VZCZCXRO3464
OO RUEHCN RUEHGH
DE RUEHBJ #0260/01 0321130
ZNY CCCCC ZZH
O 011130Z FEB 10 ZDK
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7860
INFO RUEHOO/CHINA POSTS COLLECTIVE IMMEDIATE
RUEAIIA/CIA WASHINGTON DC IMMEDIATE
RHEHNSC/NSC WASHDC IMMEDIATE
RUEKJCS/JOINT STAFF WASHINGTON DC IMMEDIATE
RHMFISS/CDR USPACOM HONOLULU HI IMMEDIATE

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 000260 
 
SIPDIS 
 
E.O. 12958: DECL: 02/01/2035 
TAGS: PREL PGOV MASS PARM CH TW
SUBJECT: PRC INITIAL RESPONSE TO TAIWAN ARMS SALE 
 
REF: BEIJING 248 
 
Classified By: Deputy Political Minister Counselor Ben Moeling. 
Reasons 1.4 (b), (d). 
 
¶1. (C) Summary:  Two days after the announcement of new arms 
sales to Taiwan, China's negative reaction to the 
announcement dominated all discussions of U.S.-China 
relations.  Observers predict a continued series of responses 
across various sectors that could be exacerbated if President 
Obama meets with the Dalai Lama.  Embassy officers were told 
that the PRC reaction could also affect cooperation on 
multilateral and regional issues, but would be unlikely to 
have an impact on cross-Strait relations.  PRC official media 
reaction was uniformly negative, but bloggers so far 
refrained from commenting on the arms sales.  Proposals to 
sanction U.S. companies participating in the sales, the one 
aspect of the Chinese reaction that is qualitatively 
different from China's response to the October, 2008 arms 
sale announcement, were popular among commentators, but the 
Chinese government has not released details on the nature or 
scope of these measures.  End summary. 
 
Government Reaction 
------------------- 
 
¶2. (C) In addition to the measures described in the official 
PRC government response to the announcement of new arms sales 
to Taiwan (reftel), on January 31 and February 1 various 
Chinese government organizations canceled or postponed a 
number of planned bilateral events.  These included: the 
cancellation of the Ambassador's meeting with Communist Youth 
League First Secretary Lu Hao and indefinite postponement of 
the Ambassador's proposed meeting with United Front Works 
Department Minister Du Qinglin, the cancellations of the 
visit to Washington of Vice Minister of Public Security Liu 
Jing and bilateral Fissile Material Cutoff Treaty 
consultations, which were to be held in Beijing.  These 
actions were not explicitly linked to the arms sale 
announcement, but the timing and sudden nature of the 
cancellations left little doubt about the reasoning. 
 
Expert Opinions 
--------------- 
 
¶3. (C) On February 1, Zhe Sun, Director of Tsinghua 
University's Center for China-U.S. Relations, told PolOff 
that the announcement of the arms sales was not a surprise, 
but "people are very mad."  Zhe said that while angry 
nationalist comments on Internet chatrooms can be expected, 
he had also seen strong reactions from mainstream 
intellectuals.  Zhe said that "there is consensus that China 
should take action to defend our national pride," adding that 
"we must be tough this time."  He claimed that China had 
"reason to be mad" and cited Secretary Clinton's recent 
meeting in London with Foreign Minister Yang Jiechi, in which 
there was no mention of the imminent announcement of arms 
sales.  Zhe said he expected the Chinese government would be 
currently studying additional retaliatory measures.  "Whether 
they are implemented may depend on reaction to President 
Obama's meeting with the Dalai Lama," Zhe opined. 
 
¶4. (C) Tao Wenzhao, Senior Fellow at the China Academy of 
Social Sciences (CASS), told PolOff that the arms sale had 
been a surprise to many Chinese citizens since "last year's 
relations were so good, it had raised expectations for this 
year."  During the celebrations of the 30th anniversary of 
the establishment of relations between Beijing and Washington 
in early 2009 people were discussing "a G2," Tao noted, and 
lamented that "now it is clear that the basic structure of 
our relations has not changed."  Tao suggested that the PRC 
would not issue some across-the-board retaliation against the 
U.S. but it would consider actions on a case-by-case basis. 
Looking to cross-Strait relations, Tao hypothesized the 
Mainland would "remind" Taiwan of the issue in their 
engagements, but that it would not seriously impact 
relations. 
 
¶5. (C) Dr. Zhang Wensheng, Director of Xiamen University's 
Taiwan Research Institute (TRI) Political Institute, told 
ConGen Guangzhou Officer that Beijing's reaction has been 
"normal."  Zhang also speculated that the situation could 
deteriorate further if Washington were to sell more advanced 
weapons such as the F-16 C/D or submarines, or if President 
Obama were to meet with the Dalai Lama in the near future. 
Nonetheless, Zhang predicted the arms sales would have only a 
short-term effect on the bilateral relationship; over the 
long-term Beijing still needs to maintain good relations with 
the United States. 
 
BEIJING 00000260  002 OF 002 
 
 
 
Sanctions against U.S. Companies 
-------------------------------- 
 
¶6. (C) The Chinese government has not released a clear 
explanation of the mention of sanctions against U.S. 
companies involved in the arms sales that was included in an 
MFA press statement on January 30.  The Taiwan Affairs Office 
(TAO) referred Embassy officers to the Ministry of Foreign 
Affairs (MFA) for comment; the MFA suggested we contact the 
Ministry of Commerce (MOFCOM);  MOFCOM in turn said the TAO 
and MFA were handling the matter. 
 
¶7. (C) Professor Tao of CASS described the proposed sanctions 
as an experiment, and said it was the first time he could 
recall that China had sanctioned foreign companies.  He was 
unaware of any details about the nature of the sanctions. 
Professor Zhang of TRI separately called the sanctions 
"appropriate." 
 
¶8. (C) Beijing representatives of Boeing, parent company of 
Boeing Defense Systems, which produces the Harpoon Block 2 
system, told EconOffs that, as of February 1, they had not 
heard anything from the Chinese government regarding the 
implementation of sanctions.  Boeing representatives noted 
that in 2009 the company sold 50 aircraft to China, each 
valued at USD 70-100 million, for a total revenue figure of 
USD 3.5-5 billion.  Boeing expected its 2010 China sales 
figures to equal those last year if sanctions were not 
imposed.  Total U.S. aircraft sales to China in 2009 were 
approximately USD 6 billion.  (Note: in October, 2008, 
Boeing's Beijing representative was called in to the MFA for 
a formal demarche by the Director General of North American 
and Oceanian Affairs and warned that if Boeing went through 
with its portion of that sale, "there will be consequences." 
Specific consequences did not materialize.) 
 
Media Reaction 
-------------- 
 
¶9. (SBU) Mainland papers January 30-February 1 carried news 
stories and editorials criticizing the arms sale 
announcement.  Official party mouthpiece People's Daily (circ 
2.3 million) called the sales "a pathetic and short sighted 
strategy" indicative of a "Cold War mentality," adding that 
"the U.S. government is ignoring the overall situation of 
U.S. - China relations and giving in to military and 
industrial enterprises."  Official Guangming Daily (circ. 1 
million) and Xinhua Daily Telegraph both said the U.S. 
decision "has once again hurt the Chinese people's feelings 
and will significantly damage U.S - China relations.  The 
United States should be responsible for any serious 
consequences this may generate." 
 
¶10. (SBU) Media reports focused on consequences for 
U.S.-China relations as well as the need for retaliation. 
Several papers also highlighted the introduction of sanctions 
against U.S. firms supplying military hardware.  Nationalist 
tabloid Global Times (circ 1.5 million) opined "when 
companies want to make profits by selling arms or harming 
China's interests, their bad behavior will not be rewarded." 
In a separate article, Global Times warned "China will soon 
have many more countermeasures in the future to combat United 
States (arms sales)."  The business-oriented China Business 
News (circ 600,000) quoted a MFA official saying "Sino-U.S. 
cooperation on key international and regional issues will 
inevitably be affected." 
 
¶11. (SBU) China Daily (circ 200,000) claimed "Washington's 
arrogance also reflects the stark reality of how a nation's 
interests could be trampled on by another...  China's 
response, no matter how vehement, is justified...  A message 
has to be sent loud and clear: If the U.S. shows no respect 
to China's core interests, it cannot expect cooperation from 
China on a wide range of major regional and international 
issues."  However, despite this rhetoric, Global Times still 
believed "that the generally steady development of diplomatic 
relations between the two countries won't change." 
HUNTSMAN