China to bring up arms sales to Taiwan in US talks

China says it will again raise the issue of U.S. arms sales to Taiwan when the two sides hold a high-level meeting Tuesday, and also issued a blunter warning against a proposed law to punish countries with undervalued currencies.

Chinese Vice Foreign Minister Cui Tiankai said Monday he will express China's strong displeasure about arms sales to Taiwan when he meets U.S. Assistant Secretary of State for East Asian and Pacific Affairs Kurt Campbell.

"The United States has time and again sold weapons to Taiwan. So, of course, we will have to express our stern opposition," Cui told reporters at a briefing on the meetings.

However, Cui also appeared to indicate China wants to move on from the matter and didn't want it to sour the overall mood for the talks.

"By putting these issues on the table tomorrow, we hope to better address these issues and prevent them from excessively interfering in the normal development of China-U.S. relations," he said.

China has said that last month's announcement of a $5.85 billion arms package for Taiwan would hurt relations and that it would suspend some military-to-military contacts with the Pentagon in response. Elements of the powerful military and hard-line nationalists have demanded stronger steps, including economic retaliation against military contractors involved in the Taiwan deal.

The U.S., which is obligated by law to ensure Taiwan has the means to defend itself, says it was merely responding to a long-standing request from the island's democratically elected government.

Cui also said that a proposed U.S. law to punish countries with artificially low currencies could result in a trade war. China's central bank issued a similar warning last week but Cui's comments came with a tougher tone.

U.S. senators voted last week to open debate on a bill allowing the government to impose additional duties on products from countries that subsidize exports by undervaluing their currencies.

"This bill in no way represents the reality of the economic and trade relationship between China and the United States and might have an adverse impact on the development of the commercial relationship," Cui said.

"Should the proposed legislation become law, the only result would be a trade war between China and the United States, and that would be a lose-lose situation for both sides," he said.

The Chinese yuan has appreciated by more than 20 percent against the dollar since China began allowing it to trade within a narrow daily band in 2005. However, Beijing has rejected calls for it to strengthen more quickly and economists are divided on how much it remains undervalued as well as the exchange rate's role in easing China's massive trade surplus with the U.S.

The issue of territorial claims in the South China Sea is also likely to arise in the talks with Campbell amid fears of a conflict between China and other claimants, especially the Philippines and Vietnam.

The U.S. Navy remains dominant in the region and U.S. Secretary of State Hillary Rodham Clinton angered China last year by stating that Washington had a vested interest in seeing that such disputes are resolved peacefully.