Business News - Opportunities - Reviews
BEIJING — China said on Friday that it would impose sanctions on American companies involved in the recently proposed sale of more than $2 billion in arms to Taiwan. The move could further strain ties between the two large powers, whose governments have been targeting each other’s businesses for punishment as a tariff war boils.
Beijing has threatened similar penalties after previous American weapons sales to Taiwan, a self-governing island that China considers a rogue part of its territory. The sanctions promised in those cases have not materialized so far.
But whether and how the Chinese government follows through this time could send a signal about officials’ willingness to inflict damage upon more American firms as the trade fight with Washington stretches into its second year.
“The United States’ arms sales to Taiwan constitute a serious violation of international law and the norms governing international relations,” Geng Shuang, a spokesman for China’s Foreign Ministry, said on Friday, without offering specifics on how and when the American companies involved would be penalized.
The United States is required to provide weapons for Taiwan’s defense under a law enacted in 1979, when Washington was shifting diplomatic relations to Beijing and away from Taipei, the island’s capital. China has long viewed American arms sales to Taiwan as an affront to its sovereignty.
Congress was notified on Monday of the two latest proposed sales. Included in the deals are Abrams tanks, which are made by General Dynamics; heavy equipment transporters, made by Oshkosh; and Stinger antiaircraft missiles from Raytheon. Hercules armored vehicles, made by the British company BAE Systems, are also part of the proposed deal.
Any sanctions from Beijing would not affect American defense contractors’ arms businesses, as American firms have been barred from selling weapons to mainland China since the Tiananmen Square massacre in 1989. But sanctions could affect their nonmilitary sales in China.
General Dynamics, for instance, makes combat vehicles and submarines, but also Gulfstream private jets, which are highly coveted among China’s ultrarich. The company does not report its sales in China, but it said it brought in $2.3 billion in revenue in the Asia-Pacific region last year.
Raytheon has said it does not sell any products to China. But the defense giant is seeking to merge with the aerospace business of United Technologies, which sells aircraft engines in China and has developed aircraft electronics in collaboration with Chinese partners. United Technologies also owns the elevator maker Otis, which says it won contracts last year to supply 2,500 escalators and elevators in 11 Chinese cities.
The merger with Raytheon was announced last month and still needs to be approved by both companies’ shareholders.
Oshkosh has designed and sold vehicles to the American military for nearly a century, but it also makes rescue and firefighting vehicles that it says are used at more than 30 airports in China. Oshkosh also says its airport snow removal vehicles are used in Beijing.
United Technologies, Oshkosh and Raytheon did not immediately respond to requests for comment. A General Dynamics representative declined to comment.
The economic conflict between China and the United States has gone beyond the tit-for-tat tariffs that the two countries’ governments began imposing last year. The Trump administration has also led a clampdown on Huawei, China’s leading maker of smartphones and telecommunications equipment, which American officials say is an espionage threat.
In May, after the Commerce Department restricted Huawei’s ability to purchase software and components from American tech firms, China’s government threatened to create a blacklist of “unreliable” foreign companies. Details of this list have yet to be announced.
Business News - Opportunities - Reviews