Special Report
A Gong Too Loud
China overreacts to latest U.S. weapons sales to Taiwan – and backs off.
Ever since Congress passed and the president signed the Taiwan Relations Act in March 1979, the United States has, from time to time, sold defensive arms to the government of the Republic of China on Taiwan. This and other provisions of the Act were intended to deter the Communist-led government in Beijing from invading Taiwan.
For 31 years, this has worked. Beijing’s armed forces continue to add missile batteries on the shoreline facing Taiwan. They now number more than 1,000. No one thinks Taiwan could withstand for long a full-scale invasion. The purpose of updating their defensive arms, however, is to make the cost of an invasion too steep for Beijing.
Usually when the U.S. announces the sale of a new arms package to Taiwan, Beijing denounces it as interference in its “internal” affairs that will damage relations with the U,S. The U.S. ambassador is called in to the Foreign Ministry for a scolding. Among China watchers this is known as “gong banging.”
Two weeks ago, the Obama Administration announced the latest sale to Taiwan (it did not include the requested F-16 fighter jets). Beijing’s gong-bangers went into overdrive. There were the usual denunciations, but something new — and ominous was added: an announcement that Beijing would impose sanctions on U.S. companies involved in the Taiwan arms sales.
This could hit Boeing, whose aircraft make up 53 percent of China’s fleet. Also, there is United Technologies, which makes Sikorsky helicopters and Otis elevators. Its Otis division employs 16,000 workers in China. Less affected would be Lockheed-Martin and Raytheon, because they have a very small presence in China.
The threatened sanctions would make a large dent in the revenue of U.S. companies with large sales to China. For a few days this had the effect of making financial markets nervous, but it didn’t take long for a reaction to set in.
Discrimination against foreign suppliers of civilian equipment (which these companies sell in China) is forbidden by the World Trade Organization, of which China is a member. Beijing soon understood that if it went forward with trade sanctions, the U.S. would very likely bring a case against it in the WTO. Such a challenge, if successful, could result in sanctions against Chinese exports in the amount of business estimated to have been lost by the sanctioned U.S. companies.
President Obama has been criticized for appearing to kowtow Beijing during his visit to China. He agreed to censorship of his “town hall” event in Shanghai and put aside a request from the Dalai Lama for a meeting in Washington.
Now, after banging very loudly, China’s sanctions gong has gone quiet. China’s authorities have realized they have more to lose than gain by imposing trade sanctions.
Meanwhile, the Obama Administration now seems to have learned that in dealing with China, it is best to use subtlety when sending signals. This last week, the White House announced, without fanfare, that the president would receive the Dalai Lama in March. And, it has maintained judicious silence over the sanctions gong-banging, reasoning that this is the best way to get China to back off its overplayed hand without losing “face.”
Like a moss and a fungus that join forces to make a lichen, China and the U.S. have a symbiotic relationship. Our government is deeply indebted to China for all the U.S. Treasury notes it has purchased, and China could not maintain its GDP or standard of living without the flow of export goods to Americans.
About the Author
Peter Hannaford was closely associated for a number of years with the late President Reagan, beginning in the California Governor’s office. His latest book is Presidential Retreats.
Letter to the Editor View all comments (32) | Leave a comment
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Copyleft| 2.12.10 @ 8:08AM
Gee, I'd LIKE to be concerned about the profit margins of our arms dealers being threatened... but somehow it just doesn't seem that important. Why the heck are we in the arms-dealing business in the first place--much less in a "symbiotic relationship" with a regime like China?
Bad policies lead to worse policies.
Bohred| 2.12.10 @ 11:06AM
Let's see, we should welcome relations with Cuba but not China? The Cuba embargo is bad but the "symbiotic relationship" with China is also bad? I guess the morality of your politics is relative. If you can beat the right with the mackerel of your indignation then it's all good.
Oh, and we "arms-deal" for international influence, profit, and to help other people in their fight for liberty. Like the Taiwanese.
Copyleft| 2.12.10 @ 3:13PM
Your accusation of hypocrisy would work better if I had actually said anything about Cuba one way or the other.
Flatdog| 2.12.10 @ 4:49PM
If your sort of attitude prevailed among policy makers, US armaments manufacturers would be forced out of business, and the livelihoods of countless thousands of American families who rely on the industry would be destroyed.
Furthermore, there are many other countries out there who will not adopt a similar sanctimonious attitude, and their armaments manufacturers will leap in to fill the void left by the US.
It is better that the US keeps the symbiotic relationship that it has with China, because the alternative will breed more mistrust and encourage an atmosphere of beligerance that nobody will benefit from.
Tenn Slim| 2.12.10 @ 8:30AM
Opine
Credit this Coup to the only sane person in the OBNA, MRS HILLARY.
bt
Her firm hand on the Secry of State Liberals, plus her ornerous presencence at these FP meetings insure we, the USA Electorate, have some chance of staying alive in the FP world.
Kudos to her.
end
Semper Fi
Ken (Old Texican)| 2.12.10 @ 11:50AM
Peter,
thank you. I was wondering when a knowledgeable writer would ..finally...point out the symbiotic relationship with China.
Yeah we owe them loans...but yes...they depend on us for their exports $$$.
Any decent govt. types on our end ought to be able to quit screaming and ducking...and do business.
Highest regards
Cabermon| 2.12.10 @ 4:37PM
Well said, Peter.
Also,
"If you owe the bank a million dollars, you have a problem. If you owe the bank a billion dollars, the bank has a problem."
China can't survive losing us as a customer, and we can't survive losing them as our bank.
Pingback| 2.13.10 @ 2:41PM
How to Adopt a Losing Attitude links to this page. Here’s an excerpt:
Chicago| 2.13.10 @ 5:41PM
Peter,
Your article is deeply flaw in logic and reason.
Your defense of Boeing and United Technology is very weak. It is well with China's right to sanction Boeing and United Technology. Both are arms dealers that contribute to wars and death in this world. Having a civilian side does not make them less so. I will be surprise that WTO would rule against China in this case.
Will WTO comes to Iran's defense in the sanctions proposed by United States? After all, Iran has trades with the rest of the world on civilian goods.
Dubya| 2.13.10 @ 8:13PM
Uhhhhh, I doubt that China is sanctioning Boeing and UTC on pacifist grounds. They're just mad because the US has made it harder for them to annex Taiwan, the keystone to the Western Pacific.
Bario| 5.10.10 @ 4:51AM
Let's see, we should welcome relations with Cuba but not China? The Cuba embargo is bad but the "symbiotic relationship" with China is also bad? I guess the morality of your politics is relative. If you can beat the right with the mackerel of your indignation then it's all good. medium season 6 episode 20 and generator rex season 1 episode 3
Puma x Alexander McQueen | 8.12.11 @ 11:10PM
is good