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Edition: U.S. Article Comments (64) Slideshow Video Save Email Print Reprints Most Popular Most Shared Scientists say crack HIV/AIDS puzzle for drugs 31 Jan 2010 U.S. expanding missile defenses in Gulf 31 Jan 2010 White House to paint grim fiscal picture: source 31 Jan 2010 Taylor Swift and Beyonce make Grammy history 9:16am EST Conservative energy greets former House Speaker 30 Jan 2010 Scientists say crack HIV/AIDS puzzle for drugs 31 Jan 2010 White House to paint grim fiscal picture: source 31 Jan 2010 Obama axes NASA moon plan in new budget 6:20am EST U.S. expanding missile defenses in Gulf 31 Jan 2010 Obama's 2010 budget deficit soars to record $1.56 trillion 10:07am EST China fumes at latest U.S. arms sales to Taiwan Ben Blanchard and Yoko Kubota Mon Feb 1, 2010 10:11am EST Factboxes Factbox: How China's anger could hurt ties with the U.S. 8:28am EST Factbox: Sources of tension between China and U.S 8:28am EST Related News Q+A: Why is China so sensitive about Taiwan? 8:28am EST Related Video China angry over U.S. arms sales 6:12am EST US-Taiwan arms deal angers China < 1 / 5 > View Full Size BEIJING/TOKYO (Reuters) - Chinese state media blasted the United States on Monday for a planned $6.4 billion arms package for Taiwan, while a U.S. official said Washington was committed to helping the island defend itself. World | Barack Obama The arms sales, the latest in a series but the first by the Obama administration, has added to a litany of bilateral strains between the world's biggest and third-biggest economies, including the value of China's currency, trade protectionism, Internet freedoms and Tibet. The official China Daily said U.S. weapons sales to the self-ruled island, which China claims as its own, "inevitably cast a long shadow on Sino-US relations." "China's response, no matter how vehement, is justified. No country worthy of respect can sit idle while its national security is endangered and core interests damaged," the English-language newspaper said in an editorial. The United States switched diplomatic recognition from Taipei to Beijing in 1979, recognizing "one China," and says it wants the two sides to settle their differences peacefully. The United States remains Taiwan's biggest backer and is obliged by the 1979 Taiwan Relations Act to help in the island's defense. U.S. Assistant Secretary of Defense for the Asia-Pacific Wallace Gregson said Washington aimed to maintain cooperative, cordial relations with China but would not abandon Taiwan. "The United States is also obligated to ensure Taiwan's self-defense capability and the United States fully intends to meet every one of our obligations there and we will continue to do so into the future," he said in Tokyo. Beijing considers Taiwan a breakaway province that must accept eventual unification, by force if necessary. China's ruling Communist Party controls the country's media and uses them at sensitive times to amplify its message. Reflecting intense emotions over the arms sales, Chinese Internet users vented anger with calls to boycott top U.S. exporter Boeing and other companies supplying parts. China has for years opposed U.S. defense sales to Taiwan, which has been separated from mainland rule since 1949 and from 1895 to 1945 was a Japanese colony. For the first time, however, Beijing sought to pressure the United States by threatening to formally punish companies whose arms are involved in the arms package, which was announced on Friday. "China has no room whatever for compromise on this issue," said a commentary in the Liberation Army Daily, the mouthpiece of the country's military, adding that Chinese armed forces were ready for "resolute struggle" over Taiwan. "It is entirely reasonable to impose corresponding sanctions on U.S. companies involved in arms sales to Taiwan." Chinese shares appeared unmoved, but trading in offshore one-year dollar/yuan non-deliverable forwards (NDFs) implied slightly slower appreciation for the yuan over the next 12 months. Dealers said the NDFs' shift was mainly driven by the dollar's global strength, but the Sino-U.S. tension also contributed to the rise. So far, China's top leaders, President Hu Jintao and Premier Wen Jiabao, have not publicly commented on what they have said is their nation's top-most issue, suggesting they want to keep some leeway in dealing with Washington. Despite Beijing's strident words, options for punishing the United States were limited, said Drew Thompson, Director of China Studies and Starr Senior Fellow at the Nixon Center, a thinktank in Washington, D.C. "They don't have a lot of leverage, and that's a source of frustration for them," he said. "It's hard to picture what they could do that's anything other than symbolic." Sanctions on plane-maker Boeing Co could give its rival Airbus more leverage in negotiations with Chinese buyers, said Thompson. "NATIONAL SECURITY" AT STAKE U.S. officials have said Taiwan, which lags China in the balance of military power, needs updated weapons to give it more sway with Beijing, which Taiwan says has more than 1,400 short- and mid-range missiles aimed at the island. Beijing would postpone or partially halt some military contacts with the United States, including visits planned for this year, including one by U.S. Defense Secretary Robert Gates, and meetings between top military commanders, Xinhua news agency said. China also said the dispute will damage cooperation with the U.S. over international issues. Washington has sought stronger Chinese support over several international hotspots, chiefly the nuclear ambitions of Iran and North Korea. Beijing could show its anger by delaying or downgrading negotiations on Iran, but is unlikely to abandon its long-established stance of nudging Tehran to cooperate while resisting heavy sanctions on the big oil supplier. "It's difficult to take what are global problems and use them as a tool to vent frustration over a bilateral issue," Thompson, the Washington-based researcher, said of China's options. "They risk isolating themselves pretty badly." (Additional reporting by Chris Buckley in Beijing; Lu Jianxin in Shanghai; Paul Eckert, Adam Entous and Arshad Mohammed in Washington) World Barack Obama Comments See All Comments (64) | Post Comment Feb 01, 2010 So, we need to boycott anything made in China. In doing that, our purchases, although being more expensive, would be higher quality and would last longer. WilmaK Report As Abusive Feb 01, 2010 Awesome. Now they can punish us by cutting off exports to the US and we can start building our own stuff again. HilaryLo Report As Abusive Feb 01, 2010 I concur whole heartedly, we stop importing their junk, buy more American products and let them cry to their Russian and Iranian buddies. richbythebeach Report As Abusive Feb 01, 2010 I am wondering what if Russia wants to sell nuke bombs to Cuba. MouthBig Report As Abusive Feb 01, 2010 If the US gave in to China over this it would show that the US is weak, and that we now answer to the communists. natebronsveld Report As Abusive Feb 01, 2010 If we boycott Chinese products that would bankrupt WalMart. I am all for that. Give the Taiwanese missiles so we can start making stuff that works and get back our manufacturing base. Nothing bad here. blindnil Report As Abusive Feb 01, 2010 With all seriousness, as a Chinese myself, I feel really good that the US gov is selling Taiwan weapons. SO, when the Taiwan is united into mainland China, all those Blackhawks, f16s and whatsoever will be in control of whose hand? When that day came, it would be interesting to see how gov of the US react. CNP Report As Abusive Feb 01, 2010 Okay here is the deal, the US stock market would certainly crumble and “die” if American companies pull out of China and stop using China’s workforce. Remember, the reason why you can buy stuff at Walmart for such a cheap price is because it is made from China. For example, a bicycle in Walmart, lets say, sells for $100 and made in China, would become like $160~ IF the company that made it would to pull out of China and have US workers make it. So this would hurt the US more than China since there are hundreds of other countries that use China’s workforce for goods(for you HilaryLo) Yes, if you boycott products made in China, the same products you will find will be more expensive, better quality as that there will be quality control and less ‘throw it in a bucket and swirl it’ kinda junk. But if this does occur, the US economy would sink and suffer, since it depends on China’s cheap exports and now transforming to US company with US labor, the US would be in dept, inflation would go up like a helium balloon and much more other side-effects. In all the US cannot afford to loose China. Plus, all of this is only hurting the military ties and some military weapon-making companies too, so I dont think that it would be at such a level to cut-off trade with China.(for you WilmaK) a.leung Report As Abusive Feb 01, 2010 “If the US gave in to China over this it would show that the US is weak, and that we now answer to the communists.” Deja vu? This reminds me of Bush’s famous “Bring it on!” Pterosaur Report As Abusive See All Comments (64) Add a Comment More from Reuters Obama's 2010 budget deficit soars to record $1.56 trillion WASHINGTON (Reuters) - President Barack Obama on Monday projected the budget deficit would peak at a fresh record in 2010 before easing as he pushes for fiscal responsibility while battling double-digit unemployment. Exxon quarterly profit down 23 percent, shares up Spending edges up, savings at 6-mth high in Dec Manufacturing data, Exxon lift stocks | Video Toyota to restart U.S. plants; confident on fix | Video Suicide bomber kills 41 Shi'ite pilgrims in Iraq » More Top News Davos in the spotlight Get the latest news, videos and analysis from the World Economic Forum in Davos, Switzerland, January 27-31. Full Coverage Wanted: Tough central bankers Greece battles sky-high debt Next year's Davos guest? Davos 2010 2010 Budget: What's in and what's out? Small businesses may smile but the wealthy and NASA are not so lucky. Here are the budget's winners and losers. Full Article Budget omits cap-and-trade revenues $33 billion sought for Afghanistan Obama axes NASA moon plan Politics © Copyright 2010 Thomson Reuters Editorial Editions: Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom United States Reuters Contact Us Advertise With Us Help Journalism Handbook Archive Site Index Video Index Analyst Research Mobile Newsletters RSS Podcasts Widgets Your View Labs Thomson Reuters Copyright Disclaimer Privacy Professional Products Professional Products Support Financial Products About Thomson Reuters Careers Online Products Acquisitions Monthly Buyouts.com Buyouts Europe: Buyouts Conferences: Venture Capital Journal EVCJ International Financing Review International Securitisation Report Project Finance International PEhub.com PE Week Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests. NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.

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