When President Obama wrapped up his first trip to China in mid-November of last year, U.S.-China relations seemed as good or better than they had been in years. It's been downhill ever since. And it looks like things are going to get worse.

While the Western media and administration critics had complained that Obama gave too much and demanded too little during his visit, both sides proclaimed success and pointed to the joint statement issued by presidents Obama and Hu Jintao — the first such statement between the two sides in 12 years — as a breakthrough, highlighting the depth and breadth of the relationship.

From Washington's perspective, the Chinese acknowledged America's positive role in the region. From China's perspective, respect for each other's "sovereignty and territorial integrity" and "core interests" were key, since every Chinese knows these words are synonymous with Taiwan and Tibet. While inside sources assure us that President Obama made it clear to President Hu that arms sales to Taiwan would proceed and that he (like all his predecessors) would eventually meet with the Dalai Lama, many Chinese choose to interpret these remarks as a signal of increased "flexibility" on Taiwan and Tibet, especially since President Obama had very publicly opted not to meet with the Tibetan spiritual leader last October as a sign of courtesy toward President Hu. Wrong!

Efforts to build a new "positive, cooperative and comprehensive" partnership hit a snag in Copenhagen where the Chinese were seen as largely uncooperative, despite their joint commitment to work together for a "successful outcome." This was followed by a series of tit-for-tat protective trade measures centered on steel imports, despite a pledge to "jointly fight protectionism in all its manifestations." Added to this were U.S. complaints that China (gasp! shock!) was censoring the Internet and using it to spy on dissidents — a case brought to a head when Google complained about Chinese restrictions and cyber attacks — and confirmation that President Obama would indeed meet with the Dalai Lama during his visit to Washington later this month.

Then came the Jan. 29 notification to Congress of the administration's plans to sell Taiwan approximately $6.4 billion worth of arms (including PAC-3 anti-missile missiles and heavy-lift Black Hawk helicopters), thus rounding out much of the remaining components of the 2001 arms package originally approved by the Bush administration.

Beijing's reaction was unusually severe, especially since the notification did not address Taipei's 2001 request for submarines or its more recent request for F-16 C/D fighter aircraft; Beijing had previously made it clear that while "all arms sales are bad," submarines and F-16 C/Ds were especially problematic. In addition to once again suspending military exchanges, Beijing threatened to impose sanctions on U.S. companies involved in the Taiwan arms sales if the deal goes forward (which it will unless Congress objects to the sale, which it won't). It also warned that cooperation on important global and regional issues will "inevitably" be affected.

Some have viewed the harsh reaction and stern warnings as a sign of increased Chinese self-confidence (read: arrogance). Others see it as insecurity from a regime fearful of instability. Both are probably right.

In a recent meeting with senior Chinese officials and scholars dealing with Taiwan, American interlocutors were frequently reminded of the "new realities" caused by China's increased political, economic, and military power and influence; "facts" which should cause Washington to "reconsider" its support to Taiwan. But they also acknowledged domestic challenges, including an unprecedented number of civil demonstrations (100,000 instances in 2009, according to one Chinese scholar) and growing public demands (many from its 300-plus million Netizens) for China to be more firm in asserting and protecting its interests.

Most instructive were Chinese demands that the U.S. readjust its strategic calculations. One cannot escape the conclusion that the Chinese may have wrongly interpreted President Obama's acts of courtesy as a sign of weakness or a willingness to defer to China on its "core interests," thus prompting a more confrontational approach to test U.S. resolve.

It is equally plausible that the Chinese overreaction is really aimed not at preventing the impending visit with the Dalai Lama or the current round of arms sales but is rather a deliberate raising of the stakes to head off more controversial future arms sales, such as the F-16 C/Ds.

What Beijing needs to understand is that U.S. arms sales are more than just the fulfillment of America's moral and legal commitment to help Taiwan defend itself. They are a clear demonstration of Washington's commitment to peace and stability in Asia that send a clear signal to allies and potential adversaries alike that the U.S. is determined to be an Asia-Pacific power. A refusal to sell much-needed arms to Taiwan would raise serious doubts about the credibility of America's defense commitment to its other allies. It could also compel Taiwan to turn to nuclear weapons as a last resort, an outcome that China, least of all, should want to see.