U.S. and China Forsee $500 Million Defense Deal
Nov. 06, 1986
QINGDAO, China (AP) _ The United States and China have signed a letter of intent for a $500 million deal under which U.S. companies will develop avionics equipment for China's F-8 fighters, a U.S. defense official said today.
The letter of offer and agreement was signed in Washington on Oct. 30, and bids from American companies will be submitted early next year, the official said.
The official, speaking on condition of anonymity, said the project will last up to 6 years and will involve installation of fire control systems in 50 of the Chinese fighters.
He said the systems will be developed in the United States and installed in the northeast China city of Shenyang.
Meanwhile, the commander of the U.S. Pacific Fleet said today that U.S.-Chinese naval cooperation is not aimed at strategic coordination against the Soviet Union.
Adm. James A. Lyons, who led three American warships into Qingdao on Wednesday for the Navy's first port call to Communist China, said increasing cooperation between the two navies was not necessarily directed against the Soviet Union.
''That is not the intent,'' he said during an exchange with reporters.
Lyons and U.S. Ambassador to China Winston Lord spoke to journalists today over breakfast aboard the guided missile cruiser Reeves. It, the guided missile frigate Rentz and the destroyer Oldendorf will be here for a week.
Qingdao, located on the Shandong Peninsula on the Yellow Sea, is home to China's North Sea Fleet. The Yellow Sea and the South China Sea are areas over which Lyons said the Soviets have been conducting simulated strikes.
A U.S. port call had been scheduled for June 1985, but was called off after China unexpectedly announced that the United States, which has a policy of not revealing whether its ships are nuclear-armed, had agreed to abide by Chinese policy of not allowing ships with nuclear arms to call at its ports.
Neither side has revealed how the issue was finally resolved, but Lyons said discussions had been held ''off and on during the last several months'' and culminated prior to Defense Secretary Caspar Weinberger's visit last month.
''Weinberger was a key player in that,'' Lyons said without providing further details.
Lyons met with Chinese North Sea Fleet Commander Ma Xinchun on Wednesday and was scheduled to mee with him again, and with People's Liberation Army Naval Commander Liu Huaqing.
Lyons said Qingdao, a Navy port before the Communist victory in 1949, was chosen for the port call for navigational reasons, and not because of its strategic location opposite the Korean Peninsula.
Asked his reaction to a recent Soviet port call to North Korea, Lyons said, ''I'm not sure what the Soviet objectives are. ... I would just as soon not see the Soviets in North Korea.''
He said the Navy is planning visits by hospital ships to the Philippines and to South Seas island nations, ''where incidentally the Soviets have been very active as well.''
Lord said the Chinese navy, the world's third largest in terms of number of ships, had ''limited'' capabilities and its equipment was outmoded.
The Reagan administration, which has discussed sales of turbine engines to the Chinese, is negotiating the sale of torpedoes as part of still small but growing arms commerce between the two countries.