China has sent an exceedingly blunt message to the U.S. Congress mind your OWN business when one of our three largest energy firms tries to take over one of your biggest.
At issue: attempts in the United States to put up some roadblocks to prevent Unocal Corp. from being boggled up by one of China’s three largest energy firms, CNOOC Ltd. And The Powers That Be in China are not happy. The Washington Post:
Four days after the House of Representatives overwhelmingly approved a resolution urging the Bush administration to block the proposed transaction as a threat to national security, China’s Foreign Ministry excoriated Congress for injecting politics into what it characterized as a standard business matter.
“We demand that the U.S. Congress correct its mistaken ways of politicizing economic and trade issues and stop interfering in the normal commercial exchanges between enterprises of the two countries,” the Foreign Ministry said in a written statement. “CNOOC’s bid to take over the U.S. Unocal company is a normal commercial activity between enterprises and should not fall victim to political interference. The development of economic and trade cooperation between China and the United States conforms to the interests of both sides.”
Those words, the latest rhetorical volley in an escalating trade battle, officially elevated the takeover battle for Unocal into a bilateral issue involving Washington and Beijing, raising the stakes of the outcome.
CNOOC’s bid comes as China’s emerging force in the global economy continues to sow international tensions over competition for natural resources, impacts on the environment, trade balances and security relationships. The deal would be the latest in a string of Chinese purchases of foreign companies as Beijing encourages domestic firms to seek new markets abroad and secure raw materials for China’s aggressive industrialization. The Chinese government has urged energy companies in particular to buy foreign oil fields as China’s consumption soars, deepening worries about the country’s access to supplies.
India’s Rediff notes:
China and India are currently the engines of world economic growth. But India is still a minor part in the worldwide competition for scarce resources. China has become the world’s second-largest importer of oil after the United States. It is building new cities and a network of superhighways, both of which are only deepening its appetite for oil, steel and other industrial materials. The rise in price for oil, which recently crossed $60 per barrel, has profound implications for Indian industry, since it continues to operate in conditions of chronic energy shortage.
In its ongoing strategic rivalry with the United States, China holds a trump card — its nearly 800 billion dollars in foreign exchange reserves. Until now Beijing has been content to buy low-paying US government bonds, indirectly financing America’s huge trade and budget deficits.
According to one view, there is a domestic imperative behind this policy. The Communist Party hopes to gain legitimacy in the eyes of its citizens that it lost after the Tiananmen massacre 16 years ago by appealing to nationalism by reclaiming Taiwan. By integrating its economy to that of the West, it makes itself immune to Western sanctions should it take over Taiwan by force.
In reality, China and America are already dependent on each other. Much of American manufacturing has relocated to China to take advantage of low wages. China cannot let its currency appreciate against the dollar, because then its products will be too expensive for Americans to buy, which would result in the closing of its factories, and social unrest and
unemployment.
The Boston Globe says this:
THE CHINESE offer for the Unocal oil company underscores the breadth and depth of that nation’s opening to the world — one of the historic transformations of the modern epoch. It also demonstrates the contradictions that stand in the way of the full development of Chinese society. US reaction to this offer, which may never be consummated, should not be dominated by false worries about national security, but should maintain the policy of watchful engagement that has served the nation well since President Nixon restored US relations with China in 1972.
NOTE TO CHINA: American politicians from both parties don’t like it when foreign countries tell it what to do. Your statement probably hasn’t helped gain you any support in Congress.
Joe Gandelman is a former fulltime journalist who freelanced in India, Spain, Bangladesh and Cypress writing for publications such as the Christian Science Monitor and Newsweek. He also did radio reports from Madrid for NPR’s All Things Considered. He has worked on two U.S. newspapers and quit the news biz in 1990 to go into entertainment. He also has written for The Week and several online publications, did a column for Cagle Cartoons Syndicate and has appeared on CNN.