Time's online service Time.com said Attorney General Janet Reno had approved indictments for both McDonnell Douglas, now part of the Boeing Company, and Catic, a state-owned Chinese aerospace company that bought the tools.

The tools were sold in 1994 for use in commercial aircraft production at a specific location but ended up in a facility that produced, among other things, Silkworm missiles -- a violation of the export license, Time said.

The companies have until October 21 to decide on the plea bargains offered by the government or face indictment shortly thereafter, Time said.

Lawrence McCracken, a Boeing spokesman, declined to comment on the status of the investigation, which he said had been going on for two years and had focused on a sale worth five million dollars.

But he stressed that "we do not believe McDonnell Douglas did anything wrong."

China Damns US Militiary Spending
In other news, the Chinese government on Friday slammed the United States' 288.8-billion-dollar defense spending bill signed this week, saying it was "anti-China", the official Xinhua news agency reported.

Foreign ministry spokeswoman Zhang Qiyue was quoted as saying China was "highly displeased" that US President Bill Clinton had signed the bill, which boosts military spending and ensures funds for missile defence systems.

"The Chinese are demanding that the United States proceed from the overall situation of bilateral relations and adopt effective measures to prevent the anti-Chinese articles in the law from damaging the improvement and development of Sino-US relations," Zhang said.

"Now that the United States has made the bill into law, China is highly displeased with and are firmly opposed to this."

The bill, the first significant military budget increase in 15 years, was signed Tuesday.

The funds for fiscal year 2000 include 56 billion dollars for procurement, the second annual increase since reversing the trend two years ago, and increases procurement funding to 60 billion per year by 2001.

The bill also provides 4.1 billion dollars for both theater and national missile defense system development.

China has strongly opposed Taiwan's possible participation in the US-led theatre missile defence shield project.

Beijing and nationalist Taipei have been separated since the end of a civil war in 1949. Beijing has since then regarded the island as a renegade province.

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