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China-US relations

Tension escalates as China summons US ambassador over military sanctions

Beijing also recalled naval chief from US and postponed a three-day bilateral military dialogue in Beijing in order to protest sanctions imposed over purchase of Russian military equipment

PUBLISHED : Sunday, 23 September, 2018, 1:25am
UPDATED : Sunday, 23 September, 2018, 3:44pm

China summoned America’s ambassador and recalled its naval chief from the US on Saturday to protest sanctions Washington slapped on Chinese entities for procuring military equipment from Russia, and threatened to follow through with additional measures by its military.

Beijing also postponed a three-day bilateral military dialogue in Beijing, which was to begin on Tuesday, and warned of possible further measures if Washington does not withdraw the sanctions, according to reports by China’s state broadcaster CCTV.

The meeting was to be the second of its kind, part of a series of multi-track bilateral dialogues started after US President Donald Trump took office last year.

China’s government called on the US to “immediately correct its mistake, revoke the sanctions, and the Chinese military reserves the right to take further countermeasures”, according to the CCTV report.

China’s response to the sanctions is the latest escalation in tensions between the two countries, and negotiation break-downs, playing out on multiple fronts.

The US State Department announced on Thursday that the Chinese defence ministry’s Equipment Development Department (EDD) violated US sanctions on Russia by buying the country’s jets and missile equipment. Both the EDD and its director, Li Shangfu, were named in the sanctions.

The US Department of State said the sanctions were invoked under Section 231 of the Countering America’s Adversaries Through Sanctions Act of 2017 “for engaging in significant transactions with persons on the [List of Specified Persons]”.

US bans on China ‘won’t dent arms deals with Russia’

Vice Admiral Shen Jinlong, the People’s Liberation Army Navy commander, was in the US to speak at the 23rd International Seapower Symposium (ISS), a four-day event in Newport, Rhode Island, which concluded on Friday.

On Wednesday, Shen spoke on an ISS panel called “defending the maritime commons, safeguarding the free and open international order”, ISS coordinator Tyrus Lemerande told South China Morning Post. A transcript of Shen’s comments on the panel was not immediately available.

CCTV provided no further details about the Chinese Foreign Ministry’s summoning of Ambassador Terry Branstad, which caps a week of actions Washington has taken against China on the trade and military issues as well as countervailing moves by Beijing. Branstad was appointed to his post in Beijing by Trump in May 2017.

Officials at the US Defence Department did not immediately respond to questions about the recall of Shen. Officials at China’s embassy in Washington also did not reply.

The transactions that triggered the US sanctions involved EDD’s purchase of Russian Su-35 combat aircraft and S-400 surface-to-air missile system-related equipment.

EDD will be denied US foreign export licences, banned from making foreign exchange transactions within US jurisdictions and prohibited from using the US financial system.

From buyer to partner – China’s changing weapons ties with Russia

Any of the entity’s property and interests within US control will be blocked. Similar restrictions apply to Li, who will also not be able to get a US visa.

Three days before the sanctions were announced, Trump announced 10 per cent tariffs on US$200 billion worth of Chinese products, which will take effect on Monday, significantly widening the scope of a trade war.

These tariffs will then rise to 25 per cent on January 1. They follow the implementation of 25 per cent tariffs placed on US$50 billion worth of Chinese imports in July and August, which Beijing met with equivalent duties on the same amount of US goods.

Reflecting the deterioration in US-China relations, trade talks have also broken down, which threatens to engulf the entirety of two-way trade as Trump has threatened to hit every Chinese import with punitive import duties if Beijing continues to respond with countervailing measures.

US government data pegged the value of bilateral trade at US$505 billion last year, making it the world’s largest trade relationship.

A planned visit by Chinese Vice-Premier Liu He to the US for trade talks has been cancelled, a source said on Saturday after Beijing said on Friday that Washington needed to “correct its mistakes” regarding its handling of the ongoing tariff war.

The source, who asked not to be identified, said that a delegation led by Liu was set to hold talks in the US on Monday and Tuesday, when the bilateral military dialogue was to kick off in Beijing, but that the trip had now been scrapped.

Investment by Chinese companies in the US has also suffered because of concerns that Beijing is acquiring technology through these channels that is ultimately used by China’s military to the detriment of American security interests.

China cancels US trade talk visit by Vice-Premier Liu He: source

Acting on these fears, Trump signed legislation last month that expanded the powers of the 43-year-old inter-agency Committee on Foreign Investment in the United States (CFIUS).

Under the new law, the range of deals the committee can review for national security concerns grew to include transactions in which a foreign investment was merely a minority interest, instead of a controlling share; and extended review powers into the real estate sector that previously had not been part of its portfolio. In the legislation, Congress encouraged other countries to adopt CFIUS-like reviews of Chinese investment.

In the first half of this year, Chinese companies invested just US$1.8 billion, a plunge of more than 90 per cent from the year earlier and the lowest level in seven years, according to investment consultancy Rhodium Group.

With additional reporting by Zhenhua Lu.