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But others say the potential harm has been overstated. The Cox report is "all worst-case scenarios," says Hughes spokesman Richard Dore. The information Hughes is criticized for sharing with the Chinese, he says, "was certainly not of a sensitive, national-security nature." Loral chairman Bernard Schwartz insisted to shareholders last week that his company didn't help the Chinese discover what went wrong with their rocket, but simply reviewed China's own analysis. In general, though, it may actually serve American strategic interests to have China use U.S. technology. "There are lots of reasons why we'd want the Chinese to make phone calls on open equipment that we sold them rather than closed equipment that they made themselves," says Under Secretary of Commerce Bill Reinsch.
Then there's the question of whether rules against technology sharing are even effective. The tech industry, not surprisingly, argues they often aren't. Current law requires chipmakers to submit applications to sell powerful microprocessors to countries (such as China and the former Soviet Union states) that are subject to highly restrictive export controls. But Intel argues that it's impossible to prevent the chips it sells to friendly countries from ending up in less friendly ones. "We make microprocessors in the millions each month and ship them to thousands of distributors all over the world, who aren't prevented from selling to China," says Intel spokesman Bill Calder. "There's a disconnect there."
Despite the current backlash, no one is really expecting substantial changes. Indeed, the tech industry's supporters argue that a crackdown would drive China to European or Japanese suppliers, which could put more information in the hands of the Chinese military. "No country is as strict about technology transfers as the U.S.," says Hughes' Dore. "The way to keep the lid on is to keep them dealing with American businesses."
--Reported by Cathy Booth/Los Angeles, Michael Krantz/San Francisco, Elaine Shannon and Adam Zagorin/Washington and Mia Turner/Beijing