China will sanction Lockheed Martin over arms sales to Taiwan

Hong Kong (CNN Business) China said on Tuesday it would place sanctions on Lockheed Martin (LMT) for its involvement in arms sales to Taiwan, a move that could further escalate tensions between Beijing and Washington.

"China firmly opposes US arms sales to Taiwan," Foreign Ministry spokesman Zhao Lijian said at a press conference. Taiwan is a self-ruled island, but China has long vowed to unify it with the mainland.

The United States is one of Taiwan's main arms suppliers. The US State Department last week approved a request by Taiwan to upgrade its Patriot Surface-to-Air missiles at an estimated cost of $620 million, according to Taiwan's state-run Central News Agency.

In response, China is imposing "sanctions on the main contractor of this arms sale, Lockheed Martin," Zhao said, without going into detail. The United States should "stop selling arms to Taiwan and cut its military ties to Taiwan, so it won't do further harm to bilateral relations between China and the United States," he added.

Relations between the world's top two economies were already approaching new lows.

After tightening sanctions on Huawei, Washington has threatened in recent weeks to ban more of China's biggest tech companies. Beijing has sanctioned US officials and lawmakers and told the United States to quit interfering in China's international affairs. Meanwhile, there is growing criticism from the United States and other Western countries over Beijing's crackdown on Hong Kong and China's early handling of the coronavirus pandemic.

Selling arms to Taiwan "shows the US is advancing its plans to contain the Chinese mainland regardless of the issues it has with handling the coronavirus at home, and it will lead to more chaos and complexity to the region instead of peace and stability," China's state run tabloid the Global Times reported last week.

The arms sale is "symbolic, and only gives Taiwan secessionists false courage, rather than boosts its military capabilities," Yang Chengjun, a Chinese expert on missile technology and nuclear strategy, told the newspaper.

Lockheed Martin did not immediately respond to a request for comment.

It is unclear how Chinese sanctions would affect the company's business. Lockheed Martin said in a recent filing that missiles and firearms will account for less than 20% of the company's estimated sales for 2020. It makes more than twice as much revenue from aeronautics, which includes sales of the company's F-35 fighter jets.

Beijing could restrict Chinese companies from supplying key technology to Lockheed Martin, which would be similar to restrictions Washington has placed on Huawei. Last year, Sky News reported that a Chinese-owned company manufactures circuit boards for F-35 jets. Lockheed Martin told the British broadcaster at the time that it was not aware of any other Chinese-owned F-35 suppliers.

— CNN's Isaac Yee contributed to this report.