China-US tensions spike over arms deal to Taiwan, possible Obama meeting with Dalai Lama

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China-US tensions spiking over Taiwan, Dalai Lama

BEIJING — China is pledging to retaliate against the U.S. over arms sales to Taiwan and warning of further damage to ties if President Barack Obama meets the Dalai Lama.

There’s likely to be even more turbulence ahead: Trade friction, currency rate woes and allegations of cyber-spying are already roiling relations.

The rhetoric also is sharpening in a disagreement over new sanctions against Iran, with Beijing refusing U.S. calls to push Tehran harder to cooperate with nuclear inspectors.

Yet the sheer number and variety of current disputes also reflects a newly combative approach by Beijing, emboldened by its $2.4 trillion in foreign holdings — about $800 billion of which is invested in U.S. Treasury securities — and relative success handling the impact of the global financial crisis.

A tough line is essential for the communist leadership that places a premium on being deemed by the deeply nationalist public to be “tough enough to defend China in a dangerous world,” said John Garver, an expert on Chinese foreign policy at Georgia Tech.

Since the 2008 financial crisis, Beijing has concluded that the world’s developed democracies “are badly wounded and therefore a healthy and growing China can now impose its will all over the world,” said Edward Friedman, a China specialist at the University of Wisconsin, Madison.

“It therefore has become more assertive and uncompromising and self-confident, such that its actions seem arrogant to many,” Friedman said.

Washington is looking to Beijing to help finance its stimulus spending by continuing to recycle its trade surpluses into buying Treasury securities and other government debt. While China has reduced such purchases as a hedge, they remain a force keeping U.S. interest rates low and the sluggish economy moving.

“The fact that Beijing is Washington’s banker is not lost on the Chinese government,” said Oxford University China scholar Steve Tsang.

Tensions have also been raised in recent weeks over U.S. comments on Internet freedom and a dispute between the Chinese government and Google Inc., which said it might pull out of China over censorship and cyber attacks on dissidents originating from within the country.

Google says it’s no longer willing to acquiesce to the Chinese government’s demands for censored search results, yet it still wants access to the country’s engineering talent and steadily growing online advertising and mobile phone markets.

For their part, Chinese leaders are determined to control the flow of information, and state media has portrayed Google’s complaints as part of a U.S. government-sponsored campaign of “information imperialism.”

Speaking Tuesday at a regularly scheduled news conference, Foreign Ministry spokesman Ma Zhaoxu reiterated China’s anger over Washington’s $6.4 billion Taiwan weapons package announced over the weekend, but offered no new details on threatened sanctions against the U.S. companies involved.

China claims Taiwan as its own territory and regards arms sales to the self-governing island democracy as a violation of its sovereignty. China said Saturday it was suspending military exchanges in response to the sale and could take further unspecified action.

The suspension follows the model employed in similar spats in past years. What’s new this time is Beijing’s threat to punish U.S. companies that make the weapons involved, among them Boeing Co., United Technologies Corp., Lockheed Martin Corp. and Raytheon Co.

A U.S. defense official said China shouldn’t have been surprised by the arms sale and criticized Beijing’s response.

“I think it’s unfortunate that China has reacted the way it has,” Bruce Lemkin, a deputy undersecretary with the U.S. Air Force, said at an air show in Singapore.

On Tuesday, another Chinese official warned that an Obama meeting with the Dalai Lama would “seriously undermine the political foundation” of China-U.S. relations.”

The warning from Zhu Weiqun, a Chinese participant in weekend talks with the Dalai Lama’s representatives, follows signals from U.S. officials in recent weeks that Obama might soon meet the exiled Tibetan leader — something Chinese officials are keen to avoid before President Hu Jintao travels to Washington, possibly in April.

Zhu did not give any details on what China would do if Obama meets the Dalai Lama, simply saying: “We will take corresponding measures to make the relevant countries realize their mistakes.”

China maintains that Tibet has been part of its territory for centuries, but many Tibetans say the region was functionally independent for much of its history.

China has significant leverage on key foreign policy issues such as Iran because of its veto power in the U.N. Security Council.

At Tuesday’s news conference, the Foreign Ministry’s Ma fired back at comments by U.S. Secretary of State Hillary Rodham Clinton that China should consider the long-term implications of Iran developing nuclear weapons.

“I believe there is no basis for such remarks,” Ma said.

Speaking last week in Paris, Clinton said she and others who support additional sanctions on Iran over its disputed nuclear program are lobbying China to back new U.N. penalties on the Iranian government.

Much of that unwillingness is driven by China’s desire to preserve its growing economic relationship with Iran, now the China’s third-largest supplier of oil and a growing destination for Chinese investment.

However, Beijing’s opposition also reflects its unwillingness to help Washington win a diplomatic victory and hopes to see it bogged down in yet another Middle Eastern quagmire, Garver said.

“From the Chinese perspective, Iranian acquisition of nuclear weapons is less injurious to China’s interests than U.S. success in bludgeoning Iran into submission,” he said.

While China’s more muscular diplomacy is doubtless popular at home, it carries the risk that Beijing could overplay its hand and spark a backlash among foreign critics, analysts said.

Just how much leverage Beijing has remains unclear: An attempt to use its U.S. Treasury holdings to pressure Washington could boomerang if that leads, as many speculate it would, to a rise in the value of the Chinese currency that U.S. critics say is deliberately undervalued to boost exports.