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CvT: Taiwan Arms Deal – Holding a Knife to US-Taiwan-China Relations

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China and Taiwan have been locked in a persisting identity crisis under the One-China Policy for decades. Given the independent governance structures put in place following the conclusion of the Chinese Civil War in 1949, the two societies have dramatically diverged culturally, economically, and politically. China’s meteoric rise to the global stage and the implications it brings to Taiwan’s identity under the One-China Policy have, as a result, created constant opportunity for scuffles between the US, Taiwan, and China. Specifically, under the Trump administration, the US has been more direct in alluding to Taiwan’s status as an independent nation and leveraged US-Taiwan relations as a strategic response to Chinese activity. In the latest brush up in US-Taiwan-China relations, China has announced a plan to sanction certain US companies following a recent US arms deal with Taiwan.

The arms deal, approved by the US State Department on October 22, provides US$1.8 billion worth of sensors, missiles, and artillery to Taiwan. Shortly after the deal’s approval, Taiwan made an additional agreement with US-owned Boeing Defense for a coastal defense system valued at US$2.4 billion. Unsurprisingly, Beijing responded to the agreement as an attack on Chinese sovereignty while a spokesperson for the Chinese government, Zhao Lijian, reiterated the arms deal “seriously undermines China’s security interests” and announced China’s decision to pursue sanctions against the companies involved.

Chinese sanctions: a case study on reality vs. theory

In practice, the efficacy of any retaliation against the deal is questionable as the American companies currently under Chinese fire—Boeing Defense, Raytheon, and Lockheed Martin, are already barred from trading military-grade equipment with China. However, while these defense giants cannot provide military equipment to China, they are heavily active in China through commercial partnerships. For example, Boeing provides a large portion of China’s aviation technology, which accounts for 7% of the company’s global revenue. Similarly, Lockheed Martin’s ties to China date back to the 1980s, and Raytheon is the parent company to Pratt & Whitney, a key aviation player in China. While the sanctions are specific to the defense branches of these companies, the potential for future repercussive action against the companies’ commercial branches still exists given their material exposure to China – begging the question of whether China’s intent is to impact these organizations or, rather, send a message to Washington.

Looking forward

Should the country’s signals to the US flatline, China still has several options to exert pressure on the US in future engagements. In particular, Beijing has already outlined regulatory reform as an option through which to create targeted blockades on US materials and introduce visa bans on American business leaders – thus increasing pressures on US policymakers.

As it is, the US has appeared seemingly unphased by the Chinese response. While the Trump administration has embarked on a collision course with China over the One-China Policy, the incoming Biden administration will be tasked with either maintaining the political shift of the current administration or returning the US-Taiwan relationship to its historical precedent. As Biden continues to fill key cabinet positions, the world will look with watchful eyes as to how the president-elect approaches the next potential US-China hotspot and the implications that his selections may have on the next four years of US-China relations.

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