01 February 2010

Big Trouble in Real China

China's throwing a fit over US arms sales to Taiwan. Got it.
Chinese state media blasted the United States on Monday for a planned $6.4 billion arms package for Taiwan, while a U.S. official said Washington was committed to helping the island defend itself.
The arms sales, the latest in a series but the first by the Obama administration, has added to a litany of bilateral strains between the world's biggest and third-biggest economies, including the value of China's currency, trade protectionism, Internet freedoms and Tibet.
The official China Daily said U.S. weapons sales to the self-ruled island, which China claims as its own, "inevitably cast a long shadow on Sino-US relations."
"China's response, no matter how vehement, is justified. No country worthy of respect can sit idle while its national security is endangered and core interests damaged," the English-language newspaper said in an editorial.
The United States switched diplomatic recognition from Taipei to Beijing in 1979, recognizing "one China," and says it wants the two sides to settle their differences peacefully. The United States remains Taiwan's biggest backer and is obliged by the 1979 Taiwan Relations Act to help in the island's defense.


And the details aren't going to make the Middle Kingdom very happy.
The Obama Administration notified Congress of a $6.4 billion package of arms sales to Taiwan Friday, and Beijing howled with predictable indignation. Far from signaling an American misstep, China's threats show how important the sale is to Asia-Pacific security.
Friday's notification fulfills promises made to Taiwan under the Bush Administration. Taipei will acquire 60 Blackhawk helicopters, two Osprey antimining ships and 114 Patriot antimissile systems—all defensive weapons that do little to alter the fundamental balance of military power across the Taiwan Strait, which is heavily in China's favor.
Taiwan President Ma Ying-jeou said Saturday the package helps redress that imbalance and allows Taipei to negotiate from a position of strength with China. This message comes at an important time for the democratic island, as many Taiwanese voters begin to question whether an economic pact with China may sell the island nation short.
China always protests U.S. sales to Taiwan, but the sanctions are a new development and part of China's increasingly willingness to use economic bullying to promote its political goals. This was on display in 2008, when China canceled an economic summit with the European Union to protest French President Nicholas Sarkozy's planned meeting with the Dalai Lama. Although most U.S. weapons manufacturers do little business with China because of restrictions on arms sales to the regime, companies like Boeing could be affected in their nonmilitary dealings with China.
The U.S. is obligated to defend Taiwan under the 1979 Taiwan Relations Act, and in any case it should keep doing so until Beijing dhows it is willing to be a more responsible stakeholder in the Asia-Pacific. China has pumped resources into its military (with double-digit growth in defense budgets every year) with next to no transparency about its defense goals.
The Chinese army has shot a satellite out of the sky with little concern for the debris that could threaten international space research, and its navy has picked fights with U.S. surveillance ships in the South China Sea. China's neighbors are also concerned over Beijing's behavior in disputes over control of the Paracel and Spratly islands in the South China Sea, and disagreements with Japan about resources in the East China Sea.
China has more than 1,000 Chinese missiles aimed at Taiwan, and a study of Taiwan's air force capabilities is underway to help Washington determine how best to upgrade them. A logical way to do so would be to sell Taiwan the F-16s it has been requesting for years, adding to the 150 F-16s the U.S. sold Taiwan in 1992.


Now, is all this just a smoke-screen for an economic dispute?
The People’s Republic had a particularly nasty reaction to the US plan to sell $6.4 billion in arms to Taiwan. China threatened to suspended military cooperation with America and sanction the US manufactures who made the arms which will be sent to Taiwan.
The dispute is part of a growing friction between the world’s No.1 and No.2 economies, depending on whether China has moved ahead of Japan in annual GDP. The recent problems with cyberattacks on Google and the search company’s threat to stop censoring results in China is on top of a number of arguments over tariffs that grew late last year.
The core of the differences between China and the US are much more basic than arms and search engines.
China’s purchasing manufacturing index hit 57.4 in January up from 56.1. Factory activity in China moved higher for the 10th consecutive month. That almost certainly means that China’s first quarter GDP will be above 10%. That has caused concerns about inflation as national banks have flooded the market with liquidity and the costs of raw materials have risen with factory output.
One the other side of the Pacific, the Congressional Budget Office has forecast GDP growth well below 3% for the next government fiscal. Pessimistic economists such as Nouriel Rubini put the expansion number as low as 1.5% for the second half of 2010. The recovery in the US could collapse completely under the weight of unemployment and lack of credit for small businesses.
China is pushing the West as hard as it reasonably can on issues of trade and its right to be a nearly unchallenged military power in Asia. The People’s Republic knows that its economic health is better than nations in North America and Europe. Favorable policies to get exports into those regions will rely on China’s willingness to close its markets to Western goods and services forcing a sort of trade quid pro quo. In the meantime, China can cut many of its military ties to the US as retaliation for weapons sales to Taiwan. The American military sees cooperation with the Chinese as a strategic necessity to support harmony between the two large armies that could reach points of friction without regularly contact and negotiations.

Starting to sound a lot like the 1930s, but with China in the raw materials quest instead of Japan. And China owning a lot more of the US economy.

By: Brant

2 comments:

LongBlade said...

Do you really think this looks like a parallel to World War II?

Brant said...

I'm sure the real WWII scholars will come out of the woodwork and disprove me, but yeah, I think it does look like an economic-based expansion of a previously-dormant power through an area of the globe still covered by a hodge-podge of pseudo-colonial powers that inherently requires blue-water naval power and over-the-horizon power projection. Or maybe it's just me...