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China to Sanction U.S. Weapons Makers Over Taiwan Sales -- 4th Update

10/26/2020 | 10:57am EST

By Chun Han Wong

HONG KONG -- China said it will sanction three American defense contractors over proposed arms sales to Taiwan, retaliating against U.S. efforts to deepen security ties with the island democracy that Beijing claims as its territory.

Chinese Foreign Ministry spokesman Zhao Lijian said Monday that Beijing has decided to impose sanctions on Lockheed Martin Corp., Boeing Co.'s defense division and Raytheon Technologies Corp., as well as other U.S. entities involved in the planned $1.8 billion weapons package.

The U.S. State Department last week approved proposals to sell missiles, rocket artillery, aerial reconnaissance sensors and related gear to Taiwan -- the Trump administration's latest effort to put pressure on China through closer defense ties with Taipei.

China "firmly opposes" and condemns U.S. arms sales to Taiwan, which "severely damage Chinese sovereignty and security interests," Mr. Zhao said at a routine briefing on Monday, calling on Washington to cease weapons deals and military cooperation with Taipei.

While portraying the sanctions as necessary measures to safeguard China's national interests, Mr. Zhao didn't elaborate on the specifics or timing. He had similarly withheld details in July, when he announced sanctions on Lockheed Martin in response to Washington's approval of a $620 million upgrade package for Taiwan's Patriot surface-to-air missiles.

China's Communist Party has long sought to assimilate Taiwan with the Chinese mainland, saying it will use force if necessary. Beijing has ramped up patrols and drills around Taiwan this year, in what Taiwanese authorities describe as intimidation tactics. Taiwanese President Tsai Ing-wen has pledged to strengthen the island's armed forces, including by acquiring asymmetric combat capabilities to counter Beijing's raw advantages.

Lockheed Martin, the world's largest defense company by sales, said its presence in China is limited, adding, "Foreign military sales are government-to-government transactions and we work closely with the U.S. government on any military sales to international customers."

Boeing and Raytheon said they remained committed to their commercial partnerships with China, one of the biggest markets for jetliners. China has to sign off on changes to the grounded 737 MAX and hosts many Boeing suppliers, as well as facilities working on passenger and cargo jets. The U.S. State Department didn't immediately respond to requests for comment.

Taiwan's Foreign Ministry expressed regret over Beijing's decision to impose sanctions. "In the face of China's military threats and intimidation, our government has a responsibility to safeguard the security of the Taiwanese people," the ministry said, adding that Taipei will continue to seek arms sales from Washington.

The sanctions are expected to have limited impact, as U.S. defense companies are broadly barred from making military sales to China. Lockheed Martin has sold civilian helicopters to Chinese buyers through its Sikorsky Aircraft Corp. unit. China is a key market for Boeing commercial aircraft, but the planned sanctions target only the company's defense arm.

China and the U.S. have been exchanging blows as ties deteriorate over issues spanning trade, technological competition, global influence and Washington's cozying up with Taiwan.

Chinese officials have described Taiwan as the most sensitive issue in U.S.-China relations, and have repeatedly warned Washington not to use Taipei as leverage against Beijing. The Communist Party has sought control of Taiwan since Mao Zedong's forces seized power in mainland China in 1949 and drove Chiang Kai-shek to relocate his Nationalist government to the island.

Though Washington maintains formal diplomatic ties with Beijing rather than Taipei, the U.S. is Taiwan's main arms supplier. The 1979 Taiwan Relations Act commits the U.S. to provide defensive weaponry and treat threats to Taiwan as matters of "grave concern."

The latest proposed U.S. arms sales, announced by the Defense Security Cooperation Agency last Wednesday, include a roughly $1 billion package of air-to-ground cruise missiles from Boeing, $436.1 million in mobile rocket launchers from Lockheed Martin and $367.2 million in aircraft reconnaissance pods from Raytheon's Collins Aerospace unit.

Separately on Monday evening, China's Foreign Ministry announced that it was requiring six American news media, including the Los Angeles Times and Newsweek, to submit information about their staff, finances, operations and real estate holdings in China.

The ministry said the move came in response to a Trump administration decision last week to designate six Chinese state-run media organizations with offices in the U.S. as foreign missions, which requires similar information disclosures. Both countries have expelled some of the other's reporters as part of a tit-for-tat media war dating back to the beginning of the year.

Write to Chun Han Wong at chunhan.wong@wsj.com

(END) Dow Jones Newswires

10-26-20 1156ET

Stocks mentioned in the article
ChangeLast1st jan.
LOCKHEED MARTIN CORPORATION 1.27% 366.61 Delayed Quote.-7.02%
RAYTHEON TECHNOLOGIES CORPORATION 0.85% 73.91 Delayed Quote.-16.33%
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