagreed, saying the report did not harm U.S. national security.

Congress has opened inquiries into whether President Clinton helped Loral, whose CEO is a major Democratic donor, by approving new satellite exports to China while the Justice investigation was pending.