The Obama Administration is discussing a major policy change in US-China military relations.   The Chinese media has reported the possibility that the US may lift its twenty year old arms embargo on China. The US may sell China the C-130 military transport aircraft manufactured by Lockheed and used extensively by the US military. The US and the EU had slapped an arms embargo on China in reaction to the 1989 Tiananmen Square Incident.

American and EU policies on the Chinese arms embargo have seen a divergence of opinion in the past decade. In 2004-5 there was widespread expectation that the EU would lift its ban. During Hu Jintao’s 2004 visit to France, the erstwhile French President Jacques Chirac had declared that the EU ban on China “makes sense no more” in context of China’s global emergence. France worked actively within the EU to achieve an agreement which fell through because of opposition on the part of the Scandinavian countries. The US was staunchly opposed to the proposed EU move. The Bush Administration was following a policy of defending Taiwan with “whatever it took” and European arms sales to China would have adversely affected the military balance across the Taiwan Strait. Washington was also concerned about China getting access to top of the line military hardware and technology from European manufacturers such as Dassault, the French company that produces the Mirage fighter jet.

The proposal for lifting the EU ban has been resurrected in 2010 by Spain. This time around the French are not as forthcoming. The EU has yet to reach an internal agreement on the issue. At an informal EU foreign ministers’ meeting last month in Brussels, a quid pro quo was discussed under which the EU could lift the ban in exchange for China agreeing to ratify the International Convention on Civil and Political Rights (ICCPR). Amidst rising acrimony between EU and China on human rights, this proposal was discussed between Chinese premier Wen Jiabao and EU Chief Jose Manuel Barroso in the first week of October.

China has made it clear it will not accommodate western sensibilities on the issue of human rights. With the announcement of the Nobel Peace Prize for detained Chinese human rights activist Liu Xiaobo, the EU-China negotiations on the issue seem to have hit a roadblock. Widespread European calls for freeing Liu Xiaobo are not likely to help the atmosphere, at least in the short run, between China and the EU countries. In fact, Beijing has already threatened that the Nobel Peace Prize decision is likely to harm China-Norway relations, since the Prize is awarded by a Norwegian committee in Oslo.

The US announcement, coming as it does, in the backdrop of this EU-China exchange becomes significant. The Obama Administration is keen to put military cooperation with China back on track. Beijing’s is opposed to a US$6.4 billion arms package to Taiwan announced by Washington in January 2010. In response to this, Beijing had suspended military exchanges with the US and declined to host US Secretary of Defense Robert Gates’ pre-agreed visit in June to China.

Taiwan continues to be the Achilles heel of US-China relations with both sides protecting core interests in the region. The US presence in the Taiwan issue pushes Beijing to take a hardline approach. For the US, Taiwan remains the test of its resolve in stepping up for the defence of its allies and protecting its strategic interests in East Asia.

Along with these long term considerations, the Obama Administration must also balance the opposing demands of correcting US trade imbalance with China and denying it big ticket items like military hardware. The proposed initiative on lifting the arms embargo has to be understood in this context. The US hopes to resume military cooperation with China and explore the huge Chinese market for military hardware. Since the Clinton administration, human rights concerns in US China relations have been used as a bargaining chip by both sides with little impact on core bilateral issues. China was accorded the Permanent Normal Trading Relation (PNTR) status by the Clinton administration, de-linking US trade and investment from Beijing’s human rights record. On the other hand, Washington raised the human rights issue when the EU wanted to review its weapons ban on China. Off the record, both the EU and the US recognize the allure of the huge Chinese arms market despite strategic concerns with regard to Chinese access to advanced military technology.

US relaxation of its ban will definitely get the European manufactures to lean on their respective governments to review the EU ban. The EU’s commitment to the human rights issue is likely to be severely tested in case the US does enter into a commercial military relationship with China. Most likely, the US is presently looking at a limited relationship and will continue to restrict advanced military technology to China. The US will also lean on the EU to follow its lead. It is debatable whether the EU would be willing to toe the US line in the issue in the face of the huge commercial opportunity that China offers.