How China Can Punish US On Taiwan Arms Sales

Those who've visited this blog more than once know exactly what I mean here: I cannot help but conclude that China's recurrent protests over the US selling arms to Taiwan are purely cosmetic given the PRC's reluctance to stick it to America where it hurts. I needn't belabor this state of affairs excessively. Given America's gaping trade deficit, one of the industries where it maintains a sizable lead is in selling weaponry. Selling products designed to cause death and destruction has not always been a universally welcome endeavor. (Indeed, you can argue that instability owing to the US-led "war on terror" has stimulated worldwide demand for arms.) Given America's limited export options, however, the Bush administration has been pushing arms sales pretty hard:

The Bush administration is pushing through a broad array of foreign weapons deals as it seeks to rearm Iraq and Afghanistan, contain North Korea and Iran, and solidify ties with onetime Russian allies.

From tanks, helicopters and fighter jets to missiles, remotely piloted aircraft and even warships, the Department of Defense has agreed so far this fiscal year to sell or transfer more than $32 billion in weapons and other military equipment to foreign governments, compared with $12 billion in 2005.

The trend, which started in 2006, is most pronounced in the Middle East, but it reaches into northern Africa, Asia, Latin America, Europe and even Canada, through dozens of deals that senior Bush administration officials say they are confident will both tighten military alliances and combat terrorism.

“This is not about being gunrunners,” said Bruce S. Lemkin, the Air Force deputy under secretary who is helping to coordinate many of the biggest sales. “This is about building a more secure world.”

The surging American arms sales reflect the foreign policy tides, including the wars in Iraq and Afghanistan and the broader campaign against international terrorism, that have dominated the Bush administration. Deliveries on orders now being placed will continue for several years, perhaps as one of President Bush’s most lasting legacies.

A recurrent sore point in the US-China relationship is America acting as, yes, gunrunner to Taiwan. Ever since the US sought a rapprochement with China, the issue has flared from time to time. With a $6.43B sale of American arms to Taiwan being mooted, the regular process has started of Chinese bellyaching. As usual, China cites its series of communiques with the US in regard to these sales which can be differentially interpreted. Nevertheless, the amount being contemplated now is somewhat larger compared to past purchases. From our favorite official publication, China Daily:

China on Saturday denounced the US government's decision to sell arms worth of about US$6.5 billion to Taiwan. Foreign Ministry spokesman Liu Jianchao said the Chinese government and people firmly opposed this action which seriously damaged China's interests and the Sino-US relations.

The US government, in spite of China's repeated solemn representations, on Friday notified the Congress about its plan to sell arms to Taiwan, including Patriot III anti-missile system, E-2T airborne early warning aircraft upgrade system, Apache helicopters and other equipment.

Chinese Vice Foreign Minister He Yafei has summoned the charge d'affaires of the US Embassy to China to raise strong protest against the US move, according to spokesman. China firmly opposes to arms sales by the United States to Taiwan, said Liu, noting that this has been a consistent and clear stance of China.

The US government's agreement on arms sale to Taiwan severely violated the principles set in the three joint communiques between China and the United States, especially the communique on the US arms sales to Taiwan signed on August 17, 1982, grossly interfered in China's internal affairs, endangered Chinese national security, and disturbed the peaceful development of cross-Strait relations, Liu stressed. "It is only natural that this move would stir up strong indignation of the Chinese government and people," he said. "We sternly warn the United States that there is only one China in the world, and that Taiwan is a part of China," Liu said...

China urged the United States to recognize that it is seriously harmful to sell arms to Taiwan, Liu said, noting that the United States should honor its commitment to stick to one-China policy, abide by the three China-U.S joint communiques, and oppose the so-called "Taiwan independence".

Liu said the United States should immediately take actions to correct its mistakes, cancel the proposed arms sale, stop military links with Taiwan, and stop disturbing the peaceful development of cross Strait relations, so as to prevent further damage to the Sino-US relations and the peace and stability across the Taiwan Strait. China reserved the right for taking further measures, he noted...

Speaking of US-China relations, the China Daily carried an article today refuting the rumor that China's intends to foot $200 billion of the $700 billion Paulson plan:

The central bank has denied media reports that China will buy up to $200 billion worth of US treasuries to help Washington combat the deepening financial crisis. Bai Li, spokesman for the People's Bank of China, said that "it is the first time I have ever heard about such rumors". According to Hong Kong media reports, China will initially spend $70-80 billion to buy US treasury bonds.

Bai said the official stance has been published on the central bank's website, which did not mention any such purchase. The statement merely said China welcomes Washington's $700 billion bailout plan; and will cooperate with the international community to ensure financial security.

Putting 2 and 2 together, the "further measures" China can take simply involve showing America who owes whom: if the PRC were really serious about putting America in its place, then it should signal that it has had enough of funding America's deficits while the US keeps selling Taiwan weaponry. Dumping some of its $1.8 trillion reserve hoard on the open market would more likely result in Dow Jones 3600 than thirty-six thousand. You may say this is asking for trouble. I say this should be done to keep America honest about the economic reality of relying on a country that doesn't share its worldview (and learn not to borrow so much).

Until China does so, commenter LeeHKG in the bailout story has the final word on Chinese wimpiness, here in the context of taking its objections to US arms sales to a meaningful level:

Funny how Americans are always mocking us when in fact we're the ones who are propping up their economy. It's about time we Chinese wake up from being stupid and retarded!

If the Chinese keep buying American Treasuries like a blindly loyal dog, without regard to its geopolitical (helping arm Taiwan) or economic (getting a guaranteed haircut) implications, then there's no one to blame other than itself. Being taken for a chump is not my idea of fun.