China has yet to give an indication of how it will respond to the Taiwan arms sales package, although it will undoubtedly involve some tough talk and bellicose posturing. But Chinese foreign policy analysts are certain it will not affect trade and business. 'At the end of the day, I don't think Sino-American relations will get that much worse,' said Professor Guo Xiangang, of the American affairs department of the Institute of International Affairs. 'The reason is simple: bilateral trade jumped 21 per cent last year and this will lead relations in the right direction,' he said. Chinese mock US President George W. Bush - popularly called 'little Bush' in China's official press - as a know-nothing cowboy, but he may be joined by a right-leaning new prime minister in Japan, Junichiro Koizumi, who will show even less tolerance for China's views. Even before the elections, Japan's ruling party was paying little heed to China's vehement protests over the history textbooks issue. The books gloss over Japanese atrocities during World War II. The arms sales put a final full stop to efforts by former US president Bill Clinton to resolve key tensions in the region by offering concessions to North Korea and China. Japan now seems bound to follow Mr Bush's lead in taking a tougher and more sceptical line towards Pyongyang - bringing about an end to a resumption of talks between the two Koreas. Although China warned Taiwan arms sales would have a 'devastating impact', there is not much China can actually do. It has already taken steps to strengthen its military stance. 'China will boost its military and take some diplomatic measures such as strengthening its co-operation with Russia,' predicted Professor Guo. It had already announced a strategic pact with Moscow, which means it intends to buy more advanced weapons. It has already increased military spending and this was reinforced by the 18 per cent rise in the PLA budget revealed at this year's National People's Congress. By taking these options and signalling a more assertive stance, and following it up with uncompromising rhetoric over the spy-plane incident, President Jiang Zemin invited Mr Bush's team to respond in kind. 'Since coming to power, Bush has strengthened co-operation with Japan and Taiwan. I think he will have to change this, otherwise there will be more problems,' warned Gao Chaoqin, an expert on American affairs at Strategy and Management, a Communist Party-backed magazine. 'I think the American Government needs a period of time to adjust its position in relations with China. If this is not handled well, then there will be other events like the plane collision,' he said. 'I think in reality, the American Government will not sell all the weapons it has promised to Taiwan. It will take China's position into consideration,' Professor Guo said. By postponing a decision on selling ships armed with the Aegis radar guided weapons system, the US has tried to keep another card in hand. Yet Mr Bush's arms package is the biggest Taiwan has been offered since the early 1990s, when the island bought 150 F-16 fighters from the US and 60 Mirage 2000-5 fighters and six Lafayette-class frigates from France worth billions of dollars. China took angry steps to punish France for the arms sales, similar to economic sanctions against the Netherlands in the early 1980s when it sold diesel submarines to Taiwan. The package of eight diesel submarines will have to be built by the Dutch again or some other European country as they are no longer manufactured in the US. Such arms sales are seen even in China as part of a protracted diplomatic dance and extended bargaining. Neither in the case of the Netherlands nor France did Chinese sanctions have any long-term bearing on bilateral relations. Indeed, France is now closer to China than it was before. As leaders jockey for position ahead of the 16th Communist Party Congress next year, President Jiang now looks as if his position has been weakened. Many people condemn him for backing down and releasing the Hainan spy crew too early. Western observers fear that if Mr Jiang wants to step down from his party and state positions but hold on to the key chairmanship of the Central Military Commission, he will have to prove himself a stern defender of the military's views, a faction which has the least to gain from entering the World Trade Organisation quickly or undertaking many needed reforms.
