Tuesday, February 02, 2010

DTN News: China Vows Sanctions Over U.S. Defense Sales To Taiwan

DTN News: China Vows Sanctions Over U.S. Defense Sales To Taiwan *Source: DTN News / WSJ By AARON BACK IN BEIJING And TING-I TSAI IN TAIPEI (NSI News Source Info) BEIJING, China - February 2, 2010: China on Tuesday renewed its pledge to punish U.S. companies that are involved in Washington's plan to sell weapons to Taiwan, in another sign of Beijing's increasingly assertive foreign policy. Taiwan Defense Ministry spokesman Yu Sy-tue welcomes the U.S. weapons sales to Taiwan during a press conference in Taipei, Taiwan, Tuesday, Feb. 2, 2010. China has not said what sanctions it might impose to penalize the companies involved in building the arms for democratic-ruled Taiwan. But the roster of potential targets is an A-list of U.S. defense contractors, including Boeing Co. , Lockheed Martin Corp. and Raytheon Co. At its semiweekly media briefing, China's foreign ministry criticized the Obama administration's decision to sell antimissile systems, helicopters and other arms to Taiwan in a package valued at a total of $6.4 billion. Spokesman Ma Zhaoxu didn't give details of the sanctions, but pledged to retaliate against companies involved in the sale. The self-governing, democratically ruled island of Taiwan split with mainland China in 1949. Beijing claims Taiwan as part of its territory and has long protested U.S. weapons sales there, but in past disputes, it has focused its ire on the U.S. government. The companies involved in the sale belong to the U.S. Foreign Military Sales Program, which obligate participating companies to provide arms and weapons system to U.S. allies. Even though this means the companies—Raytheon Co., Boeing Co., United Technologies Corp. and Lockheed Martin Corp.—have no choice, some have been steadily targeted by China for years. "The Chinese started taking punitive actions against Raytheon several years ago for selling arms to Taiwan, and Raytheon shut down its office in Beijing," said Bonnie Glaser, senior fellow at Washington-based Center for Strategic and International Studies. According to Raytheon's Web site, it has delivered radar and air-traffic-management systems to 16 Chinese airports, including Beijing, Guangzhou, Shanghai and Kunming. It also signed a contract with the Northeast Regional Air Traffic management Bureau of the Civil Aviation Administration of China to supply an air-traffic-control system for Shenyang Airport. Raytheon officials couldn't be reached for comment. Boeing and United Technologies, which have been actively operating in China, are the most likely to suffer from Beijing's sanctions, analysts said. "Boeing is obviously the most concerned as it has a huge stake in commercial aircraft sales to China," Ms. Glaser said. United Technologies couldn't be reached for comment. United Technologies will provide Taiwan with 60 Black Hawk helicopters valued at $3.1 billion. But the company is a broadly based conglomerate, with 16,000 employees in China. It was a major supplier to Olympic projects, having won 69% of the heating, ventilation and air-conditioning contracts awarded for the Beijing Games, including contracts for the "Water Cube" National Aquatics Center. UTC's unit Sikorsky, which makes the Blackhawk helicopter, is building multi-purpose S-76 helicopter airframes in China under a contract with AVIC II, the state-owned aviation conglomerate. The package also includes 114 advanced Patriot antimissile systems, valued at $2.8 billion and made by Lockheed Martin and Raytheon. Lockheed couldn't be reached for comment. A relatively small part of the package are 10 Harpoon antiship missiles made by Boeing. Boeing stands much to lose from any sanctions as it has extensive commercial interests in China's civil aviation market. Speaking at the Singapore Air Show, Randy Tinseth, vice president of marketing for Boeing Commercial Airplanes, said, "It's a government-to-government issue and it's premature to speculate the impact on our industry or business." China's threatened sanctions come as the country has been increasingly belligerent in its tone toward foreign governments. In a long article Tuesday, the state-run Xinhua news agency criticized U.S. Commerce Secretary Gary Locke for accusing China of protecting domestic firms and creating barriers for foreign investment. The article said Mr. Locke's accusations were "misleading and ran totally contrary to the facts," accusing the U.S. of protectionism. "While China is striding ahead on its road to openness, the United States, however, is opening its arms to protectionism," according to Xinhua. China also on Tuesday blasted the Obama administration for a planned meeting between the president and the Dalai Lama, the spiritual leader of Tibet, a province of China plagued with unrest for decades.

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