Chinese Foreign Minister Yang Jiechi and U.S. Secretary of State Hillary Clinton, Sept. 26, 2011. (Xinhua)

China has protested renewed arms sales by the US to Taiwan, but the threats of retaliatory action have been described as ‘restrained’ by commentators.

Taiwan requested the sale of F-16 fighter jets but the US decided to ‘only’ upgrade Taiwan’s existing fleet in a deal worth $5.85 billion.

There was an effort by Republican and Democrat Senators to force President Obama to sell the fighter jets, a move that would have upset China considerably more, but the proposal was defeated in a senate vote.

China’s Defence Ministry issued a strong statement, condemning the deal.

"The Chinese military expresses great indignation and strong condemnation... US actions... have caused serious damage to Sino-US military relations, and have seriously undermined the good momentum of the peaceful development of cross-strait relations."

But US Secretary of State Hillary Clinton defended the deal at a meeting with Chinese Foreign Minister Yang Jiechi at the United Nations according to a US official.

"Secretary Clinton responded very clearly that the United States had a strategic interest in the maintenance of peace and stability across the Taiwan Strait," said the official who spoke on conditions of anonymity.

Clinton also pointed out "that the Taiwan Relations Act is quite clear that it provides for a strong rationale for the provision of defensive capabilities and weapons to Taiwan as part of a larger context to preserve that peace and stability," the official said.

Chinese officials "have indicated that they're going to suspend or to cancel or postpone a series of ... military-to-military engagements," added the official.

Analysts say China is unlikely to take any drastic action as they have done in the past and the latest sabre-rattling may be aimed at the domestic audience as much as the international.

Jean-Pierre Cabestan, political science professor at Hong Kong Baptist University, told AFP Beijing had learned lessons from the 2010 break-off in military ties.

"They are going to react, to get angry, and the military may take measures to better counter these retrofitted F-16s, but they will not break military ties with the United States like they did before," he said.

"They're (China) in a new phase -- more flexible and accommodating, and with the Taiwanese electoral factor, it reduces their room for manoeuvre a lot and it will force them not to over-react on this."

Meanwhile the rejection of the request for new jets has been met by a mixed reaction in Taiwan.

The Defence Ministry called the deal a ‘major break-through’ and as good as ‘80% of the sale of the F16s’

But observers criticised the move, worrying about the growing disparity between the two militaries.

“Given the fact that the PRC [Peoples Republic of China] has been building up its strength in recent years and the military balance across the Taiwan Strait has continued to tilt in China’s favor, I think the inability to acquire the more advanced F-16 C/Ds is a disappointment for Taiwan," said Raymond Wu, managing director of a political risk consultancy in Taipei.

The tension between China and Taiwan is currently at its lowest since the split in 1949.