What is the purpose of this? Is China supposed to buy American hardware (it would never be granted a license) now?
- The sanctions mean the Chinese military may no longer pay for its weapons imports in dollars which will suit yuan backers just fine
It has been barely two weeks since China joined Russia in the "Vostok" war games, the largest display of Eurasian military might since 1981 when the Soviet Union was still a global superpower, and already the US has found an opening to try and drive a wedge between China and Russia, or at least express its displeasure with their increasingly close relationship.
Amid a simmering trade dispute between the US and China, the US has imposed sanctions on a branch of the Chinese military in retaliation for China's recent purchase of Russian combat aircraft and anti-air surface to air missiles.
The sanctions are more of a nuisance than anything else, blocking China's Equipment Development Department from participating in the dollar-based financial system and from doing business with US businesses, while also blocking the agency and its head, Li Shangfu, from applying for US export licenses.
As Reuters adds, the US State Department said it would immediately impose sanctions on China’s Equipment Development Department (EDD), the military branch responsible for weapons and equipment, and its director, Li Shangfu, for engaging in "significant transactions" with Rosoboronexport, Russia’s main arms exporter.
The sanctions are related to China’s purchase of 10 SU-35 combat aircraft in 2017 and S-400 surface-to-air missile system-related equipment in 2018, the State Department said. They block the Chinese agency, and Li, from applying for export licenses and participating in the U.S. financial system.
It also adds them to the Treasury Department’s list of specially designated individuals with whom Americans are barred from doing business.
The US also blacklisted another 33 people and entities associated with the Russian military and intelligence, adding them to a list under the 2017 law, known as the Countering America’s Adversaries Through Sanctions Act, or CAATSA.
As one might expect, the sanctions provoked an outraged response from China, which demanded that the US correct its "mistake" immediately or face "consequences", per RT.
Beijing has threatened that Washington will face "consequences" if it doesn’t withdraw the recent batch of sanctions against China over military cooperation with Russia.
China’s Foreign Ministry did not mince words, saying Washington should immediately correct its "mistakes" before it’s too late.
China, predictably, was furious, with Foreign Ministry spokesman Geng Shuang telling reporters in Beijing that the move seriously harmed bilateral relations and military ties.
"China expresses strong indignation at these unreasonable actions by the U.S. side and has already lodged stern representations."
"We strongly urge the U.S. side to immediately correct the mistake and rescind the so-called sanctions, otherwise the US side will necessarily bear responsibility for the consequences," he said, without giving details.
Geng also insisted that the purchases were part of "normal" military exchanges between Russia and China - pushing back against the US as it seeks to dictate the terms of global trade between two geopolitical rivals.
China has "normal" military exchanges and cooperation with Russia, aimed at protecting regional peace and stability, which is not against international law or aimed at any third party, Geng added.
China will continue to work with Russia to promote strategic cooperation at an even higher level, he said.
But for all of China's indignation, one anonymous US official told Reuters that the sanctions are actually targeted at Moscow, not Beijing.
One US administration official, who briefed reporters on condition of anonymity, said the sanctions imposed on the Chinese agency were aimed at Moscow, not Beijing or its military, despite an escalating trade war between the United States and China.
"The ultimate target of these sanctions is Russia. CAATSA sanctions in this context are not intended to undermine the defense capabilities of any particular country," the official told reporters on a conference call.
"They are instead aimed at imposing costs upon Russia in response to its malign activities," the official said.
Meanwhile, an analyst said the sanctions would do little to impede China's military expansion, as Beijing only relies on Russia to "plug holes" in its military offerings.
Collin Koh, a security analyst at Singapore’s S Rajaratnam School of International Studies, said the sanctions would do little to counter the evolving research and development relationship between China and Russia.
One Russian lawmaker insisted that the sales would have "zero impact" on Russian arms sales.
In Moscow, Russian member of parliament Franz Klintsevich said the sanctions would not affect the S-400 and SU-35 deals.
"I am sure that these contracts will be executed in line with the schedule," Klintsevich was quoted as saying by Russia’s Interfax news agency. "The possession of this military equipment is very important for China."
Security analysts in Asia said the move was largely symbolic and would only push Moscow and Beijing closer together.
"The imposition of U.S. sanctions will have zero impact on Russian arms sales to China," said Ian Storey, of Singapore’s ISEAS Yusof Ishak Institute.
Instead of discouraging their trading relationship, the sanctions will only push Russia and Beijing closer together.
"Both countries are opposed to what they see as U.S. bullying and these kind of actions will just push Beijing and Moscow even closer together," he said, adding that Moscow needed Chinese money and Beijing wanted advanced military technology.
The US has previously taken steps to sanction China's military: For example, under President Obama, the US DOJ indicted several military intelligence operatives for hacking into the networks of US companies. President Trump issued the sanctions on Thursday, shortly after China announced that it would cut import levies for foreign goods (except for the US). But beyond the trade war and rising geopolitical tensions between the US and Russia, the subtext of Trump's decision is clear: If you're going to buy arms, buy them from a US defense contractor, or face the consequences. Yet, we're sure the mainstream media will overlook this story since it clashes with the narrative that President Trump is merely a "pawn" of Russian President Vladimir Putin.
Source: Zero Hedge