WASHINGTON -- Seven years ago, in the face of mounting costs, the United States withdrew from an elaborate project to help build an advanced combat aircraft for Israel. The idea was scrubbed -- or so it seemed.
Now, to the consternation of U.S. officials, much of the American know-how and initial planning for the canceled "Lavi" fighter plane are about to be put to use in China.
U.S. government officials have recently concluded that China and Israel are collaborating to develop and produce an improved fighter for the Chinese air force. Comparable to an American F-16, the new plane will be based on the Lavi and will incorporate extensive technological innovations derived from that project, according to U.S. government experts on the Chinese military.
China and Israel already have finished work on a prototype, and production probably will start soon at a plant in the Sichuan Province city of Chengdu, U.S. officials said. The plane's deployment is viewed as a major step in Beijing's effort to modernize its air force, and some observers believe it has negative implications for China's long-standing rival, Taiwan.
"This plane would fit in with a scenario for [conflict over] Taiwan 10 years from now," said one U.S. government expert. "And for someone to help the Chinese build a production line, a turn-key facility for this aircraft, is ominous."
The U.S. government's confirmation of Israel's role in development of the new Chinese plane could create tensions between the United States and Israel. The joint work on the plane is the latest in a series of military projects in which Israel has helped China over the past 15 years.
Although China's impending production of the Lavi-style fighter has been closely monitored and discussed in the U.S. intelligence community in recent months, White House and State Department officials say there has been no official diplomatic protest to Israel about it.
Some administration officials are said to believe the issue is not of great concern. While the plane represents a big step forward for China, they say, it is based on 1980s-era technology and will not be placed in service for several years.
Marvin Klemow, vice president for government affairs of Israeli Aircraft Industries International, the Washington subsidiary of Israel's state-owned export firm, denied that his company is transferring American technology to China.
"IAI does not transfer any technology illegally. Any U.S. technology that requires a license, we apply for that license," Mr. Klemow said. "And we have not applied for any license for any Lavi-associated technology for China."
Mr. Klemow would not say whether his company is providing China with other, non-American aircraft technology from the Lavi project. "We never confirm or deny who we do business with," he said.
An official at Israel's Embassy in Washington also denied that Israel had passed on American technology based on the Lavi.
For several years, there was speculation that China and Israel were working together on a new plane based on technology from the Lavi project.
But the first report that the plane is nearing production came in November in a British aviation publication, Flight International. U.S. officials confirmed that report in recent interviews.
"The plane is in the prototype stage. The prototype has been built," said one U.S. official. "It is a very capable aircraft. It uses extensive U.S. technology." The official said the combat fighter will be ready for flight-testing in about a year, and will be in full service in China's air force about a decade from now.
The plane, which China intends to call the F-10 fighter, represents the latest in a prolonged effort by Beijing to obtain modern combat planes and to be able to manufacture them on its own soil.
By producing the new plane, China's once-antiquated air force will take a quantum leap forward, U.S. officials said.
According to Flight International, officials of Israel Aircraft Industries have helped guide the way for the Chinese air force to develop and produce the plane under a contract signed in 1992.
Over the past 15 years, China has established itself as the biggest customer for Israel's arms export industry. The first public demonstration of this cooperation came in a Chinese National Day parade in 1984, when foreign military attaches in Beijing were surprised to find Israeli guns, cannons and electronic equipment mounted on top of Chinese tanks.