WASHINGTON — China curtailed military exchanges with the United States on Saturday and threatened to sanction U.S. firms in retaliation for proposed American weapon sales to Taiwan.
The moves signaled a souring of relations between the world's two largest economies.
China's actions, reported by its state-run news agency, came a day after President Obama told Congress he would sell Taiwan $6.4 billion in helicopters, missile defense rockets, mine-hunting ships and other materiel.
China also suspended military-to-military contacts with the Pentagon the last time Washington sold weapons to Taiwan — which Beijing regards as a renegade province — in 2008. But the threat to limit dealings with U.S. companies that sell weapons to Taiwan was new and suggests China is willing to use its growing economic power as a diplomatic tool.
"The U.S. plan will definitely further undermine China-U.S. relations and bring about serious negative impact on exchanges and cooperation in major areas between the two countries, and lead to aftermath both sides are unwilling to see," Chinese Vice Foreign Minister He Yafei said, according to the Xinhua news agency.
Xinhua said He called in U.S. Ambassador to China Jon Huntsman on Saturday to protest the weapons sale.
In Washington, the State Department defended the sale, saying the U.S. is obligated to provide the island defensive weapons under the 1979 Taiwan Relations Act.
The sale is consistent with U.S. policy toward China and Taiwan, "and contributes to maintaining stability and security across the Taiwan Straits," State Department spokeswoman Laura Tischler said.
China also could retaliate by making life more difficult for the Obama administration in other ways, such as diplomacy over Iran's suspected nuclear weapons program.
Obama is trying to persuade a skeptical China to join other permanent, veto-holding members of the U.N. Security Council to agree to new sanctions on Iran.
Since taking office, Obama has tried to keep relations with China on a solid footing. He visited China in November.
Both the United States and China have good reasons not to let relations spin out of control. The United States is a huge market for Chinese goods, which helps fuel its economic growth, while China's government holds nearly $800 billion in U.S. debt, according to Treasury Department figures.