In this article, "China suspends military exchanges with U.S. ," China is retaliating against the United States for the sale of military weapons to Taiwan. The retaliation comes in the form of sanctions against defense weapon companies that do business with China. This is not the first time that this has happened, but with China's increasing power and confidence, the response is expected to be greater this time around.
I'm very suspicious of China. China already has a history of not helping us when it comes to foreign affairs. They have not used their influence with Iran and North Korea in stopping their pursuit of nuclear weapons. The Chinese are still dragging their feet with Iran, with whom they import a large amount of crude oil. One of many reasons, I imagine.
I agree with the article when it says that this may be a test of President Obama's leadership. When the Obama administration scrapped a missile defense plan in Poland to appease the Russians, they got nothing in return in helping with Iran and imposing harsh sanctions against them.
Perhaps this is still the same approach being used by the Chinese.