By Jim Wolf
RICHMOND, Virginia (Reuters) - Taiwan portrayed the Obama administration on Monday as yielding to China at Taipei's peril, renewing a push for 66 new U.S.-built Lockheed Martin Corp F-16 multi-role fighter aircraft.
"These years, China is showing stronger and stronger reaction to U.S.-Taiwan arms sales, and that (has) turned your country more wary with arms sales," Andrew Yang, the deputy defense minister, told an annual U.S.-Taiwan defense industry conference running through Tuesday in Virginia.
The Obama administration informally told U.S. lawmakers on Friday that it would upgrade Taiwan's 140-plus existing F-16 A/B jets while deferring a request for the more advanced F-16 C/Ds, the latest model.
The F-16 issue underlines the role that U.S. arms-makers and their political backers play in the sensitive dealings between the world's two largest economies over Taiwan, the thorniest issue dividing them.
The administration is expected to formally notify Congress of the proposed arms sale on Wednesday, a U.S. official said.
The U.S. government is mandated under the Taiwan Relations Act of 1979 to provide for Taiwan's defense. No other country is supplying it for fear of angering Beijing, increasingly important in world economic, diplomatic and military affairs.
France and the Netherlands are among countries that have suffered economic and diplomatic retaliation for having armed Taiwan in the past. Washington has balked since 2006 at releasing the F-16 C/D, which carries a more powerful engine, advanced cockpit controls and updated display and radar technology.
Yang said Taiwan's top military hardware needs were the new fighters plus diesel-electric submarines -- transfers that Beijing has suggested it opposes above all other arms supplies to Taiwan to date.
The new planes would replace aging F-5s "to maintain air superiority across the Taiwan Strait in the near future," he said in prepared comments distributed to reporters outside the closed-door conference hosted by the U.S.-Taiwan Business Council. Without the new jets, Taiwan's air force will shrink as older aircraft become obsolete.
All U.S. arms sales to Taiwan are opposed by China, which claims the self-ruled island as its own. Beijing has declined to renounce the use of force to bring Taiwan into its fold despite steady progress in cross-Straits relations since President Ma Ying-jeou and his Koumintang party returned to power in 2008 after eight years in opposition.
In January 2010, President Barack Obama approved a potential $6.4 billion arms sale to Taiwan left over from the George W. Bush administration. China in response suspended military-to-military ties and threatened sanctions against U.S. firms.
Arms-sales advocates argue that Taiwan must maintain strong deterrent and defensive capabilities so it can negotiate with Beijing from a position of strength.
China's rise was "an opportunity and a threat to Taiwan and all China's neighbors," Yang said, calling on the United States to provide advanced technologies so Taiwan could become more self-reliant.
To complicate matters for Obama, the U.S. decision on F-16s is spilling into a presidential election due in Taiwan in January. The opposition Democratic Progressive Party's candidate, Tsai Ing-wen, is mounting a strong challenge to Ma and his Koumintang party.
Only days before the Richmond conference, an unidentified senior U.S. official was cited by the Financial Times newspaper as criticizing Tsai's China policy as jeopardizing regional stability.
Dan Blumenthal, a former Pentagon China desk chief now at the American Enterprise Institute, said the reported anonymous criticism of Tsai appeared to be an Obama administration gift to Beijing designed to head off any serious "blowback" over the planned F-16 upgrades.
(Editing by Philip Barbara)