China announced sanctions on U.S. defense stocks Boeing (BA), Raytheon Technologies (RTX), and Lockheed Martin (LMT) Monday over Taiwan weapons deals.


A foreign ministry spokesman told reporters Monday that China was protecting its national interest but gave no details about the sanctions, Reuters reported.

The announcement comes after the U.S. State Department approved $1.8 billion in weapons sales to Taiwan last week, Reuters reported. The weapons included:

  • 11 Lockheed High Mobility Artillery Rocket System (HIMARS), for an estimated cost of $436.1 million
  • 135 Boeing AGM-84H Standoff Land Attack Missile Expanded Response (SLAM-ER) Missiles for an estimated $1.01 billion.
  • Six Collins Aerospace MS-110 Recce external sensor pods, for an estimated cost of $367.2 million. Collins is a division of Raytheon.

The package may have spurred extra hostility from China because the HIMARS reportedly will include the M57 missile, which can hit targets up to 190 miles away. That’s enough to reach the east coast of China that’s directly opposite Taiwan, according to Defense News.

More weapon approvals for Taiwan are expected. Late Monday, the State Department notified Congress that it has approved a $2.37 billion sale for up to 100 Harpoon Coastal Defense Systems, which includes 400 Boeing RGM-84L-4 Harpoon Block II missiles.

But it’s not clear how much impact the Chinese sanctions would have on the defense stocks.

While Boeing and Raytheon have large commercial aerospace units that do big business in China, the sanctions are targeting their defense units, and the U.S. already restricts any sales to rivals like China.

Boeing and Raytheon also report earnings later this week.

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Boeing shares fell 3.9% to close at 160.83 on the stock market today amid a broad market selloff triggered by surging coronavirus cases. Among top defense stocks, Lockheed lost 1.5%, Raytheon dropped 2.8%, Northrop ticked up 0.5% and General Dynamics gave up 1.6%.

The inclusion of drones, cruise missiles, anti-ship missiles and underwater mines signals a more proactive posture to thwart a Chinese attack before it can reach the island. Prior weapons deals included tanks and anti-tank missiles meant to fight a ground battle after an invasion.

The Trump administration has pushed for major deals with Taiwan as tensions with China grow.

Last year, the U.S. approved an $8 billion deal for 66 Lockheed F-16s, equipped with Northrop Grumman‘s (NOC) APG-83 AESA radar, which is also present on Lockheed’s F-35 and F-22 stealth fighters.

Washington also moved forward a $2 billion arms deal to Taiwan which included more than 100 General Dynamics (GD) M1A2 Abrams tanks, over 400 Raytheon and Lockheed Javelin anti-tank missiles, Raytheon TOW anti-tank missiles, and anti-aircraft Stinger missiles also made by Raytheon.

Follow Gillian Rich on Twitter @IBD_GRich for defense news and more. 


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The post China Hits Defense Stocks Over Taiwan Weapons As Missile Can Reach Coast appeared first on Investor’s Business Daily.

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