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U.S.-China Relations In A New World

China’s relations with the U.S. are going through a nervous-making patch. Beijing has warned that any meeting between U.S. President Barack Obama and the Dalai Lama would be taken as damaging the bilateral relationship. The two are planning to hold the meeting postponed last year so the U.S. president could first visit President Hu Jintao in November.

“If the US leader chooses this period to meet the Dalai Lama, that would damage trust and co-operation between our two countries, and how would that help the United States surmount the current economic crisis?” says Zhu Weiqun, the vice-minister who is Beijing’s point person for dealing with the Tibetan leader.

At the same time, Beijing has restated its intention to impose sanctions on U.S. companies that sell arms to Taiwan, following the Obama administration’s decision to approve a $6.4 billion arms sale to Taiwan. That would hit U.S. companies like Boeing, United Technologies, Lockheed Martin, and Raytheon. China has reacted angrily to U.S. arms sales to Taiwan before – by cutting off military-to-military ties – and has in effect blacklisted some companies, but this is the first time it has threatened sanctions publicly.

This all follows on U.S. criticism of China’s performance at the Copenhagen climate change conference, Beijing’s resistance to strengthening the yuan against the U.S. dollar, and cyberattacks on the American search media firm Google that are alleged to have originated in China. On top of that Wall Street firms like Goldman Sachs are feeling a backlash for selling state-owned enterprises money-losing energy derivative contracts.

Energy, like media, is an industry that the government considers sensitive and which is dominated by politically well connected firms. Taiwan, of course, is one of Beijing’s hottest political hot buttons. So is all this just China being more assertive of its national interests at a moment when Western officials are increasingly sensitive to the inexorable shift of economic power eastwards, or is it overplaying its hand as Chinese officials grow more confident about their country’s role in the world?

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New ABC Of Aerospace

The C919, a 190-seat commercial jet, won’t take to the air for at least half a decade, and not enter service for at least a couple of years after that, but it will be the largest home-built airliner to be constructed in China, and will mark a significant advance for an industry Beijing has earmarked as a national champion and global competitor. Models of the plane, to be built by Shanghai-based Comac, an acronym for Commercial Aircraft Corp. of China and part of the state-owned Aviation Industry Corp. of China (Avic), have gone on show in Hong Kong. (It was announced in March.)

Comac already builds a 90-seat jet, the ARJ-21, for which it says it has around 200 orders on its books. The new jet liner is potentially competitive bad news down the road for Airbus and Boeing, the two global aerospace giants who see the Chinese market as one of their great hopes for the future, and whose A320 and 737 models now dominate the regional jet section of the market. The overall Chinese market for commercial aircraft is forecast to expand fivefold over the next 20 years. That means orders for more than 2,000 aircraft to scrap over, as China expands it aerospace industry’s focus from military to civilian. Air China, China Southern Airlines and China Eastern Airlines can all be expected to do their patriotic duty.

It would be rash to assume that the Chinese plane maker will stay third in the trinity of Airbus, Boeing and Comac. Equally, the challenge shouldn’t be underestimated. Comac is starting from scratch, having been set up only last year with the purpose of developing China’s first airliners. It has given itself eight to 10 years to develop the C919, compared to the six it typically takes the more practiced Airbus or Boeing. It will need to rely on foreign-made engines, avionics and other components for its early models as it learns to build its own, and perfects its aviation grade aluminum and composites. It will also have to learn how to get its airliners internationally certified if it wants global sales. The ARJ-21 isn’t yet certified in the U.S. for example.

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