The American Prospect: The China Hack and How to Reverse It
In the 1990s, satellite communications were taking off. Demand for space launches was high, but supply of vehicles was low. The U.S. satellite industry was on the prowl for cheap rocket rides into space. The space shuttle was no longer accepting commercial payloads, and there were only so many Delta and Atlas commercial launches to go around. European launches were an option, but they were not cheap, and the U.S. satellite industry wanted to do better. As if in answer to their prayers, the Chinese Communist government stepped up to the plate, offering the industry rides on its Long March rockets for fully half off the going rate.
Strictly speaking, the industry couldn’t take China up on the offer. At least not right away. China was sanctioned by the U.S. government for doing nasty things like proliferating missile technology to other countries. Also inconvenient, these rockets that the U.S. satellite industry was eyeballing were the same ones China was improving for its intercontinental ballistic missiles—some of which were said to be pointed at U.S. cities. But from their perspective, the market savings far outweighed any pesky national-security concerns. And besides, they hadn’t been building political clout for nothing.
Mike Armstrong, CEO of Hughes Electronics, the leading U.S. satellite builder, made gaining access to Chinese launches his mission. He relentlessly lobbied and browbeat Congress and the Clinton administration. He cozied up to Chinese space officials, who were eager to work with him, going so far as to serve as their intermediary in Washington. On their behalf, he told top U.S. government officials that it was “obvious” that “the Chinese are committed not to proliferate missile technology,” despite all indications that this was not true—and which hindsight confirms was not true. Armstrong wasn’t alone. He had a strong ally in Bernard Schwartz, the CEO of satellite maker Loral, who during this time became one of the Democratic Party’s biggest funders. Eventually, the government relented. The satellite industry had its prize: cheap Chinese launches.
Only, as is often the case when things seem too good to be true, Hughes and Loral quickly discovered why the launches were half the price of European ones. The Chinese rockets kept blowing up! Their satellites were destroyed long before they ever made it to space. Chinese officials investigated each failed launch, but couldn’t figure out what had happened, and therefore couldn’t get things right. Hughes and Loral were undeterred. If they could just fix the Chinese rockets, they would experience a windfall …