"I was distraught when I heard there as an attempt to get around the arms embargo on China" says Green spokeswoman Åsa Romson.
Swedish Television's programme Uppdrag Granskning broke the story that a state agency has begun negotiations to sell software to China.
The computer programme, called Edge, is a so-called digital wind tunnel, that simulates the effects of air resistance on aeroplanes. But experts say to SVT it can also be used to develop more aerodynamic bombs and missiles.
The state-run FOI defence research institute has used the royal technical college as a go-between to sell the unique Swedish software to China.
FOI is not allowed to cooperate with China directly, because of an international weapons embargo.
"I knew that China was a potential … recipient of the license, in the event that we gave KTH the decision," says the general director of the FOI, Jan-Olof Lind, to Uppdrag Granskning.
KTH also wanted access to staff from the FOI, to employ them to make the deal with China work.
The watchdog for Swedish weapons exports, ISP, says they were not fully informed of the deal, and that the defence agency FOI should have known better.
"This is a function that could be used in weapons of mass destruction," says acting ISP director Jan-Erik Lövgren, speaking of the Edge software.
When China tried to buy similar weapons software from Germany, they were refused. "It was never going to happen," says Norbert Kroll at the German Aerospace Center, to Swedish Radio News.
In March 2012 the Swedish defence minister, Sten Tolgfors, resigned after Swedish Radio revealed how a go-between company had been used to plan a weapons factory in another dictatorship, Saudi Arabia.
The chair of parliament's defence committee, opposition politician Peter Hultqvist, does not want to say whether his confidence in the head of the FOI has been shaken by revelations of the China deal. But he says it should not go through, if it is defence-related, due to the EU weapons embargo on China, reprots news agency TT.
The head of the FOI has hit back, saying he welcomes anyone looking into the deal, since Edge is a civilian programme and his agency has been completely open about any links to China.