Beijing, China (CNN) -- Challenge China's position on Taiwan and watch China go ballistic. When the United States last week announced plans to sell advanced weapons to Taiwan, China fired back with vitriolic anger. It's a "crude interference in China's domestic affairs," said He Yafei, vice minister of foreign affairs. It could "lead to repercussions that neither side wishes to see," he said. The same day, China suspended plans for military exchanges and threatened sanctions on American companies involved in the arms sales.
China's angry response comes as no surprise. "The Chinese take this seriously," said Jim McGregor, senior adviser at APCO, a U.S. consulting company. "We're in a political season in China. People are jockeying for positions for a change in leadership a few years down the road, so I guess it makes the Taiwan issue even more sensitive."
China considers Taiwan as a mere renegade province. Beijing said it seeks Taiwan's "peaceful reunification" with the mainland, but it has also hinted readiness to resort to military means if Taiwan declares independence. Beijing considers Taiwan a "core interest" issue that is non-negotiable.
Washington said it plans to sell a package of weapons that include Black Hawk helicopters, anti-missile missiles, mine-hunting ships and a command and control enhancement system.
Estimated price tag: $6.4 billion. Under the Taiwan Relations Act, passed by the U.S. Congress in 1979, Washington is obligated to help Taiwan, its longtime ally, to defend itself. The State Department said the latest round of sales is a way to guarantee security and stability across the Taiwan Strait.
Some America-watchers believe the arms sale is ill-conceived.
"It comes at a point when you have the best mainland-Taiwan relations, with opening of direct transport links across the Strait, and the two sides working for a possible peace treaty. There is no hostility, no threat from Beijing to use force and no Taiwanese eagerness to provoke the mainland. This is not a wise choice in terms of strategy," said Wenran Jiang, a political science professor at University of Alberta in Canada.
Other analysts warn it may just backfire. Victor Gao, director of Center for China and Globalization, a Chinese think tank, says: "If the United States think the Taiwan issue is just a Taiwan issue, that it can do whatever it wants regarding Taiwan without triggering backlashes from China, it's dead wrong."
In recent months, China and the U.S. have been at loggerheads over a slew of prickly issues: the U.S. trade deficit with China; U.S. pressure to revalue China's currency; and U.S. criticism of China's human rights record, its ethnic and religious policies in Tibet and Xinjiang.
In recent weeks, Washington and Beijing have traded sharp words over China's Internet policy after the search engine company Google threatened to pull out of China, citing problems of censorship and hacking attacks.
In the coming months, President Barack Obama is expected to meet the Dalai Lama, the exiled Tibetan spiritual leader when he visits Washington. The Nobel Peace prize laureate said he advocates genuine autonomy for Tibetans, not Tibet independence. Beijing regards him as not just a religious figure but a dangerous "separatist," a politician who wishes to sever Tibet from China.
When asked how China would react to such a meeting, Zhu Weiqun, a senior Communist Party leader in charge of ethnic and religious affairs, warned of serious damage. "It will seriously undermine the Sino-U.S. political relations," he said. "We will take corresponding action to make relevant countries see their mistakes."
Such seemingly unrelated events feed into China's paranoia, analysts say. "Beijing will connect the dots of recent events," said Jiang, the University of Alberta professor. "The U.S. government criticisms on Internet freedom in China and now the arms sale to Taiwan -- [China] will use these events as proof that the Obama administration is now pursuing a hard-line strategy against China. So Beijing feels it must respond with much stronger measures."
It's not clear how else Beijing will match its bark with bite. Its threat to impose unprecedented sanctions on American companies could hurt the business of aerospace giants like Boeing. That will send a bad signal to the American business community in China, which is already complaining about creeping Chinese protectionism at its expense.
"It's a tough business climate here right now," said APCO's McGregor, who once served as chairman of the American Chamber of Commerce in China. "This is just one of a number of things that are troublesome." China also is now the biggest holder of U.S. treasury debt. "China may also consider buying less U.S. treasury bonds, which will make the U.S. economic recovery much more painful," Gao said.
The souring of relations comes only three months after Obama visited China during which the two sides issued a joint statement that signaled cordial and steady ties. Some political analysts at that time spoke of "G2," wondering if much of the global issues will now have to be discussed and solved by the two big economic powers.
"There was too much of a hype about sea change in Sino-American relations," says Peking University professor Zha Daojiong. "There was never a G2 to speak of. Sino-American relations are going to be shaped by the same sort of issues that have troubled the two governments in the past."
But Beijing's retaliation could hurt more by inaction.
As a rising power and a permanent member of the U.N. Security Council, the U.S. needs China's acquiescence, if not cooperation, to help resolve intractable global issues: the financial crisis, terrorism, cross-border crimes, climate change, and North Korea and Iran. In the U.S. standoff with Iran, for example, Washington has been leading a move to impose additional U.N. sanctions on Iran over its nuclear activities.
China, which relies on Iran for supply of oil and natural gas, has typically resisted sanctions, saying they are counterproductive. U.S. Secretary of State Hillary Clinton last week met her Chinese counterpart in Paris to lobby for China's crucial support for that. So far, China remains noncommittal.