Once Again, Fireworks Over China Tech Secrets

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Has the Justice Department decided to make McDonnell Douglas a whipping boy — or did the company knowingly supply machine tools to a Chinese cruise missile factory? It'll probably be up to the courts to decide the answer, following Justice's decision to indict the company Tuesday for violating its export license by supplying sophisticated equipment that it allegedly knew would be used for military purposes. "McDonnell Douglas claims that a Justice Department, under pressure from Republicans to get tough on China, is picking on the wrong target here," says TIME correspondent Viveca Novak. "But the government wouldn’t proceed unless it had a very strong case." After all, despite the political pressure over the Chinese nuclear spying allegations, lack of evidence restrained Justice from pressing charges against Los Alamos scientist Wen Ho Lee, which suggests the department has strong evidence against the Boeing-owned company. Indeed, NBC News has reported an unnamed official claiming that a "secret witness" from inside the company will testify that McDonnell Douglas knew the equipment was being diverted to companies other than the one specified in its export license.

Whatever the strength of the government’s case, the company doesn’t appear ready to concede. "They’ve been given a chance to plead guilty to lesser charges over the last few weeks," says Novak, who first reported impending charges and the plea bargaining on TIME.com on October 11. "If the indictment goes ahead it would suggest McDonnell Douglas is taking a tough line," she says. But so is the government. "And for companies such as Loral and Hughes, which are still under investigation over exports to China, a McDonnell Douglas indictment could be cause for concern." If it does go to court, though, the case will involve a lot more than just a set of dual-use machine tools that wound up in the hands of the People’s Army –- the defendants clearly plan to bring the entire U.S. policy on high-tech trade with China into the dock alongside them.