Amid growing trade tensions with the United States, China is amplifying its decision to sanction U.S. companies that would be involved in weapon sales to Taiwan, demonstrating Beijing’s resolve to defend its “one-China” principle.
The state-run tabloid Global Times , earlier this week, nailed specific steps that China can take to hurt four American military hardware firms — General Dynamics, the maker of the M1A2T tanks, Raytheon, the manufactures of Stinger missiles, as well as tank equipment contractors, BAE and Oshkosh.
On July 8, the U.S. Defence Department, notified Congress of its proposed arms sales to Taiwan. These included 108 M1A2T Abrams tanks, as well as Hercules armoured vehicles and heavy equipment transporters. Besides, congressional clearance was also sought for the sale of Stinger anti-aircraft missiles, worth $ 220 million. Analysts say that congressional approval of the military sales was merely a formality.
The Chinese threat comes when the U.S. was considering harsh actions against Huawei, the Chinese tech giant, and a market leader in cutting edge 5G technology.
Analysts say that China now has the tool kit to retaliate against the U.S. decision on arms sales to Taiwan. For instance, China as the third largest buyer of Gulfstream executive jets built by General Dynamics can seriously upset the company’s balance sheet, should it decide to restrict imports. China is also a big purchaser of aircraft rescue and fire-fighting vehicles produced by Oshkosh Corporation, using the equipment in more than 60 domestic airports.
Rare earth material
According to a Global Times report, China can more fundamentally disrupt parts of the supply chain, including export of rare earth material, used by U.S. military firms.
“Rare earths, the industry which is largely controlled by China, are imperative in making advanced weapons and equipment. For instance, the M1A2 tank of General Dynamics uses samarium-cobalt in its navigation system,” the daily said, citing a 2011 report that appeared in the UK-based Daily Telegraph .
The Global Times report cited Xu Guangyu, a senior consultant at the China Arms Control and Disarmament Association, as saying that, “A final product is based on many components built by a whole industrial chain in which China plays important roles…” He pointed out that China could freeze the industrial chains related to these companies, or stop providing certain base materials.
New levers of influence
China’s unprecedented decision on sanctions signals that Beijing has acquired, and is willing to use, new levers of influence in its dealings with Washington.
Eurasia Group, an international think tank said that the Chinese decision to sanction U.S. military firms was “very significant”.
“If China follows through on sanctioning the U.S. companies involved in the arms sale, it will be the first time it has taken this kind of action,” it observed.
An editorial in the Global Times asserted that the U.S. attaches greater importance to China’s recently announced sanctions on U.S. firms, because China is growing stronger. “We are more capable of safeguarding our national interests and launching precise counter-attacks on entities that harm China’s interests and national security,” it observed.
In announcing its intent to impose sanctions, the Chinese Foreign Ministry said the defence of the “one China principle,” which implies that Taiwan is an integral part of China, was the underlying principle behind the decision. “U.S. arms sales to Taiwan constitute a serious violation of international law and the basic norms governing international relations. This is a serious violation of the one-China principle and the three China-U.S. Joint Communiqués,” Chinese Foreign Ministry spokesperson Geng Shuang has said.
