Market Watch
February 1, 2010

HONG KONG — China adopted a tough stance against the U.S. over the weekend for selling arms to Taiwan, announcing it will suspend military exchanges with Washington, and warning of sanctions against U.S. companies involved, according to reports Monday.

[efoods]The Chinese foreign ministry said the suspension of military exchanges would affect scheduled vice-minister level meetings on security, arms control and anti-nuclear proliferation issues, The Wall Street Journal reported.

Chinese vice-foreign minister He Yafei told the U.S. Ambassador Jon Huntsman that America’s $6.4 billion arms sale to Taiwan “constitutes a gross intervention into China’s internal affairs,” the Journal reported, adding China is “extremely indignant.”

But U.S. officials believe the risks with China can be contained, as neither side would want their bilateral relationship to get out of control, according to the Journal.


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