US urges China against sanctions

WASHINGTON: The United States has urged China not to slap sanctions on US companies selling arms to Taiwan, as the firms tried to stay out of President Barack Obama's biggest row yet with Beijing.

The Obama administration defended the arms sale Monday as preserving the military balance between Taiwan and fast-growing China, which reacted furiously to a US announcement it was selling the 6.4 billion dollars in weapons.

Beijing has always strongly opposed US sales to Taiwan, which it considers a Chinese territory awaiting reunification. But in a new step, China pledged Saturday to punish the US companies involved in the deal. Related article: China furious at US 'arrogance' on Taiwan

White House spokesman Robert Gibbs said that Chinese sanctions "would not be warranted."

Gibbs said that Obama had spoken to Chinese leaders when he visited Beijing in November about the question of arms sales to Taiwan, and other issues.

"We've always said that we want the type of relationship where we're working together on important issues of mutual concern," Gibbs said.

"But when we have disagreements... we'll voice those disagreements out in the open, in public."

State Department spokesman Philip Crowley said the sale was consistent with longstanding US policy of only recognizing Beijing but of providing Taiwan with weapons to ward off a potential invasion.

"We think these defensive arms will contribute to security and stability across the Taiwan Strait," Crowley said.

"We regret the fact that they have suggested they will impose sanctions on US companies involved in the sale of these defensive articles."

Obama has tried to pursue wide-ranging cooperation with China, saying that the world's largest developed and developing economies can work together on issues from climate change to the North Korean and Iranian nuclear disputes.

But relations have hit a rough patch on a range of disputes including Google's revelations last month that China had been hacking into accounts of the company and human rights activists.

Another row may be fast approaching as Tibet's exiled spiritual leader the Dalai Lama is visiting the United States in late February.

Obama came under intense criticism at home last year for not meeting with the Dalai Lama so as not to sour the mood before the president's trip to China.

The US side agreed that Obama would meet later with the Dalai Lama, who is widely respected in the United States but vilified by China.

US companies involved in the Taiwan deal all declined to comment other than to say that the issue concerned governments and not individual firms.

An official at one company noted that China did not reveal details about the sanctions, making it difficult to gauge the impact.

US defense contractors sell little to China, which has been under a US and EU arms embargo since its bloody 1989 crackdown on pro-democracy protesters in Tiananmen Square.

But Boeing Co. -- whose McDonnell Douglas unit was given a 37 million-dollar contract for 12 Harpoon missiles to Taiwan -- is an aerospace giant which counts China as one of its largest markets.

Nonetheless, Boeing shares closed up 1.82 percent on the New York Stock Exchange, outpacing the benchmark Dow index, after Obama's budget proposal outlined new business for the company with NASA.

Boeing has deep ties with the aviation industry in China, which could stand to lose if it sanctioned the aviation giant.

Three Chinese companies are under contract to produce key parts of Boeing's emblematic 787 Dreamliner, which took to the skies in December after a more than two-year delay.

Aviation expert Richard Aboulafia, vice president for analysis at Teal Group, said that with past arms sales to Taiwan, "it's usually been this little dance of expressing disapproval over a few months and then things return to normal."

"But you never know when there could be a tipping point," he said. "If somehow Europe stays squeaky clean and the US has this tension over Taiwan and Tibet and cyber freedom and climate change, then there may be a shift to the European aerospace companies."