China warns US about Dalai Lama

BEIJING – China is pledging to retaliate against the U.S. about arms sales to Taiwan and is warning of further damage to ties if President Barack Obama meets the Dalai Lama.

There’s likely to be even more turbulence ahead: Trade friction, currency rate woes and allegations of cyber-spying are already roiling relations.

The rhetoric also is sharpening in a disagreement over new sanctions against Iran, with Beijing refusing U.S. calls to push Tehran harder to cooperate with nuclear inspectors.

Yet the sheer number and variety of current disputes also reflects a newly combative approach by Beijing, emboldened by its $2.4 trillion in foreign holdings – about $800 billion of which is invested in U.S. Treasury securities – and relative success handling the impact of the global financial crisis.

A tough line is essential for the communist leadership that places a premium on being deemed by the deeply nationalist public to be “tough enough to defend China in a dangerous world,” said John Garver, an expert on Chinese foreign policy at Georgia Tech.

“The fact that Beijing is Washington’s banker is not lost on the Chinese government,” said Oxford University China scholar Steve Tsang.