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Sanctions target US firms By Wu Jiao (China Daily)

Updated: 2010-02-01 07:50

For the first time Beijing vowed to censure private companies involved in the arms sales to Taiwan by the United States, a measure seen as concrete by experts and demanded by Chinese netizens for a long time.

China said it would impose unspecified sanctions on the companies involved and reduce international cooperation with the US unless it canceled the new arms package. The foreign ministry didn't list the companies involved in its draft statement over the weekend.

But Sikorsky, Lockheed-Martin, Raytheon and Boeing, are four companies involved in the latest $6.4 billion sale. All four have so far declined to comment to the press.

Boeing has big commercial interests in China, the world's most populous market, including commercial aircraft sales. United Technologies, which owns Sikorsky, also has significant business in the country, where it sells Carrier brand heating and air-conditioning, Otis elevators and escalators and other products.

Experts, while hailing the sanction as the most concrete countermeasure so far, said the government should weigh the sanctions in a cautious way as those companies have close trade cooperation with China.

Yuan Peng, head of US studies at the China Institutes of Contemporary International Relations, said that imposing sanctions for the first time signals China is more serious than ever in its reaction to the arms sale.

Ye Hailin, an expert at the Chinese Academy of Social Sciences said the sanctions mean that those companies who try to profit from the deal need to pay the price.

"You cannot just make money from both Taiwan and the mainland," said Ye.

Many Chinese also applaud the sanctions.

"We should make the US feel more pain over the arms sale. They deserve this concrete punishment," said Gao Jie, a resident in Beijing.

According to Li Qinggong, deputy secretary-general of the China Council for National Security Policy Studies, arms makers, including Lockheed Martin Corp and Raytheon Co, have actually been long kept out of the Chinese market despite the fact that China has a huge demand for radars and related equipment because of its airport expansion.

On the website of Lockheed Martin, the global section listed the ROK, Japan, Taiwan, Singapore, Australia, New Zealand and India under its category of "Asia Pacific market", but not the Chinese mainland. The company's last business with the mainland can be traced to 2002, when it provided seven air traffic control automation systems.

Li said it was relatively easy for China to ban pure arms sellers, but it would be very complicated to sever the relations with Boeing and the United Technologies.

"It is still unclear whether the sanctions mean to be effective against the whole group or just the unit involved," said Li. "Yet our government should weigh the sanctions in a cautious way to avoid hurting overall trade relations."

Like previous US governments the Obama administration has been closely linked with arms manufacturers.

Robert J. Stevens, chairman, president and CEO of Lockheed Martin made a large donation to the Democrats since the Obama administration came to power. William J. Lynn, the current Deputy Secretary of Defense, used to be chairman and chief executive officer of Raytheon Company.

Other US politicians are also closely linked with the arms sellers. FedSpending.org, a website of the watchdog group OMB Watch, reported in 2008 that 151 members of Congress invested close to a quarter billion dollars in companies that received defense contracts of at least $5 million in 2006. These companies got more than $275.6 billion from the government in 2006, or $755 million per day, said the report.