At Large

Beijing Smiles and Growls

Playing hope and experience for a sucker again.

By 4.27.10

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Since the passage of the Taiwan Relations Act in 1979, the United States has sold defensive arms to Taiwan. Each sale over the year has brought routine denunciations from Beijing ("gong-banging" in the parlance of China watchers), but the sales proceeded. Taipei's 2006 arms wish list submitted received a tentative green in the final days of the Bush Administration. It took nearly a year for the Obama Administration to act on it. When it finally did, it was without 66 F-16 fighter jets badly needed to replace Taiwan's aging, outdated F-5s.

The purpose of regular upgrades of Taiwan's defenses is to deter any trigger-happy generals in Beijing from deciding that bombardment and invasion are the best ways to force Taiwan to integrate on the Mainland's terms. A strong defense shows that the cost of belligerence could be ruinously high.

The announced sale of other equipment was greeted with intense anger in Beijing. U.S. suppliers to Taiwan were threatened with being kicked out of the Mainland, some U.S.-China military exchanges were halted, and one general said Beijing should begin selling off sell its U.S. Treasury notes.

It looks as if the Obama Administration worried that inclusion of the F-16s in the sale might have caused Beijing to overreact, given the several bellicose statements made by some of its senior military officers lately. 

All of this was taking place over recent weeks when Obama, et al. wanted Beijing to do two things: let the value of China's currency go up in international exchange and vote at the United Nations in favor of strict sanctions on Iran to force it to stop development of a nuclear bomb. 

For years, China has kept its currency deliberately undervalued in order to insure price competitiveness for its products. Burgeoning sales have fueled the rapid growth of China's urban middle class. Pressure to let its currency rise in value builds up periodically. The U.S. Treasury Department said that in a semiannual report due April 15 it would announce whether it would formally declare that China was manipulating its currency against the dollar. A few days before this decision was to be made, China announced that its leader, Hu Jintao, would join President Obama's 47-nation nuclear summit in Washington. Secretary Tim Geithner then announced that Treasury would delay issuing its currency-manipulation report.

Treasury is betting that this sliced-carrot-and-twig approach will result in the yuan rising a little in currency trading. If history is a guide, it will rise very slowly and very little.

Meanwhile, President Obama crowed that in a side meeting in Washington during the summit, he and Mr. Hu had a reached complete meeting of minds over sanctions to be applied to Iran. We are led to believe that Mr. Obama's rhetorical magic was working at full horsepower.

Of course, no specifics were announced. Of course. And, of course, the sanctions plan when it is unveiled at the UN will be close to valueless. It will be another triumph of hope over experience, which has marked the entire course of the Obama policy toward Iran.

Meanwhile, Taipei is without the F-16s it needs and Lockheed Martin, the manufacturer, is now expected to shut down its production line for good. There go more U.S. jobs. And, American consumers will continue to gobble up Chinese-made gadgets and China will buy more Treasury paper to feed our government's insatiable appetite for giant federal budgets and trillion-dollar annual deficits. 

(Mr. Hannaford is a member of the Committee on the Present Danger.)

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About the Author
Peter Hannaford was closely associated with the late President Reagan for a number of years. He is a member of the board of the Committee on the Present Danger. His latest book is “Presidential Retreats.”