Really? From what end was the person you know involved. Because if it's the US side then that doesn't tell anything.
why hasn't the US governement acted
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well the guy was a close relative of mine who used to oversee this kind of matter in china i.e weapon sales and purchase. as for aiding terriorist, i think china did aid talban during soviet invasion of afgan, but not against USA though.
why hasn't the US governement acted,this is pure politics, one example is US found out china smuggled heavy water and the end user was north korea, but at least they did not act publicly. It is actully to serve any propaganda purpose but governments try to avoid leak such information to the public, otherwise some of the deals when heard by the public, will be extremly damaging to US and China government alike.
We already know China aided the Afghan rebels who are now the Taliban because the US paid for the Chinese arms which was shipped to Pakistan then handed to the Afghan rebels so it wouldn't look like the US was involved. Big hypocrisy at pointing the finger at China for aiding terrorists and especially when the US started shipping high-tech Stingers to be used against the Soviets.
In regards to the North Koreans... China doesn't have to smuggle. The only embargo was by Western nations and not by international law. And plus again we're going by the notion that everyone else is stupid. Before the Wen Ho Lee scandal, most Americans didn't even know that China had nuclear weapons. I would hear many, from avergae citizens to public figures, say things like, "If China ever got the bomb, they would start WWIII." And if I was there, I'd tell them China has had the bomb since 1964! Some that know that say the Soviets gave the Chinese the bomb. But then that was one of the reason why there was the Sino-Soviet split because they were dragging their feet on the promise of giving China the bomb. So what makes it so unique for only "certain" people that can make a nuke let alone have the intelligence to put one together on their own. China did it. Why not anyone else?