China Threatens US Defense Contractors

And he writhed inside at what seemed like the cruelty and unfairness of the demand. He had not yet learned that if you do one good deed your reward usually is to be set to do another and harder and better one.

The reliably excellent Wendell Minnick has a couple of stories out this week. The first ran in the print edition of Defense News. It details China's increasing pressure on US defense contractors and on US government officials:

Over the past two years, China has threatened to stop buying com­mercial airliners from Boeing and civil helicopters from Bell Heli­copter and Sikorsky if the com­panies continue to sell weapons and “advanced helicopter tech­nologies” to Taiwan, sources said. Each of the companies stands to lose billions of dollars in po­tential orders, sources added.

Pressure on U.S. officials and arms makers is a growing part of Beijing’s efforts to isolate the self­ governing island and undermine its defenses. When Chinese Defense Minister Liang Guanglie placed the first call on the new Beijing-Wash­ington military hot line in April, he asked his American counterpart, Robert Gates, to halt arms sales to Taiwan.

“China is flexing its economic muscle,” said a U.S. military official, who said China had also threatened to withhold entry visas from U.S. governors whose trips included vis­its to Taiwan.

“The subject is radioactive,” one U.S. defense contractor based in Taiwan said. “There have been some nasty exchanges” between his company and Beijing on the is­sue of military sales to Taiwan.

Executives said that companies like Lockheed Martin and Raytheon — which make commercially com­petitive products like air traffic and other systems — admitted that they’re handicapped in the lucrative Chinese market, in part because of their arms sales to Taiwan, sources said.

“We have some commercial work that we do in China, like RFID [radio frequency identifica­tion] and weather radars,” said Rick Kirkland who heads Lock­heed’s South Asia operations. “But we don’t expect to be invited to compete for large commercial ten­ders because we are such a large supplier to Taiwan. That’s just a fact of life. Our product portfolio doesn’t fit well with what’s re­leasable to China.” Washington imposed an embar­go of arms and military technolo­gy on China after its 1989 crack­down against demonstrators in Tianamen Square.

In 2006, China’s threats led Boeing to shutter its Taipei office and move the staff to Singapore, sources said.

A Taiwan military official con­firmed the problem. “Boeing did not want its employ­ees talking to Taiwan,” he said.

Now the Chicago-based firm is hoping its expected $1 billion deal to supply 30 AH-64D Apache at­tack helicopters will not hurt com­mercial sales to China, which has ordered more than 100 jetliners an­nually in the past five years and is the world’s largest and fastest growing commercial jet market.

Boeing, Bell and Sikorsky prefer to sell arms to Taiwan through the U.S. Defense Security and Cooper­ation Agency under the Foreign Military Sale system. Under the system, the U.S. government buys equipment from contractors and then transfers them to allied and friendly nations.

The companies have been telling China that they have a responsibil­ity to fill these orders, especially when they come from the U.S. gov­ernment. What that government chooses to do with the items is not the firms’ concern or responsibili­ty.

Boeing spokesman Doug Ken­nett declined to comment directly on Beijing’s threats. But he said that the company continues to supply the U.S. government with weapons systems that through the FMS system are transferred to na­tions worldwide.
Kennett stressed, however, that Boeing’s three-decades-plus of jet­liner sales to China were a pillar of the two countries’ ties.

“Boeing’s export of commercial aircraft to China has met their bur­geoning civilian transport needs while supporting thousands of jobs here at home,” he said. “Our com­mercial products represent the sin­gle strongest export in the U.S.­ China trade relationship.” Richard Millies, the deputy direc­tor of the Defense Security Coop­eration Agency, said he had no knowledge of Beijing’s threats, but added that leading American firms with commercial interests in China have asked that all defense sales to Taiwan be handled through the For­eign Military Sales system.
None of the American companies have declined to sell to the U.S. government, and if any did so, it would be cause for alarm and con­cern, Millies said.

In the April 10 hot line call, Gates stressed the U.S. commitment to the one-China policy and restated that the United States opposes any unilateral effort by either China or Taiwan to change the status quo, according to Chinese Defense Min­istry press releases.

It’s not clear whether any of this will placate China; Chinese officials could not be reached for comment. Lin Chong-Pin, a former Taiwan deputy minister of defense, believes this is part of a sophisticated soft­power strategy by Beijing.

“Since late June 2007, high-rank­ing U.S. officials pressured by Bei­jing have publicly criticized the Taipei government 11 times for the referendum to join the United Na­tions under the name of Taiwan, while Beijing itself has taken a low profile on this issue,” said Lin, who is president of the Taipei-based Foundation on International and Cross-Strait Studies. “Urged by Bei­jing, other powers such as Paris, Singapore, Tokyo, Canberra, Lon­don and more have done the same in past months.” Lin said Chinese pressure on Bell, Boeing and Sikorsky reflects the same principle.

Both US corporations and US government officials are threatened by these policies, according to the report. Connect the dots: the Bush Administration abases itself before the Dragon Throne, craps all over Taiwan for a referendum that couldn't possibly succeed and that China can block with ease. What does it get for this service to Beijing? The opportunity to serve Beijing even more! When the US concedes, it means that the US is weak and can be pressured for further concessions (latest story I heard is that the US refusal of a Ma trip to Washington prior to the swearing in was the result of Chinese pressure). Moreover, as the Taipei Times scathingly observed:

What this meant was that Washington could continue to yield to Beijing’s pressure and humiliate its ally, but please, please, buy our weapons and our beef. We’re your friend, as long as you remain a market for our goods.

Earlier this week the China Times reported (Taipei Times) that a prominent KMT legislator with long experience in defense issues said that Taiwan was ready to purchase the 60 F-16s that Taipei requested back in May of 2006 (Taiwan's F-16s on F-16.net). Apropo that is Minnick's other piece on US-Taiwan relations under the incoming Ma Administration:

Even before Ma Ying-jeou is sworn in as Taiwan’s president May 20, he is working to assuage concerns that a friendlier attitude toward China will fray ties with the United States.

The first KMT, or Chinese Nation­alist Party, president in eight years brings a mandate for warmer rela­tions with the mainland, thanks to victories in this year’s legislative and presidential elections. KMT officials have been quick to act in the wake of Ma’s March triumph. Several sen­ior party officials have flown to China for meetings.

And on April 24, Wu Yu-sheng, KMT caucus deputy secretary-gen­eral, complained to reporters that U.S. government officials attended Taiwan’s annual Yushan military ex­ercise. Wu called the U.S. presence “inappropriate,” although U.S. ob­servation teams have regularly at­tended major defense exercises. However, Wu appears to be speak­ing unilaterally. A KMT source stat­ed Wu was “ultra-right wing” and did not represent Ma’s administration.

In the next few years, Ma’s poli­cies will likely bring a welcome de­crease in cross-strait tension, “but in the long-run, unease,” said Lin Chong-pin, president of the Taipei ­based Foundation on International and Cross-Strait Studies. During his campaign, Ma proposed direct flights, economic agreements, con­fidence-building measures (CBM) and a peace accord with China.

Some U.S. officials worry that Bei­jing will agree to economic and se­curity accords — but only on the condition that Taipei’s government discontinue joint U.S.-Taiwan intel­ligence sharing and expel U.S. de­fense officials.

“The U.S. does have doubts re­garding Ma’s commitment to the se­curity cooperation between Taiwan and the U.S. Especially when Ma puts the status of cross-Strait rela­tions as the guiding principle for Taiwan’s external engagement,” said Lai I-Chung, executive member of Taipei-based Taiwan think tank.

The U.S. National Security Agency and Taiwan’s National Se­curity Bureau run a signals intelli­gence facility on Yangmingshan Mountain just north of Taipei, and an electronic support measures facility in Taichung that collects the radar signatures of warships passing through the Strait.

China has for several years pressed U.S. and now KMT officials to discontinue arms deals, but for now, the KMT is not expected to withdraw requests to buy F-16s, Aegis-equipped warships and other U.S. arms.

“Ma has repeatedly stated that in dealing with China, we have to deal with them from a position of strength,” the KMT source said. “Ma has said if you [China] want to talk about a peace accord you have to first remove your missiles.” China has more than 1,000 short-range bal­listic missiles aimed at Taiwan.

“Taiwan’s need for new air plat­forms is here and now,” said Bonnie Glaser, a senior associate at the Washington-based Center for Strate­gic and International Studies. “I doubt it will be affected by concerns about what might or might not oc­cur in relations between Taiwan and the Mainland in the future.” Taiwan is moving ahead with a broad rearmament program that in­cludes Patriot Advanced Capability 3 missile defense systems, P-3C Ori­on maritime patrol planes and diesel attack submarines. Taipei and Washington are negotiating the final details of an Apache deal, along with an estimated $600 million For­eign Military Sales deal for 60 Siko­rsky UH-60 Black Hawk helicopters. The two governments are also talking about sales of M1 Abrams tanks and 66 F-16C/D Block 50/52 fighters.

Observers said Ma is unlikely to soon win agreements for conf­idence-building measures and a peace accord.

“CBMs and a peace accord are long-range goals. We first must es­tablish economic and diplomatic agreements. After economic nor­malcy has been established, Ma will pursue security issues,” a KMT source said.

“For military CBMs to proceed, Beijing will first have concluded that it trusts Ma Ying-jeou and that it serves China’s interests for Tai­wan to feel more secure, rather than insecure,” Glaser said.

The first step would likely be lim­ited contacts between retired mili­tary officers and discussions.

But under the radar screen, she said, “there might be better informal cooperation between coast guards to deal with problems such as drug and human smuggling and helping fisherman in distress.” Richard Bush, who directs the Center for Northeast Asian Policy Studies at Washington’s Brookings Institution, said Chinese agreement to CBMs will depend on whether Beijing wants to make Taipei feel more confident or vulnerable.

“I would argue that Beijing, after having lived with its own sense of vulnerability concerning Taiwan’s political initiatives, might see the mutual benefits that would flow from CBMs,” Bush said.

Lai said CBM talks between Taiwan and China would likely by­pass U.S. officials and disrupt or­ders of U.S. arms.

“Unless the U.S. forces its way into the cross-strait CBM talks by demanding that the cross-strait CBM should include U.S.-China CBMs as well, the U.S. will find it­self marginalized,” he said. “Sadly and ironically enough, the U.S. is en­couraging cross-strait CBMs with­out a firm foundation of Taiwan­ U.S. security cooperation. If the U.S. finds itself marginalized … the U.S. only has itself to blame.”

Glaser said real improvements in security would likely come only af­ter a few years of economic gestures. “Direct flights, tourists from the mainland, currency convertibility, lifting the investment caps, etc. There may be some gestures by the mainland side — politically sym­bolic only — on the security front, but I don’t expect any serious steps to reduce the threat of force against Taiwan,” she said.

Yup. Note that China's continuing pressure on US corporations is also a direct rebuke to Ma's policies of "negotiating from strength" and a concrete revelation that whatever symbolic moves it may make, it is still very much committed to snuffing out our independent existence here. Washington seems to be slowly waking up to the realization that maybe it was not such a great idea to support the election of Ma Ying-jeou, and that shoving Taiwan into China's arms is basically solving the Taiwan headache by amputation....

[Taiwan]