Wednesday, February 03, 2010

China: Taiwan arms sale - China's dual tactics

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In their reaction to the decision of President Barack Obama to go ahead with the sale of a new arms package to Taiwan, the Chinese authorities have been a following a dual tactics similar to what they had done before the Beijing Olympics of August 2008, when there was a threat of a boycott of the opening ceremony by some Western countries such as France over the issue of human rights in China.

2. This dual tactics consisted of encouraging a public clamour for strong retaliation against the West through sections of China’s media and Internet users in the form of boycott of Western goods, while the State itself sought to convey an impression of acting with restraint despite the perceived provocation from the West and the demands from the public for strong retaliation. The Chinese tactics worked. There was no boycott.

3. In reacting to the decision of the Obama Administration to go ahead with the long-pending arms sale to Taiwan, the Chinese have been encouraging their party and Government controlled media units such as the “Global Times” and the “China Daily” to demand strong action against the US companies such as Boeing and Lockheed Martin, which,inter alia, manufacture some of the weapons and military equipment, which are proposed to be sold to Taiwan, while the Government itself has till now restricted its retaliation to suspending military exchanges with the US, while talking of the available extra option of sanctions against the US companies.

4. At the same time, the Chinese have carefully avoided any talk of a wider retaliatory action such as suspending fresh investments in the US treasury bonds or even reducing their current holdings in the US bonds, which might damage the US economy.

5. The present Chinese concerns are confined to two issues: Firstly, securing a commitment from the US that there will be no more arms sales to Taiwan even if the present package is not re-considered under Beijing’s pressure and , secondly, to ensure that Mr.Obama does not revert to the past policies of the Clinton and Bush Administrations of maintaining interactions with His Holiness the Dalai Lama under some cover or the other. The Chinese have been sending out warnings that if Mr.Obama receives His Holiness during his visit to the US later this month, they would find it even more difficult to resist public clamour for a strong retaliation against the US than today.

6.While deciding on the appropriate options available to Beijing, the Chinese authorities are keen that the escalation of rhetoric on the Taiwan and the Dalai Lama issues does not damage China’s economic linkages with the US. The present Chinese economic recovery is largely due to their pumping money into their market in order to boost the domestic purchase of manufactured goods to compensate for the loss of overseas orders, particularly from the US. The Chinese realize that the continued recovery of their manufacturing sector would depend on the recovery of the US economy and the resumption of the flow of large orders from the US. They do not want to take any hasty action which could reverse the present trend towards economic recovery.

7. If China has a credible weapon against the US in the form of its bond holdings in the US, the US has an equally potent weapon against China in the form of the dependence of the Chinese manufacturing sector on the US market. The Chinese Government will therefore continue to be measured in its reaction while letting the public clamour for even stronger action continue for some time. ( 3-2-10)

The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. He is also associated with the Chennai Centre For China Studies.

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