Cross Strait

Arm’s length

China threatens to sanction US defence firms

FOXCONN-CHAIRMAN/

Even though he claimed that Mazu, Taiwan’s sea goddess, had come to him in a dream to tell him to run for office, Terry Gou’s bid to become Taiwan’s leader looks to have come to an end. Last week the chairman of Foxconn, the firm best known for manufacturing iPhones, lost in the Kuomintang (KMT) presidential primary to populist Kaohsiung mayor Han Kuo-yu.

Yet having earlier resigned as the chairman of Foxconn, Gou has declined to dismiss mounting speculation that he will now quit the KMT (his membership was only reinstated a few months earlier) and run as an independent candidate instead.

Gou had made plain the presidential race will focus heavily on Taiwan’s tricky relationship with mainland China – and for Han (see WiC436) the recent headlines will be tricky to navigate as well.

Early this month, news surfaced that Washington had approved the sale of $2 billion-worth of military hardware to Taiwan, including 108 M1A2T Abrams tanks and some 250 Stinger missiles.

The US provides weapons for Taiwan’s defence under a law enacted in 1979. However, the arms sales come at a time when Sino-US ties are already strained by a trade war. Taiwan’s president Tsai Ing-wen – who was en route to the Caribbean – further infuriated Beijing when she also made stops in New York and met with US lawmakers, a divergence from decades of protocol.

A columnist for China Times, a pro-Beijing newspaper in Taiwan, warned about the risk of cozying up to the US. “The Taiwan government has been so pro-America, treating the US as its real parents, but Taiwan is merely a pawn. Did anyone notice that America’s attitude towards Taiwan has recently warmed up. Why? The reason is because the US now competes against China to be the world’s biggest economy.”

“The US arms sales to Taiwan are deliberately creating trouble for China, attempting to disrupt the peace and stability across the strait and curbing China’s development,” China’s state-run news portal ThePaper.cn thundered. “This kind of interference in China’s internal affairs not only jeopardises the development of Sino-US relations, but also seriously damages the international image and credit of the US itself.”

In response to the arms sales, Beijing has raised the stakes by threatening to sanction American defence firms including Honeywell, General Dynamics and Raytheon for their involvement in the sale of the tanks and missiles.

“The US arms sale is ‘penny wise, pound-foolish’. They sell weapons to Taiwan but lose their market in China, and their non-military products will be boycotted in China too,” decried the People’s Daily. “Do not ever underestimate the firm will of the Chinese government and its people to defend national sovereignty and territorial integrity! Do not underestimate China’s strength as the world’s second-largest economy.”

Still, what does the new sanction mean? China’s foreign ministry spokesman Geng Shuang, told journalists of the move, but kept the specifics vague. “Specific details will not be disclosed for the time being. But please believe that Chinese people always practice what we preach… Even if the American companies don’t sell weapons to China, they or their related companies have businesses in China. Once China’s sanctions are imposed, they will feel the pain,” he threatened.

Raytheon has a lot to lose from the sanctions, China Times thought. Even though the defence giant doesn’t sell any products to China, it is in the process of merging with United Technologies, which sells aircraft engines there. 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. So if Raytheon is sanctioned in China, its merger with United Technologies could face a backlash.

Meanwhile, Honeywell was quick to deny any direct involvement in the arms sales. The defence giant, in a statement to the South China Morning Post, claimed it saw no reason why Honeywell would be potentially sanctioned. It said it is a “component provider and [does] not decide where the products are used. This was a government-to-government sale, initiated by the US government. Honeywell has no input into these agreements and has had no direct dealings with Taiwan”.


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