Chinese see U.S. debt as weapon in Taiwan dispute

China’s military has no apparent control over the country’s financial policies, although the military remains a powerful force in the communist system where ultimate power resides in the Central Military Commission, headed by Chinese President Hu Jintao along with two key generals as deputies.

Pentagon officials have expressed concerns in recent years that China’s military may be acting outside its political leadership. They pointed to differing explanations by Chinese military and civilian leaders regarding the secret January 2007 anti-satellite missile test, and a perplexing incident in 2007 when the aircraft carrier USS Kitty Hawk had permission to dock in Hong Kong for Thanksgiving but was turned away by Chinese authorities upon nearing the port.

The last time Chinese officials raised economic threats against the United States was 2007 when two economic officials warned of what some called the “nuclear option” — a campaign of economic threats — meant as a political weapon to counter opposition in Congress to China’s currency manipulation that has undermined the U.S. dollar.

The Chinese military officers said China’s next defense budget, expected to be made public in February, should reflect Beijing’s opposition to the Taiwan arms sale.

“Clearly propose that due to the threat in the Taiwan Sea, we are increasing military spending,” Gen. Luo said.

Gen. Luo said China must change its approach to the United States and assert its power. “China’s attitude and actions over U.S. weapons sales to Taiwan will be increasingly tough,” he said. “That is inevitable with rising national strength.”

John Tkacik, a former State Department China specialist, said China’s Central Military Commission has the power to order financial measures such as selling U.S. securities, although it is a complex process.

“The Chinese military now believes that China has tremendous economic and financial leverage, especially over the United States, and they are giving fair warning to the world that they will use it when they can,” he said.

The Obama administration, like its predecessors, has said U.S. arms sales to Taiwan are authorized under the 1979 Taiwan Relations Act, passed by Congress in the aftermath of the shift in diplomatic recognition from Taiwan to mainland China. The act authorizes sales of defensive arms.

China’s government has rejected the U.S. justification, claiming that U.S.-China joint communiques outlining relations call for limiting and eventually ending all arms sales to Taiwan.

China and the United States have clashed in recent weeks on a number of issues in addition to the Taiwan arms sale, including Beijing’s opposition to the upcoming meeting between President Obama and the exiled Tibetan Buddhist leader, the Dalai Lama.

Secretary of State Hillary Rodham Clinton also criticized China recently for tightening controls on the Internet, which she suggested was a violation of basic freedom.

The administration also has sought the Chinese government’s explanation for the recent computer attack on the Internet giant Google and several other U.S. high-technology firms, suggesting that Beijing was behind the computer intrusions and data theft.

China’s military spending has increased sharply over the past decade as part of China’s semi-secret military buildup that has involved new deployments of advanced ballistic and cruise missiles, large numbers of new warships and submarines, new advanced fighter bombers and various high-tech weapons ranging from computer network attacks and anti-satellite weapons.