US quandary: Can it supply arms to both China and Taiwan?

The Reagan administration is wrestling with a politico- military decision it inherited from the Carter administration: arms sales to Taiwan. A related, though less urgent, decision is whether to sell arms to the People's Republic of China.

Taiwan urgently needs a replacement for its aging F-100 fighter planes, which make up nearly one-fourth of its combat aircraft. It would love to have the F- 16, a single-seat fighter used by the United States Air Force and its European allies. But it would probably settle for the FX, a place that as yet exists only as a concept. The three related questions the new administration must decide, experienced observers of the east Asian scene say, are:

* What kind of a military relationship, if any, to have with the People's Republic of China. Should this relationship include the sale of arms and, if so , what arms?

* Whether to sell Taiwan the FX or the F-16 in the face of Peking's determined opposition.

* Whether to combine a military relationship with the mainland with arms sales to Taiwan.

There does not appear to be any great hurry on the question of a mility relationship with the People's Republic of China. The new administration has said it wants friendly relations with Peking, and Mr. Reagan appears to share many of Peking's perceptions regarding the aggressive intent of the Soviet Union. The Carter administration went as far as approving the sale of dual-use technology -- applicable, that is, in both military and civilian fields -- to Peking. But although a number of items have been talked about, no sale has yet been actually consummated.

The Taiwanese government wants a decision on the fighter question as soon as possible. It expects the Reagan administration to be warmer to it than the Carter administration was, and it has friends on Capitol Hill on whom it relies to press its case. But can Washington make a decision on arms for Taiwan without considering the kind of military relationship it wants with Peking?

The People's Republic will most certainly and most vigorously oppose any arms sales to Taiwan as a violation of the agreement setting up full diplomatic relations between Washington and Peking. Washington disagrees with this interpretation, but it must know that the type, the amount, and the manner in which arms sales are made to Taiwan will heavily affect its relations with Peking. And relations with Peking, in turn, have a bearing on the overall balance of power between the United States and the Soviet Union.

Such are the political implications. There are commercial implications as well: The most urgent item on Taiwan's long shopping list of military hardware is a replacement for the F- 100s.

A decision will have to be made between the F-16 (which the US is apparently ready to supply to South Korea) and the FX, a replacement for the F-5 so-called freedom fighter. The FX is still in the planning stage, but the idea is that it would be a less expensive alternative to the $10 million F-16.

Assurance of sales to Taiwan would enable the winner of the FX contract to tool up for a production line that could turn out up to 500 planes. Billions of dollars are at stake.

"We prefer to have the F-16," said government spokesman James Soong. A Defense Department spokesman, Maj. Gen. Chen Kan-Wei, said his department prefers either the F- 16 or the F-18 (made by the Navy), but that "either the [ less powerful] F-16-J-79 or the F-5G will be good enough."

Taiwan already co-produces the F-5G under agreement with Northrup, turning out one or two per month.

Presumably a co-production agreement could be reached regarding the F-5G as well. On the other hand, even with the J-79 engine, the F-16 might be considered a more prestigious aircraft, and for that reason perhaps more vigorously opposed by Peking. Spokesmen for the Taiwanese government point out that both the F-5G and F-16-J-79 are strictly defensive. But Peking does not buy this argument and so, in making its final choice, Washington must also consider which aircraft will be more acceptable, or less unacceptable, to Peking.

Thus despite the commercial implications, in the end the decision must be a political one.

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