Mostly bark, little bite? Modeling US arms sales to Taiwan and the Chinese response

Abstract

US arms sales to Taiwan generate considerable anger in Beijing. Yet China has typically been reluctant to retaliate strongly in response to US arms sales; rather, Beijing has tended to take more symbolic, temporary, actions-such as freezing military exchanges and postponing official visits. Why, on the issue of US arms sales to Taiwan, does the PRC response seem to be mostly bark, with little bite? In this article, we construct a formal model of US arms sales to Taiwan, and use the model to generate expectations about Chinese reactions to those sales. Our model suggests that China faces a tradeoff when responding to US arms sales. On the one hand, domestic pressures and concern that arms sales improve Taiwan `s bargaining leverage vis-à-vis the PRC push China to retaliate against the US. By sanctioning the US, China both ameliorates domestic nationalists demanding strong action and at the same time raises the costs to Washington of continuing with arms sales. On the other hand, however, by responding strongly to US arms sales, Beijing runs the risk that the US will continue with the sales despite the high costs; in turn, the higher costs signal a stronger US commitment to Taiwan that could undercut the PRC `s future bargaining leverage vis-à-vis the island. We show that several variables determine how China makes this tradeoff, including the magnitude of US arms sales to Taiwan, prior Chinese beliefs about how strongly committed to Taiwan the US is, and how much additional leverage revealed US support for Taiwan provides the island in its bargaining with Beijing over sovereignty-related issues.