By: Jens Kastner

There is rising concern that China will impose sanctions on US companies that sell arms to Taiwan, with potentially devastating effect on Taipei’s quest to build its own submarine fleet with foreign help.

Although the Chinese foreign ministry on July 12 issued the threat, it issued similar warnings in 2010 and 2015 and then backed away. But given China’s increasing belligerence over Taiwan and its aggressiveness in the region in general, the concern is that this time Beijing may act.

The latest sale, announced days earlier, includes 108 Abrams tanks and relevant equipment and support, 250 Stinger missiles and four Stinger Fly-to-Buy missiles and related equipment, at an estimated cost of US$2.22 billion.  

Whereas the conventional wisdom holds that US arms makers don’t do much business with China owing to a military sales boycott imposed by the West after the Tiananmen massacre in 1989, a closer look at the corporate data of companies involved in the latest deal suggests that China does have the means to really hurt.

The US-based General Dynamics Land Systems, for instance, which makes the M1A1 Abrams battle tank. has the same parent company as private jet maker Gulfstream Aerospace, which has experienced robust growth in China in recent years. Britain’s BAE Systems provides a comprehensive portfolio for Chinese commercial aviation customers, maintaining aviation repair centers and offices in the country.

Oshkosh Corporation, an American industrial company that designs and builds specialty trucks, military vehicles, truck bodies, airport fire apparatus and access equipment, has long been supplying trucks to protect major Chinese airports and maintains a manufacturing plant in Tianjin.

US industrial conglomerate Honeywell International, for its part, has witnessed rapid development in China over the past decade, placing its bets on lucrative deals under the Belt and Road Initiative and massive demand for software and industrial systems deriving from Chinese companies globalizing.

Even US missile-maker Raytheon seems vulnerable, its Germany-based Raytheon Anschütz subsidiary feeding China’s flourishing shipbuilding industry with top-notch navigation and communication equipment.

“It is hard to say how significant China’s latest threat is since Trump has taken things outside our experience base, and Comrade Xi is also playing by a new set of rules,” said John Pike, director of the Globalsecurity.org think tank, in an interview with Asia Sentinel.

“If the PRC just sanctioned General Dynamics Land Systems for the Abrams, it wouldn’t amount to much, since GDLS does not sell to China anyway, but if the PRC sanctioned the whole supply chain for everything, and mandated no sales to anyone doing business with China from any of the sub-contractors, it could get really annoying,” he added.

Pike added that it is indeed thinkable that China would punish the whole supply chain, given its growing mercantilist approach, with all political and economic factors completely connected for its leadership.

“Zhongnanhai [the headquarters for the Communist Party of China and the State Council of China] evidently seriously miscalculated on Hong Kong SAR and might wish to show a bit more backbone in this instance,” Pike said. “Also, they will need to lay down a marker for when they try to derail Taiwan’s submarine project, which will be very dependent on global subcontractors.”

The Taiwanese defense ministry in April declared it has completed the contract design phase of Taiwan’s first indigenous diesel submarine project, with blueprints and prototype to be completed by 2020 and 2024, respectively.

This came a year after the US State Department gave the go-ahead for American defense companies to sell technology for the new project, which is being carried out by China Shipbuilding Corporation (CSBC), Taiwan’s main shipbuilding company.

Taiwan’s President Tsai Ing-wen in May broke ground on an indigenous submarine construction and repair facility, saying that the facility would furnish the military with weapons that could not be procured abroad, and that its construction will be completed by the end of next year.

Taiwan still has an outstanding request for the US to approve the sale of 66 F-16 fighter jets of the new Viper variant, which can carry a wide range of short- and medium-range air-to-air missiles.

Although some military observers doubt the efficiency of the new Abrams tanks on the island’s coastal terrain, others see them as a useful addition to Taiwan’s arsenal.

“Lining up M1A2 tanks at the peacetime drills at the beaches to fire into the ocean showcases determination to deter and eliminate amphibious invading troops at the beach, thereby generating deterrence,” said Yisuo Tzeng, the Acting Division Director of the Taipei-based Institute for National Defense and Security Research. “In wartime, engaging invading enemies at the beach with either [main battle tanks] M1A2, M60A3 or M48H requires the existence and timely support of local air superiority.”