Tactical Rabbit
International Government Relations Unit Military Affairs Unit

COUNTRY: China

SUBJECT:

STRONG WORDS AND THREATS OF CHINESE SANCTIONS FOR US COMPANIES ENGAGED IN ARMS SALES TO TAIWAN

DOI: 2011 to mid-2019

SOURCE: Open source intelligence.

SUMMARY:

As of mid-2019, the Chinese government’s threats of tariffs and sanctions against US companies engaged in arms sales to Taiwan was deemed to be an intangible warning unlikely to incarnate into any real penalties provided that the US government continue to respect the “One China” doctrine.

DETAILS:

On 12 July 2019, the Chinese government announced it planned to impose sanctions against US companies that, as of mid-2019, agreed to sell US $2.2 billion in military weaponry to Taiwan. China’s Foreign Minister Wang Yi warned the US “not to play with fire on the question of Taiwan” and, by inference, to tread more cautiously around the “One China” policy.

The US $2.2 billion arms deal included 108 M1A2T Abrams tanks, 250 Stinger missiles and related equipment. The principal contractors are Raytheon Missile Systems and General Dynamics Land Systems.

Media-based analysts warn the arms deals may exacerbate already tense, adversarial relations between the US and China: since 2017, the two countries have been caught in fractious disputes on issues from China’s occupation of the South China sea to trade and intellectual property rights violations.

Tactical Rabbit senior analysts have proposed a more reasonable prospect. In the short-term, the sales will add to the current, growing discord. But larger sales have occurred before, matched by similar threats from Beijing, and nothing material resulted. In 2011, the US supplied Taiwan with US $5.8 billion in arms and advanced military equipment; in 2015, US $1.8 billion.

In the past, the US has proceeded with arms sales while adhering to the “One China” policy, thus diplomatically side-stepping a more tangible penalty from China.
Additionally, the US has not acquiesced to every request for arms from Taiwan, again for fear of further riling China. As an example, absent from recent arms sales has been any assistance to modernize or resupply Taiwan’s aging submarine fleet, a move that Tactical Rabbit assesses would provoke a sharper response from Beijing.

Additionally, most of the threats of Chinese sanctions are without teeth, according to Tactical Rabbit analysis. For many years, China has repeatedly threatened to impose punitive tariffs or sanctions on US companies, but Beijing has not provided clarification or followed through. Furthermore, most of the US companies in question would likely be unaffected by such penalties even were they to be imposed since these companies do not engage in trade with China in the first place. In the case of a company like Boeing that does do non-military sales inside China, and thus could be affected by tariffs, Tactical Rabbit believes it is highly unlikely China would take any action to disrupt or impede the supply of (Boeing) aircraft parts and services to Chinese logistics and transportation capabilities.

Everett A. Stern, M.B.A.
Intelligence Director, Tactical Rabbit Former U.S. Senate Candidate
www.TacticalRabbit.com / www.EverettStern.com