Chinese state media are warning of “severe consequences” if the United States goes ahead with a reported plan to upgrade Taiwan's existing fleet of F-16 jet fighters.

Members of the U.S. Congress are telling news organizations they have been briefed on the plan, which falls short of Taiwan's request to purchase the latest generation F-16s with more advanced capabilities and weapons.

The China Daily newspaper said Monday that even the reduced $4.2 billion arms package will provoke a fierce reaction from China, affecting its relations with Taiwan and the United States. It quoted a financial news website suggesting that China reduce its huge holdings in U.S. Treasury bonds as retaliation.

China's Global Times newspaper also predicted protests from Beijing, but said there is no effective way for China to respond. It said China is unlikely to cut off military exchanges with the United States, as it did after an earlier arms sale , as this would lead to further international criticism of China.

U.S. President Barack Obama is also being criticized by conservatives in his own country, who accuse him of caving in to China.

U.S. officials say they will not comment on the sale until they have formally notified Congress, something that is expected to happen before the end of this month.

Taiwan Defense Minister Kao Hua-chu said Monday he has not been notified of any decision on the arms sale by Washington, and he still hopes the United States will agree to sell Taiwan the advanced jets and diesel electric submarines it has requested.

Taiwan has been independently governed since the Chinese civil war ended in 1949, but Beijing still sees it as a renegade province to be reunified with the mainland, by force if necessary. It regards any arms sales to Taiwan as interference in its internal affairs.

U.S. law obliges the American government to sell Taiwan sufficient weapons for its own defense. But Washington has also committed to gradually phase out arms sales to the island.