China, a nation long ago referred to by Napoleon as a sleeping Dragon, is now, thanks to capitalism gone awry, in possession of a U.S.-made supercomputer that has been "improperly" put to military use. The sale, made by Sun Microsystems, Inc., went first to a Hong Kong company.

Hong Kong then sold it to Beijing, reportedly to a Chinese scientific institute. This institute then transported the computer to a Chinese military facility, a defense and scientific research institute in Changsha, in the southeastern province of Hunan.

The Clinton administration, which is presently challenging a judge's elimination of "Don't Ask, Don't Tell" military policies against gays, loosened controls over exports of supercomputers in 1995. No license was required in that year for resales. A spokesman for Sun Microsystems, Inc. says that the computer manufacturer is cooperating with the U.S. government in an attempt to retake the computer, using as its excuse the technology's untoward resale.

China is the only nation that disallows verification inspections centering on the usage of U.S. sold high-tech products. Following a high-tech sale, stipulations against its military use therefore become inconsequential.

An earlier Chinese diversion of U.S. technology to military use occurred in 1995 when machinery fashioned by McDonald Douglas was acquired. Director Gary Milhollin, of the Wisconsin Project on Nuclear Arms Control, says that these sales raise broad questions about foreign acquisitions of advanced American technology. Mr. Milhollin said that the Chinese situation "shows that our export policy toward China is broken because they divert our technology and close the door in our faces when we ask them to verify where it is."

The Chinese are not currently talking to Americans about the matter. American officials say that they simply insist that no deception was ever intended, and that the supercomputer had always been slated for delivery in Changsha, to be used for peaceful purposes.

Ten years ago there were ten corporations competing to make military hardware sales to the U.S. Department of Defense. Today, because of recent mergers, there are only three. Each of these three companies fulfills specific functions. The Pentagon's marketplace for missiles, planes, and information systems, has been totally reduced in size. Therefore, the much-touted value of technical innovation through competitive capitalism is now deemed absent from the military-industrial scene. The Pentagon can no longer ask for better materials at fairer prices. There are no other companies that can easily complete with the Big Three, and that can afford to provide the Pentagon with what it needs.

Taxpayers, as a result of this development, will be stuck with whatever military-equipment-manufacturing bills the Big Three, in collusion with the Pentagon, decides must be paid. Currently, Lockheed-Martin enjoys an annual revenue of $35 billion.

The other two corporations, Raytheon and Boeing, also provide the Pentagon with both old-fashioned and advanced military hardware. The Northrop Grumman Corporation has sold itself to Lockheed Martin for $8.3 billion.

Merrill Lynch & Company's analysts say that the mergers focus debate on how the Pentagon "will grapple with less innovation and potentially higher costs." The analysts might have best extended this question to the plight of the taxpayer who gives the U.S. military a greater portion of his income than goes to any other agency of the government. For the past 30 years, in fact, annual taxpayer support for the military-industrial complex has averaged approximately $280 billion. This figure far outweighs welfare, education, health research, and all other government-supported ventures. Now, those who set military hardware prices will be so few as to make a competitive market almost nonexistent.

Only Boeing and the larger combined Lockheed-Martin-Northrop-Grumman, will compete for the privilege of making jet fighter planes, for example.

Eugene Carroll, deputy director of the Center for Defense Information, and a retired admiral, laments: "Once you have a near monopoly of production capability the situation is ripe for the implied deals where there is a single supplier for these contracts."

Carroll says that there is "a benefit to honest competition where companies are forced to come up with something innovative at a competitive price, which maintains some margin of safety for the taxpayer."