U.S. threatened to take military action against China over arms race in space

* WikiLeaks documents reveal battle for supremacy above the Earth in 2007
* Both superpowers destroyed their own satellites with missile strikes in show of strength

The U.S. warned China it could take military action in response to Beijing’s use of space missiles, it has emerged.

Leaked diplomatic documents reveal that the U.S. shot down one of its own satellites to demonstrate its ballistic power after China had destroyed its own weather satellite.

And despite being threatened with military action in 2007 by then U.S. Secretary of State Condoleezza Rice, China carried out another missile test only last year.

The military standoff has been likened to the ‘star wars’ strategic missile plan conceived by Ronald Reagan in the 1980s.

According to diplomatic cables obtained by WikiLeaks and published by the Daily Telegraph, China and the U.S. jostled for position behind closed doors over the issue of missile defence.

China shot down a weather satellite stationed 530 miles above the earth in January 2007, sending over 2,000 pieces of space debris into orbit.

The strike was the first anti-satellite test since 1985 but despite widespread international criticism of China’s actions, then-Foreign Ministry spokesman Liu Jinchao stressed: ‘There’s no need to feel threatened by this.’

Cause for conflict: China and the U.S. engaged in a military standoff over space missile tests

The field of conflict: An artist's impression of a weather satellite, similar to that shot out of the sky by China with a missile




The U.S. state department appeared to not agree, with Clark Randt, the American Ambassador in Beijing complaining about the test to Chinese assistant foreign minister He Yefei.

Officials working for Ms Rice later told China: ‘A Chinese attack on a satellite using a weapon launched by a ballistic missile threatens to destroy space systems that the United States and other nations use for commerce and national security. Destroying satellites endangers people.’

Officials warned: ’Any purposeful interference with US space systems will be interpreted by the United States as an infringement of its rights and considered an escalation in a crisis or conflict.

‘The United States reserves the right, consistent with the UN Charter and international law, to defend and protect its space systems with a wide range of options, from diplomatic to military.'

While the U.S. said China’s testing of an anti-satellite missile contravened ‘the spirit of cooperation’ of international space operations in the 21st century, just over a year later Washington launched its own test strike.

A malfunctioning U.S. satellite was shot down in February 2008, with the public explanation that its fuel tank was defective and would be hazardous if the satellite retuned to earth.

However, diplomatic missives at the time indicate the strike was militarily-sanctioned, with the American Embassy in China receiving ‘direct confirmation of the results of the anti-satellite test’ from U.S. military commanders in the Pacific.

Leaked embassy cables reveal the shooting of satellite USA 193 angered Beijing.

A memo sent from the Beijing embassy in Februarty 2008 said the Chinese 'repeatedly emphasised that the United States should provide information on the planned satellite interception prior to releasing the information to CNN'.

Tensions were evident in June 2008 with Chinese delegates at a defence summit claiming the superpowers were ‘neither allies nor adversaries’.

However, China carried out a fresh test last year, according to documents sent from the office of U.S. Secretary of State Hillary Clinton in January 2010.

A diplomatic cable said the Chinese destruction of a CSS-X-11 missile about 150 miles above the earth could be judged to have ‘furthered both Chinese ASAT [anti-satellite] and ballistic missile defense technologies’.

The cable also outlined the concern of the ‘Obama administration’ over China’s stance on space weaponry.

Warning: China's president Hu Jintao (left) angered the U.S. by testing an anti-satellite missile, with officials working for then Secretary of State Condoleezza Rice threatening Beijing with military action

Pentagon proposes huge sale of warplanes to Saudis

The Obama administration is seeking a go-ahead from Congress to sell up to $60 billion worth of sophisticated warplanes to Saudi Arabia and could add another $30 billion worth of naval arms in a deal designed to counter the rise of Iran as a regional power.

The deal would apparently represent the largest single U.S. arms sale ever approved. It would allow Saudi Arabia, the most militarily advanced of the Arab Gulf states and one of the richest countries in the world, to buy top-line U.S.-made helicopters and fighter jets with ranges that would span the Middle East and beyond.

Unlike some previous sales to Saudi Arabia, this one is not expected to be derailed by opposition in Congress or from U.S. backers of Israel, who have worried in the past about blunting Israel's military edge over its Arab neighbors.



Pentagon proposes huge sale of warplanes to Saudis

Iran is now seen by Israel, the Gulf Arab states and the West as a significant and unpredictable threat that has changed the old calculus of the region's balance of power.

The U.S. is realigning its defense policies in the Persian Gulf as Iran improves the range and accuracy of missiles and other weapons that could threaten Israel or U.S. allies in Europe. Besides the Saudi deal, the U.S. has pending or proposed arms sales to Kuwait, Oman, and the United Arab Emirates, and has repositioned some U.S. forces and military assets around the Gulf.

The Pentagon plans to notify Congress of the proposed Saudi sale within about a week, spokesman Col. David Lapan said Monday. Lapan would not confirm details of the Saudi shopping list pending congressional notification, but two senior defense officials said it includes up to 84 new F-15 fighter jets and three types of helicopters including the sleek Black Hawk and the missile-toting Apache.

The Saudi sale has been in the works for months, and U.S. officials have acknowledged its rough outline for months. Full details of the numbers and types of aircraft were reported by The Wall Street Journal on Monday.

The defense officials, who spoke on condition of anonymity because Congress has not yet seen the entire proposal, said the Pentagon expects that Saudi Arabia would initially select about $30 billion worth of aircraft. Approval of the larger proposal would give the kingdom room to buy more warplanes later.

Congress could ask for changes or try to attach strings. U.S. and Israeli officials said they expect some members of Congress will object strongly to the sale, but not enough to block it.

Separately, the Pentagon is considering an additional request to sell up to roughly $30 billion in advanced naval technology to Saudi Arabia. The defense officials said that plan was still in the preliminary planning stage and would not come before Congress for months. It could include new patrol ships to defend Saudi coastal waters and counter the growing naval capability of Iran's powerful Revolutionary Guards.

The sales acknowledges the shift in U.S. and Israeli security priorities in the Gulf region, defense analyst Anthony Cordesman wrote recently.

"Strong U.S. security ties to Saudi Arabia offer Israel a far better alternative than Saudi Arabia turning to European or other suppliers and questioning U.S. support if it faces a crisis with Iran," Cordesman wrote in a Center for Strategic and International Studies analysis.

The Obama administration has repeatedly assured Israel that it is committed to protecting the Jewish state's military advantage, said Jonathan Peled, spokesman for the Israeli Embassy in Washington.

"We have had a close, consistent dialogue about it," and Israel accepts the U.S. rationale for the sale "even though we are not thrilled about it," Peled said.

U.S. and other diplomats said Defense Secretary Robert Gates laid out the reasoning behind the proposed Saudi sale during meetings with Israeli Defense Minister Ehud Barak in recent months.

Washington plans to counterbalance the sales to Arab nations with $30 billion in military assistance to Israel over 10 years. Israel is buying about 20 advanced American F-35 fighter jets worth $4 billion, to be funded by U.S. military aid to the country.

"At the core of our policy is making sure that there is stability in the region and part of that stability is making sure that Israel has what it needs to be able to provide for its own security," State Department spokesman P.J. Crowley said Monday. "So the United States would do nothing that would upset the current balance in the region."


               

       

The 'Angel of Death': Special Forces' latest weapon is biggest flying howitzer in the world

Hell in the sky: The AC-130 Hercules - aka 'Angel of Death' fires its deadly load

This is the ‘Angel of Death’, the world’s biggest flying artillery gun – and the latest weapon being used by British and US Special Forces to defeat Taliban insurgents in Afghanistan.

Our exclusive picture shows the AC-130 Hercules aircraft unleashing its awesome firepower on the enemy 2,000ft below.

From a distance the plane – nicknamed the ‘Angel of Death’ because of the shape that its anti-missile flares take when they are fired – looks like a normal troop carrier.

But the aircraft, which is rarely deployed in daylight, carries a powerful Howitzer 105mm field gun which can ‘vaporise’ targets at a range of 1,200 yards.






Deadly weapon: The artillery gun Special troops call 'Spectre'.




'Fire': Troops load shells and prepare for the recoil

As the Hercules drops from 2,000ft to as low as 80ft above the battlefield, the Howitzer – normally used by ground troops – fires ten rounds a minute and has a back-up of three 25mm Gatling cannons spewing out 7,500 rounds every 60 seconds to produce the ultimate airborne gunship. Once a camera sited under the fuselage has fixed on the target, it sends the co-ordinates to an onboard computer – and the ‘Angel of Death’ is ready to unleash its deadly load.

To dampen the recoil and avoid pushing the Hercules off course as the Howitzer is fired, the gun is set on rollers which run on a small track fixed to the aircraft’s superstructure.

After the fire controller shouts ‘Fire’ the Howitzer leaps back on the track and hits a hydraulic buffer that sends it back to be reloaded. The high explosive 105mm shells, each packed with 5lb of TNT, rocket towards their target at 1,548ft per second.

On contact, the shells can destroy buildings and spread shrapnel over a ‘kill’ area of up to 1,500 yards.

Codenamed ‘Spectre’ by the SAS and SBS in southern Afghanistan, the lethal war machines have been deployed to spread fear among the enemy.

During recent operations, British Special Forces troops have flown alongside American comrades to help pinpoint enemy targets and, in the words of one officer, ‘unleash hell’ against the Taliban.

The gunship is used against what intelligence chiefs list as ‘Tier 1 Taliban’ – top-level fighters, who are constantly hunted down by UK Special Forces units codenamed ‘Task Force 42’ and ‘Task Force 444’.

A Special Forces officer said last night: ‘When a group of key Taliban fighters are taken out it is referred to as ‘‘splashing the target’’ – a crude description, but it works for us.

‘The AC-130 really is the ultimate weapon. It is very accurate and simply vaporises the target and sends a powerful psychological message to the enemy.

‘We have called in Spectre many times and you know the minute it starts to unleash its fury the enemy melt away.

‘We have taken out several high-value targets on the border with Pakistan thanks to the support of the AC-130 crews.’

The ‘Angel of Death’ is operated by a total of 12 crew members. There are five officers – the pilot, co-pilot, navigator, fire control officer and electronic warfare officer. They are aided by seven enlisted staff – a flight engineer, TV operator, infra-red detection set operator, loadmaster and three aerial gunners. Their specially converted aircraft can stay in the skies for 12 hours at a time and is the largest airborne gun in the world.

The crew can carry several thousand 105mm Howitzer rounds, which weigh 40lb each. The Howitzer provides pinpoint accuracy and has top-secret sensors to protect it from missiles.

On operational flights, the plane is loaded with ten tons of ammunition.

Pilots rely on high-tech radar to track targets. It is supported by a top-secret night sensor system.

Further evidence of the plane’s killing power can be seen just behind the cockpit in the form of two 20mm Vulcan rotary cannons, which fire 7,200 rounds per minute.

The gunners who man the weapons are issued with shovels to clear the huge pile of empty ammunition cases as the cannons spew it out.

The artillery gun boasts a pilot-aiming sensor, laser range-finder and a powerful night-vision camera providing real-time information and footage to the gun commander who sits behind the pilots in a fire control centre.

Just in front of the port-side wing, the 105mm artillery gun is mounted alongside a smaller 40mm Bofors cannon.

Rapid-fire sniper takes out five Taliban soldiers from more than a mile away to save British patrol .28 seconds and 9 bullets to take out 5 taliban ambush team more than 1 mile away.

Feat of arms: The Corporal, his face obscured, and his L115A3 rifle

British sniper shot dead five Taliban gunmen in just 28 seconds to save the lives of comrades walking into an ambush.

The marksman felled the rebels from more than a mile away as they prepared to attack troops on foot patrol in Afghanistan.

The corporal - whose identity cannot be revealed for security reasons - has killed a record 37 enemy fighters during a four-month tour of duty.

But his most remarkable feat of arms came when he and the spotter who accompanies him saw the group of armed Taliban.

They were taking up positions to fire on a patrol that included the platoon commander in Helmand Province.

Hiding in an old fort, the sniper prepared his British-built L115A3 Long Range Rifle.


Parade: The Duchess of Cornwall greets soldiers from 4th Battalion The Rifles - including the unnamed sniper - at Bulford Camp, Wiltshire, yesterday

The firearm, which fires 8.59mm bullets at three times the speed of sound and uses a state-of-the-art telescopic sight, is so effective that it has been nicknamed The Silent Assassin.

Requesting permission to shoot - needed because the British had not yet been attacked - the corporal made sure the rebel leader was in the crosshairs of his sights.

He would have had to make precise calculations in a split-second on wind speed and other weather conditions to compensate for the drift of the rounds in flight.

Moments later his commander gave him the go-ahead to fire and in less than half a minute the five Taliban gunmen lay dead.

He said: 'They gave me the "weapons free". I engaged with the first insurgent. It took me nine rounds but I took him down with the ninth.

'Then the other four had moved closer, so I took them down as well.'
The sharp-shooter, a father of one who has been a sniper for nine years and serves with 4th Battalion The Rifles, added: 'My job is about taking care of the boys. It is not about how many you kill, it's about the team.'

Former SAS commander Andy McNab said: 'To bring down five targets in less than 30 seconds is a real achievement. When shot at, humans react just like animals. There are a couple of seconds where they will freeze, then they hit the ground or run.

'In this case the sniper would have had to hit, and kill, a moving target at a considerable distance.'
The corporal's achievement in June last year in the Nad'e Ali district of Helmand, was revealed after the Mail told of how fellow sniper Craig Harrison broke all military records by killing two Taliban machine gunners from more than a mile and a half away.

The Corporal of Horse - a rank in the Household Cavalry corresponding to Sergeant - felled the gunmen with consecutive bullets even though they were 1,070 yards beyond the official range of his rifle

Russia to make 1,000 stealth jets, eyes India deal-Putin urges expanded Russia-India ties

Russian Prime Minister Vladimir Putin (L) participates in an Internet conference with Indian citizens


Russian Prime Minister Vladimir Putin (L) participates in an Internet conference with Indian citizens


Russian Prime Minister Vladimir Putin (L) shakes hands with Indian Prime Minister Manmohan Singh



Russian Deputy Prime Minister Sergey Ivanov (L) talks with Indian Defence Minister A.K. Anthony


Putin was to sign more than a dozen arms and energy pacts worth around 10 billion dollars with India



Energy is emerging as a focus between oil and gas-rich Russia and energy-starved India


India's Prime Minister Manmohan Singh (R) speaks with Russia's Prime Minister Vladimir Putin during a joint news conference in New Delhi March 12, 2010.

Russia will build more than 1,000 stealth fighter jets within four decades, including at least 200 for its traditional weapons buyer India, the head of plane maker Sukhoi said on Friday.

Sukhoi test-flew its long-delayed fifth-generation fighter at the end of January, and Moscow said it would be able to compete with its U.S. F-22 Raptor rival built more than a decade ago.

Sukhoi said last week it hoped the fighter, codenamed T-50, would be ready for use in 2015.

"If you talk about warplanes of this type, there is definitely a market for it if we produce more than 1,000 jets," Sukhoi director Mikhail Pogosyan told reporters on the sidelines of Russian Prime Minister Vladimir Putin's visit to India.

"We have all grounds to believe that there will not be tough competition on the world market," he said.

He said Russia would produce more than 1,000 of the planes within 35 to 40 years.

After the test flight, Putin said Russia had plenty of work to do on the plane.

Analysts say Russia's plans for a joint venture with India to produce the stealth fighters will likely be watched with unease by India's uneasy neighbour Pakistan and regional rival China.

Pogosyan said an agreement on joint output of the jet with India was still in the works and did not say when a deal might be signed.

"I believe that more than 200 planes will be delivered (to India)," Pogosyan said.

"I think (Russia's) defence ministry will buy no less than this amount," he said. About 600 of the planes would be sold elsewhere, he said.

Analysts say several nations, including Libya and Vietnam, have already expressed interest in the fifth-generation fighter.

"Apart from America, the only other fifth-generation project is Russia's, while the Europeans have given up such plans," Pogosyan said.

"Probably the Chinese will try and promote such a product, but I think they face an immense amount of work to make their product competitive," he said.

Russian Prime Minister Vladimir Putin, in India to sign a clutch of multibillion-dollar arms deals, said Friday it was time for the old Cold War allies to boost trade beyond the limited scope of defence.

At just over 7.5 billion dollars in 2009, bilateral trade turnover is minuscule and the two countries aim to lift it to 20 billion dollars by 2015.

"There is the political will on both sides, but we need support from the captains of industry," Putin said during a live webcast with leading Indian businessmen and cultural figures.

"We should think about the future," Putin said, stressing the need for commercial ties to move beyond arms sales -- Russia is India's biggest supplier -- into areas such as energy, banking and information technology.

"Cooperation in hi-tech is the priority for us," he said. "The Russian government is ready to directly support this activity, with the help of additional financial assistance, if need be."

According to Indian officials, energy is emerging as a focus between oil and gas-rich Russia and energy-starved India, always on the lookout for new fuel sources to power its growing economy.

Indian foreign ministry official Ajay Bisaria noted that New Delhi had invested 2.8 billion dollars in an oil field on Sakhalin island off Russia's east coast and was in talks with energy firms Rosneft and Gazprom for more blocks in north Russia.

"India has had an energy strategy of investing in equity in that region and this continues," Bisaria said.

Russia is expected to begin construction soon of a nuclear power facility in the eastern India state of West Bengal and Friday's visit is set to result in another deal for at least two reactors in the southern state of Tamil Nadu.

Russia is already building two reactors there.

"This is one of our most important and promising areas of cooperation," said Putin, who acknowledged growing competition to provide nuclear energy to India after it sealed a landmark deal with the United States in 2008.

The agreement allowed India access to civilian nuclear energy despite its refusal to sign the Non-Proliferation Treaty.

Putin was scheduled to meet his Indian counterpart Manmohan Singh later Friday and sign more than a dozen arms and energy pacts worth around 10 billion dollars.

The deals include an accord to resolve the sale of a refitted Soviet-era aircraft carrier, the Admiral Gorshkov, as well as 29 MiG fighter jets.

The sale of the Admiral Gorshkov has been marred by a series of price disputes and delayed deliveries, fuelling concerns in Moscow that India could be tempted to end its dependence on Russian military equipment.

Putin's foreign policy aide Yury Ushakov said the new accord would "suit both sides" and help put the dispute behind them.

Russia supplies 70 percent of India's military hardware but in recent years New Delhi has looked to other suppliers including Israel and the United States.

The strong ties between Moscow and New Delhi date back to the 1950s after the death of Stalin. But India has in recent years also taken care to balance this friendship by fostering closer relations with Washington.

Russian Prime Minister Vladimir Putin sealed a visit to India Friday with a raft of multi-billion-dollar arms and energy deals, including the construction of 16 Russian nuclear reactors.

The two countries also signed agreements for the long-awaited sale to India of a refitted Soviet-era aircraft carrier as well as 29 MiG fighter jets, further cementing Moscow's role as New Delhi's principal arms provider.

Energy-hungry India is one of the world's biggest markets for nuclear technology and the reactor deal is a triumph for Russia's state atomic agency Rosatom which faces stiff competition from French and US rivals.

While welcoming the deals, Putin stressed that the two Cold War allies were still short of realising the potential of their partnership, one half of the powerful four-strong group of emerging nations that includes China and Brazil.

"The level of our capabilities has not been reached," he said following talks with Indian Premier Manmohan Singh.

Singh hailed the meeting with Russia -- a "trusted and reliable strategic partner" and a "pillar of our foreign policy" -- and pointed to the "rich and very substantive" agreements signed in nuclear energy, defence, space and other sectors.

Russian Deputy Prime Minister Sergei Ivanov said the reactor agreement covered the construction of "up to 16 nuclear energy units" at three Indian sites.

Earlier, Sergei Kiriyenko, the head of Russia's state atomic agency said six of the reactors would be built by 2017.

Two units are already under construction in the southern Indian state of Tamil Nadu and Russia won a deal to build four more in 2008. It was unclear if the 16 reactors referred to by Ivanov included these six.

The accord on the aircraft carrier, the Admiral Gorshkov, marks the end of a lengthy purchase process that was marred by a series of price disputes and delayed deliveries.

Ivanov said the ship would be delivered by the end of 2012. The final cost was not revealed, although experts believe it to be around 2.3 billion dollars.

Russia supplies 70 percent of India's military hardware but in recent years New Delhi has looked to other suppliers including Israel and the United States.

Mikhail Pogosyan, the general director of Russian plane maker Sukhoi as well as the unit that manufactures MiGs estimated the value of the MiG-29K fighter deal at around 1.5 billion dollars.

The strong ties between Moscow and New Delhi date back to the 1950s after the death of Stalin. But India has in recent years also taken care to balance this friendship by fostering closer relations with Washington.

In a live webcast interaction with Indian businessmen, Putin said it was time for the old Cold War allies to boost trade beyond the limited scope of defence.

At just over 7.5 billion dollars in 2009, bilateral trade turnover is miniscule and the two countries aim to lift it to 20 billion dollars by 2015.

"There is the political will on both sides, but we need support from the captains of industry," Putin said.

"Cooperation in hi-tech is the priority for us," he added. "The Russian government is ready to directly support this activity, with the help of additional financial assistance, if need be."

On security issues, Putin highlighted the presence of militant outfits operating along the Afghanistan-Pakistan border, saying they were cause for concern not just to Russia and India but the entire region.

Putin also reassured that Russia had prioritised its military relations with India over rival Pakistan, with which New Delhi has fought three wars since 1947.

In the space realm, Russia agreed to help put an Indian into space in 2015 -- the target date for India's first manned space mission.

U.S. seeks calm as China fumes over Taiwan arms-US urges China against sanctions amid Taiwan spat

Paramilitary policemen practise during a daily training session at the Forbidden City in Beijing, February 1, 2010.




Taiwan's President Ma Ying-jeou (L) speaks to Taiwan's top negotiator on China policy, Straits Exchange Foundation Chairman P.K. Chiang, during an International Democrat Union (IDU) meeting in Taipei, February 1, 2010.


Paramilitary policemen practise during a daily training session at the Forbidden City in Beijing, February 1, 2010.



A child runs past a torpedo on display outside the Taiwan Armed Forces Museum in Taipei, January 30, 2010.




U.S. Assistant Defense Secretary for Asian and Pacific Security Affairs Wallace Gregson speaks during a forum hosted by the Japan Institute of International Affairs in Tokyo, February 1, 2010. The United States intends to meet its obligation to ensure Taiwan's self-defence capabilities, Gregson said on Monda

Chinese state media blasted the United States on Monday for a planned $6.4 billion arms package for Taiwan but U.S. officials said they hoped the flap would be temporary and not derail cooperation.

The arms sales, the latest by the United States but the first by the Obama administration, has added to a litany of strains between the world's biggest and third-biggest economies, including the value of China's currency, trade protectionism, Internet freedoms and Tibet.

The official China Daily said U.S. weapons sales to the self-ruled island, which China claims as its own, "inevitably cast a long shadow on Sino-U.S. relations."

"China's response, no matter how vehement, is justified. No country worthy of respect can sit idle while its national security is endangered and core interests damaged," the English-language newspaper said in an editorial.

White House spokesman Robert Gibbs said the U.S.-China relationship was important and "I don't think that either country can afford to simply walk away from the other."

Gibbs said any sanctions against the companies involved in the arms sales, a move threatened by China for the first time, would not be warranted.

The United States switched diplomatic recognition from Taipei to Beijing in 1979, recognizing "one China," and says it wants the two sides to settle their differences peacefully. The United States remains Taiwan's biggest backer and is obliged by the 1979 Taiwan Relations Act to help in the island's defense

.

State Department spokesman P.J. Crowley said the arms sale decision reflected "long-standing commitments to provide for Taiwan's defensive needs."

"We will, as always, pursue our interests but we will do it in a way that we think allows for positive and cooperative relations with China," he told reporters.

U.S. Defense Secretary Robert Gates defended the arms sale, telling reporters he hoped China's decision to protest by curtailing bilateral military contacts would be temporary and that he still planned to visit China later this year.

"Stability is enhanced by contact between our military and a greater understanding of each other's strategies, so I hope that if there is a downturn, that it will be a temporary one and that we can get back to strengthening this relationship," Gates said.

MISSILE BUILDUP CONCERNS

The Pentagon's 2010 Ballistic Missile Defense Review Report to Congress, published on Monday, said the United States was concerned and closely monitoring China's missile buildup and increasingly advanced capabilities in the Pacific region.

"One regional trend that particularly concerns the United States is the growing imbalance of power across the Taiwan Strait in China's favor," the report said.

The report said U.S. defense policymakers "remain committed to a relationship that is positive, cooperative, and comprehensive and do not believe a hostile or adversarial relationship with China is by any means inevitable."

Beijing considers Taiwan a breakaway province that must accept eventual unification, by force if necessary. China's ruling Communist Party controls the country's media and uses them at sensitive times to amplify its message.

Venting intense anger over the arms sales, Chinese Internet users called for a boycott of top U.S. exporter and plane-maker Boeing Co and other companies supplying parts.

China has for years opposed U.S. defense sales to Taiwan, which has been separated from mainland rule since 1949 and was a Japanese colony from 1895 to 1945.

But for the first time, Beijing sought to pressure the United States by threatening to formally punish companies whose arms are involved in the arms package, which was announced on Friday.

"China has no room whatever for compromise on this issue," said a commentary in the Liberation Army Daily, the mouthpiece of the country's military, adding that Chinese armed forces were ready for "resolute struggle" over Taiwan.

"It is entirely reasonable to impose corresponding sanctions on U.S. companies involved in arms sales to Taiwan."

U.S. arms exporters declined to comment on the Chinese threat and White House spokesman Gibbs said: "I don't think those (sanctions) would be warranted."

Walter Lohman, director of Asian studies at the Heritage

Foundation, said China's response was "mostly noise" and probably designed to deter Washington from considering selling F-16 advanced fighter jets to Taiwan.

"Partly what they're doing now is trying to scare us off the F-16 sale, by making a big deal out of this one," he said.

CHINESE FACE LIMITED OPTIONS

Chinese shares appeared unmoved but trading in offshore one-year dollar/yuan non-deliverable forwards (NDFs) implied slightly slower appreciation for the yuan over the next 12 months.

Dealers said the NDFs shift was mainly driven by the dollar's global strength but the Sino-U.S. tension contributed.

China's top leaders, President Hu Jintao and Premier Wen Jiabao, have not publicly commented on what they have said is their nation's topmost issue, suggesting they want to keep some leeway in dealing with Washington.

Despite Beijing's strident words, options for punishing the United States were limited, said Drew Thompson, director of China Studies at the Nixon Center, a thinktank in Washington.

"They don't have a lot of leverage, and that's a source of frustration for them," he said. "It's hard to picture what they could do that's anything other than symbolic."

Sanctions on Boeing could give its rival, Airbus, more leverage in negotiations with Chinese buyers, Thompson said.

U.S. officials have said Taiwan, which lags China in the balance of military power, needs updated weapons to give it more sway with Beijing, which Taiwan says has more than 1,400 short- and mid-range missiles aimed at the island.

Beijing would postpone or partially halt some military contacts with the United States, including visits planned for this year such as Gates's trip, Xinhua news agency said.

China also said the dispute will damage cooperation with the United States over international issues. Washington has sought stronger Chinese support over several hotspots, chiefly the nuclear ambitions of Iran and North Korea.

"It's difficult to take what are global problems and use them as a tool to vent frustration over a bilateral issue," Thompson said of China's options. "They risk isolating themselves pretty badly."


The $6.4 bln sale has outraged Beijing




US President Barack Obama came in for criticism last year for not meeting with Tibetan spiritual leader, The Dalai Lama



Taiwanese soldiers man US-made anti-tank missiles during a military event in the island's capital, Taipei

White House has warned China against sanctioning US firms

US urge China against sanction
The United States has urged China not to slap sanctions on US companies selling arms to Taiwan, as the firms tried to stay out of President Barack Obama's biggest row yet with Beijing.
The Obama administration defended the arms sale Monday as preserving the military balance between Taiwan and fast-growing China, which reacted furiously to a US announcement it was selling the 6.4 billion dollars in weapons.
Beijing has always strongly opposed US sales to Taiwan, which it considers a Chinese territory awaiting reunification. But in a new step, China pledged Saturday to punish the US companies involved in the deal. Related article: China furious at US 'arrogance' on Taiwan
White House spokesman Robert Gibbs said that Chinese sanctions "would not be warranted."
Gibbs said that Obama had spoken to Chinese leaders when he visited Beijing in November about the question of arms sales to Taiwan, and other issues.
"We've always said that we want the type of relationship where we're working together on important issues of mutual concern," Gibbs said.
"But when we have disagreements... we'll voice those disagreements out in the open, in public."
State Department spokesman Philip Crowley said the sale was consistent with longstanding US policy of only recognizing Beijing but of providing Taiwan with weapons to ward off a potential invasion.
"We think these defensive arms will contribute to security and stability across the Taiwan Strait," Crowley said.
"We regret the fact that they have suggested they will impose sanctions on US companies involved in the sale of these defensive articles."
Obama has tried to pursue wide-ranging cooperation with China, saying that the world's largest developed and developing economies can work together on issues from climate change to the North Korean and Iranian nuclear disputes.
But relations have hit a rough patch on a range of disputes including Google's revelations last month that China had been hacking into accounts of the company and human rights activists.
Another row may be fast approaching as Tibet's exiled spiritual leader the Dalai Lama is visiting the United States in late February.
Obama came under intense criticism at home last year for not meeting with the Dalai Lama so as not to sour the mood before the president's trip to China.
The US side agreed that Obama would meet later with the Dalai Lama, who is widely respected in the United States but vilified by China.
US companies involved in the Taiwan deal all declined to comment other than to say that the issue concerned governments and not individual firms.
An official at one company noted that China did not reveal details about the sanctions, making it difficult to gauge the impact.
US defense contractors sell little to China, which has been under a US and EU arms embargo since its bloody 1989 crackdown on pro-democracy protesters in Tiananmen Square.
But Boeing Co. -- whose McDonnell Douglas unit was given a 37 million-dollar contract for 12 Harpoon missiles to Taiwan -- is an aerospace giant which counts China as one of its largest markets.
Nonetheless, Boeing shares closed up 1.82 percent on the New York Stock Exchange, outpacing the benchmark Dow index, after Obama's budget proposal outlined new business for the company with NASA.
Boeing has deep ties with the aviation industry in China, which could stand to lose if it sanctioned the aviation giant.
Three Chinese companies are under contract to produce key parts of Boeing's emblematic 787 Dreamliner, which took to the skies in December after a more than two-year delay.
Aviation expert Richard Aboulafia, vice president for analysis at Teal Group, said that with past arms sales to Taiwan, "it's usually been this little dance of expressing disapproval over a few months and then things return to normal."
"But you never know when there could be a tipping point," he said. "If somehow Europe stays squeaky clean and the US has this tension over Taiwan and Tibet and cyber freedom and climate change, then there may be a shift to the European aerospace companies."
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