The U.S. Commerce Department approved a deal by Boeing to sell a satellite containing top-secret military technology to a startup company financed by the communist Chinese government.

After the Wall Street Journal reported the deal Tuesday, Boeing backed out, citing default for nonpayment, the paper reported Friday.

But intelligence experts such as Adm. Den­nis Blair, a for­mer U.S. di­rec­tor of na­tional in­tel­li­gence, are baffled by the Commerce Department's approval. The Journal noted Blair chairs an ad­vi­sory com­mit­tee for a Boeing competitor, Lock­heed Mar­tin Space Sys­tems.

Thomas Lifson, editor of the American Thinker, said the Journal "deserves huge kudos for uncovering a genuine scandal involving national security."

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The Journal reported workers at a Boeing plant in Los Angeles were nearing completion of a new satellite that uses restricted technology relied on by the U.S. military.

According to corporate records, court documents and people close to the project, the satellite was being funded by Chinese state money.

Using an offshore channel from a state-owned Chinese financial firm, about $200 million went to Boeing for the satellite project.

The technology, the Journal reported, would "help fill in a missing piece of the puzzle for China as it seeks to secure its status as a superpower alongside the U.S."

"It would bolster China's burgeoning space program, as well as initiatives to dominate cutting-edge industries and expand its influence in the developing world."

Boeing insisted in a written statement it "undertakes rigorous measures to comply with U.S. export regulations and protect national interests."

The aerospace company said it had obtained an export license from the Commerce Department for the Global IP satellite and would "continue to work closely with Commerce officials to ensure appropriate protection of satellite technology."

The Journal said Boeing declined to say what it told Commerce officials about the deal. The Commerce Department told the paper it couldn't comment on an individual application.

Lifson – noting U.S. laws bar export of satellite technology directly to China – commented that it's "disconcerting that this deal came to light thanks only to a spat breaking out between the founders of the startup Global IP and their Chinese financiers."

"If the Chinese had been willing to spend a bit more, would the deal have been pulled off?"

Lifson said Boeing "has a lot to answer for."

"I trust there will be legislative and possibly criminal investigations."