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Analysts: Effect of Possible Chinese Sanctions Against US Companies Would be 'Limited'


Analysts say China's threat to impose sanctions against companies that are involved in a recently announced U.S. arms sale to Taiwan is the latest sign of Beijing's growing confidence in the international arena. They say that while the threat is turning into U.S. President Barack Obama's biggest dispute with China, Beijing is unlikely to press the matter, especially when it's own commercial interests are at stake.

Since the United States approved the more than $6 billion arms sale to Taiwan late last week - which includes 60 Blackhawk helicopters, more than 100 advanced Patriot surface to air missiles, two mine-sweeping ships and other hardware - tensions have been building between Beijing and Washington.

China has suspended military exchanges and threatened to punish private U.S. companies involved in the deal by imposing sanctions on them.

The White House is urging China not to enact sanctions, saying that such a move would be unwarranted.

The Asia bureau chief for Defense News, Wendell Minnick, says China has long wanted to use sanctions as a political tool against the United States.

"China is just taking the same model that the United States uses," said Wendell Minnick. "You know, we sanction companies that do business with Iran [and] North Korea. And China has learned from that lesson and is applying the same techniques the Americans have been using forever."

But Minnick adds that even if China goes forward with sanctions, it is unlikely to target every company involved in the deal.

"I don't think that they are going to inhibit their business relations with Boeing or Sikorsky," he said. "They really need those companies to improve their own aviation capabilities. What they might do is they might take a symbolic act of sanctions against one of the other companies that don't do as much business in China in the commercial area."

Raytheon and Lockheed Martin, as well as Boeing and Sikorsky, are among the firms providing weapons systems to Taiwan.

But the company with the biggest business interests in China is U.S. commercial airline manufacturer Boeing. It's subsidiary McDonnell Douglas was the prime contractor involved in the sale of anti-ship Harpoon missiles that were part of the deal.

Boeing says that China will need more than 3,700 new commercial aircraft by 2028 - a prize worth an estimated $400 billion.

Boeing has declined to comment on the arms sales dispute, stating that the matter was a government-to-government issue.

Stephen Yates, president of Washington-based consulting firm D.C. Asia Advisory says that if China follows through with its threat of sanctions, it would be a first. But he says it is unlikely.

"I have a hard time believing it would be seriously implemented," said Stephen Yates. "If so, I think they have dramatically underestimated the ill-will it will generate in the United States, in the U.S. Congress. And it will actually put a lot more pressure on the [Obama] administration to toughen its approach to China. So I have a hard time believing that they will follow through."

Bonnie Glaser, a senior fellow at the Center for Strategic and International Studies here in Washington says that while a dip in U.S.-China relations is to be expected, it probably will not last long.

"I think that the calendar dictates a desire on the Chinese side - that is also shared by Washington - to resume the relationship, if you will, if there is a downturn, fairly quickly," said Bonnie Glaser.

Glaser says there are windows of opportunity for a summit this year between Chinese President Hu Jintao and President Obama - either at the Nuclear Security Summit here in Washington in April or the Group of 20 Summit, scheduled for June in Canada.

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