China labels U.S. helicopter allegations "fictitious"

BEIJING Thu Jul 26, 2012 4:39am EDT

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BEIJING (Reuters) - China's defense ministry on Thursday labeled as "fictitious" a case in which United Technologies Co. admitted selling software in contravention of U.S. export rules that helped Beijing develop its first modern military attack helicopter.

United Technologies said last month its two subsidiaries, Pratt & Whitney Canada and Hamilton Sundstrand Corp, agreed to pay more than $75 million to the U.S. government to settle criminal and administrative charges related to the violations.

But the Chinese defense ministry, in the first official response, denied having anything to do with the incident, insisting its helicopter program relied purely on indigenous know-how.

"To say that China stole U.S. technology in the process of developing helicopter gunships is seriously out of kilter with the facts," spokesman Yang Yujun said in a statement posted on the ministry's website (www.mod.gov.cn).

"China's development of helicopter gunships has all along been done upholding the principles of standing on ones own and independent innovation, relying on our own strength for development and production," he added.

"China's helicopter gunships and its engines are all self-developed and produced and we own all the intellectual property rights."

U.S. federal prosecutors said United Technologies knew that its export of modified software to China would allow Beijing to test and develop its new military helicopter, called the Z-10, using 10 engines that had been legally exported as commercial items.

They said the company harmed national security while trying to gain access to China's lucrative civilian helicopter market. United Technologies said it accepted responsibility for the violations and deeply regretted that they had occurred.

The case comes amid growing U.S. concerns about China's military expansion and escalating electronic espionage.

Federal authorities have brought five major cases since last February, involving everything from drone technology to radiation-hardened computers used in satellite communications.

Western experts say the Z-10, first delivered to China's People's Liberation Army in 2009, is developing into one of the world's most modern and capable combat helicopters.

(Reporting by Ben Blanchard; Editing by Ed Lane)

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