China‘s threats to punish U.S. companies involved in a major arms sale to Taiwan are raising questions over whether Beijing could pull it off without undermining its own aviation industries.

 

China has not said what sanctions it might impose to penalize the companies involved in building the arms for democratic-ruled Taiwan. But the roster of potential targets is an A-list of U.S. defense contractors, including Boeing Co., Lockheed Martin Corp. and Raytheon Co.

China‘s threats to punish U.S. companies involved in a major arms sale to Taiwan are raising questions over whether Beijing could pull it off without undermining its own aviation industries.

 

China has not said what sanctions it might impose to penalize the companies involved in building the arms for democratic-ruled Taiwan. But the roster of potential targets is an A-list of U.S. defense contractors, including Boeing Co., Lockheed Martin Corp. and Raytheon Co.

 

The plan to sell $6.4 billion of arms to the island, which China claims as its own territory, has drawn a barrage of criticism since it was announced last Friday. Beijing quickly suspended military exchanges with Washington and announced the unprecedented threat of sanctions.

 

“This is the first time the government has issued such an announcement, and I think they are very serious,” said Wu Xinbo, a professor at the Center for American Studies at Shanghai’s Fudan University.

 

In Washington, a White House spokesman says it would “not be warranted” for China to slap sanctions on the U.S. companies over the Obama administration’s plans to sell arms to Taiwan.

 

White House press secretary Robert Gibbs said President Barack Obama discussed the arms sale plans during his visit with Chinese officials in November. Gibbs said the U.S. is working with China on issues of mutual concerns and airing disagreements publicly when they occur.

 

Boeing is perhaps the thorniest issue for potential Chinese retaliation. The company said Monday that it had not received any notice of sanctions. “This is a government-to- government issue. We are not in the position to comment or speculate on this matter,” the Chicago-based company said in a statement.

 Looking ahead, China’s anger over the arms sale could sway it toward favoring European aviation giant Airbus for aircraft contracts, or stalling or canceling some planned purchases of Boeing jets. In the past, Beijing has often used such tactics to try to shape trading partners’ Taiwan policies(can be eliminated if needed). But overall, Beijing will have to weigh its options carefully: As a member of the World Trade Organization it would likely face challenges for sanctions not justified under WTO rules.

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