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The Chinese response to the decision of the United States to sell a $6.3bn arms package to Taiwan represents a small but significant raising of the ante. The Chinese have partially halted the military exchange programme between the two countries, only recently resumed following a suspension after the last such military package in 2008. This time the Chinese have also threatened to impose sanctions against the US firms involved in the deal. This is causing serious disquiet among firms like Boeing and Lockheed Martin.

Taiwan, of course, is of special significance to the Chinese; since 1949 the return of the island to China has been seen as an overriding priority. Beijing regards Taiwan as an internal Chinese issue, and the US arms sales are ­therefore regarded as interference in...