June 26, 2005

Should Unocal sell to CNOOC?

Here we are. A country that claims to be striving towards being less dependent on foreign sources of energy and just over the horizon looms a deal to sell one of our MAJOR American Oil Companies to a company in a far from trusted competitor in the world market - China.

Should we worry?
All about Unocal. It's not just an Oil Company.
Trying to maintain good Foreign Relations is definitely a difficult necessity.
"President George W. Bush's initial response to the proposed takeover of a major American oil company by a Chinese rival has been to duck. It is not hard to see why. ...." continue reading "News Analysis: Chinese bid for Unocal puts Bush in hard spot" By Richard W. Stephenson The New York Times
Is the Administration caught between a rock and a hard place when it comes to China? Yes. It is bad enough that they don't play fair when it comes to Free Trade and the way they manipulate their currency. Now CNOOC has way overbid an American Company, Chevron, in the bid to purchase Unocal.
It is not just the problem of selling out part of our oil industry to a foreign competitor, it may also affect the negotiations with North Korea.
We want China to do certain things, like begin sanctions against N.Korea. Will part of this deal include allowing CNOOC to purchase Unocal?
(This company is supposed to be independent of the government. The Forbes article below will deal more with this.)
From BBC News:
"In an interview with the Reuters news agency, CNOOC chief executive and chairman Fu Chengyu said he was "quite confident" that his firm's offer would be accepted, adding that the move for Unocal was friendly.

"We believe the US government will approve the deal," he said.

The company's chief financial officer Yang Hua told Dow Jones Newswires that CNOOC is "prepared to closely cooperate to get US approval for this deal".

"We believe the offer will be very good for America as we are going to protect US jobs while continuously marketing [Unocal's] products in the US," Mr Yang was reported as saying."

Protect U.S. jobs? Can we really believe that?

Also from that article:
"The widespread assumption then was that CNOOC would keep hold of Unocal's Asian assets, and sell off the rest of the company."

Who? Who will end up with the assets that China is not interested in?

As of 9:23pm on 6/26/05 1 usd = 8.3 yuan according to Forbes.com where I found the following update:

'China's CNOOC to begin talks with Unocal; sparring begins over review - report'

"BEIJING (AFX) - CNOOC Ltd is set to begin talks with Unocal Corp on its landmark 18.5 bln usd unsolicited bid for the US energy group after Chevron Corp gave permission for the two to negotiate, the Financial Times reported.

The newspaper did not say when the talks will begin but it said the discussions will give CNOOC an understanding of how Unocal's board views the proposal, and what it would take for it to be declared 'superior'.

In Washington, a bi-partisan group of lawmakers has sent a letter to Treasury Secretary John Snow demanding that the potential deal be reviewed 'immediately' by the Committee on Foreign Investments in the US (CFIUS), a powerful inter-agency panel."

(several paragraphs)

"In a letter to Snow, 41 congressmen said the CFIUS review should examine whether the Chinese government was involved in financing the potential deal, whether investments by CNOOC were 'market-based' and free of subsidies and whether there were any 'technology transfer implications' that presented US national security concerns."

The currency issue should definitely play a part in any decision to sell to a Chinese company.
It mentions National Security risks based on technology, but what about the energy we need? What next? Give control of our Nuclear Plants to Iran because they are the highest bidder?

IMO, certain American businesses should never be controlled by foreign entities.
Soon we will all be employed and controlled by foreign (used to be American) companies.


Posted by Dawn at June 26, 2005 10:00 PM
Comments
Comment #63112

Dawn,

Why not?

After all, with all the money the Bush addministration is borrowing from them, pretty soon they will own everything else in this country anyway.

Maybe we could get a good price for Hawaii.

Posted by: Rocky at June 27, 2005 01:59 AM
Comment #63115

Dawn:

Welcome to Democracy and the Free Market. Really, I find your attitude quite disturbing. Don’t you believe in Globalization? Don’t you trust Dear Leader?

Posted by: Aldous at June 27, 2005 02:20 AM
Comment #63116

Free Enterprise, he with the most bucks wins the bid. China is bidding with the most bucks, so far. What is your problem, Dawn? Are you really suggesting that free enterprise is not the panacea to end all problems. Careful how you answer that. Some here might say you belong in the blue column.

Posted by: David R. Remer at June 27, 2005 02:24 AM
Comment #63119

Dawn said: “IMO, certain American businesses should never be controlled by foreign entities.
Soon we will all be employed and controlled by foreign (used to be American) companies.”

Oh, you are just waking up to this? I have been railing about globalization and the selling off of America since Reagan was president and Chrysler was bailed out. America set the standard for subsidizing its corporations outside of communist/socialist societies. America set the standard for buying foreign companies to expand its global market place back in the 1960’s and 1970’s. And Republicans believed this was good, this was free enterprise by America’s definition.

Taiwan and Japan taught the US it could play this game better than the US with its auto and computer industries back in the 70’s and 80’s. Korea and Malaysia and France joined the US model back in the late ‘70’s and ‘80’s and well into the 90’s.

The genie is out of the bottle Republicans. You got what you wished for. Global Free Enterprise where each nation plays its own game of government subsidies to enhance its economy by competitive marketing overseas. The US subsidizes its breadbasket in a number of ways, subsidizes its military weapons sales, subsidizes its medical advances which it exports.

Why should any Republican complain that other nations are playing by our rules? Because Republicans really don’t believe in level playing fields or universal rules. They believe in competitive advantage, however it must be achieved. Of course, in the global marketplace, America is reaping what it has sown.

Had America set the standards for fair competitive marketing practices decades ago when she was the world leader, the rest of the world may have followed that lead. But that history never existed. And now that China is moving on the world stage as the up and coming new economic giant, which America must depend upon, our ability to shape their moves in globalization are limited at best.

So, Dawn are you suggesting that American companies be prohibited from selling to highest bidders of certain other nations? Are you suggesting the be compelled to sell at a lower price? Are you thinking in the back of your mind that the government should pick up the difference between the lower bid price and the prohibited highest bid? And if so, are you not advocating the very kind of subsidization that we suspect China is engaged in? And wouldn’t such subsidizations by taxpayers be socialistic?

My how the world turns.

Posted by: David R. Remer at June 27, 2005 02:50 AM
Comment #63120

Good article Dawn. China has gobs of money. Its government is trying to secure the country. Bush’s oil constituency stands to gain a lot of money. This is the Chinese Century. It’ll be interesting to see how this one plays out.

BTW, I haven’t looked into the details, but I remember everyone was worried about Japan buying everything about twenty years ago. What’s the downside of this deal for the US? Are there really national security issues at stake?

Posted by: American Pundit at June 27, 2005 02:50 AM
Comment #63121

Allow me to formally announce here: the bid marks the beginning of the decline of USA as a world power, and since you will have to engage in Iraq for 10 years, by the time you finish with the Middle-easterner, you will find a World which no longer care about USA. USA will represnet a bunch of white people who is good at using guns or tanks but do not know how to read, do addition or subtraction, recall names of five continents… in essence: idiot!

China will win over USA without a single shot and single death in army. We have enough nuclear weapon to scare the sh!t out of you, and we have enough green back to buy that pants you are wearing.


Posted by: Xiu Zhou at June 27, 2005 05:03 AM
Comment #63125

Bush needs to draw the line. Businesses in China do what their government tells them to do, or otherwise their CEO’s families get billed for the bullet.

This is the major problem of free trade: It’s mostly Bullshit. We may be dropping protectionism here and there, but many other countries, including our main trade partners, including China, are not playing the game fairly.

China especially. They’re keeping their labor costs down by forcing sweatshop wages, keeping their products cheap by pegging their currency to our dollar. They are subsidizing, flooding the markets with their good, and doing all the nice things you’re not supposed to do in free trade and the free market. China hasn’t been converted to free market economies. It has only created a command economy that’s good for business.

Truth is, there are a number of companies out there who want cheap labor and higher profits, and if we did fix the iniquity of the current system, they personally would lose money.

This is why the Bush policy of simplistically pushing free trade is doomed to failure. All it does is play into the hands of those who pretend to play the game, but don’t.

Posted by: Stephen Daugherty at June 27, 2005 08:26 AM
Comment #63128

With oil being so scarce, wise man say America true fool to give more oil authority to foreign power.

Wise man say China company must elect American to its board of directors before deal go through. Will this be negotiated?

No, of course not. Smell of green make Americans betray each other. Big oil company sell out to Chinese. Good ol’ boy Bush will approve without concessions.

China is trying to rule world and is succeeding. Wise man say American leaders too weak to force good deals with Chinese leaders.

Posted by: Wise Man at June 27, 2005 09:11 AM
Comment #63132

Xiu Zhou,

“and we have enough green back to buy that pants you are wearing.”

You made the pants (and most everything else) we are wearing.

To offset you having all the oil we are going to close down all the Chinese restaurants in this country. Unless, as part of the Unocal deal we can get “take out” oil with our Won Ton soup and Eggrolls.

Where is Unocal getting its oil now? Is the origin of any of the Unocal oil in the US or one of its alleged allies countries?What % of the Unocal work force (those drilling for oil) are US citizens.

Posted by: steve smith at June 27, 2005 09:42 AM
Comment #63133

No David, I am not ‘just waking up to this’. I have been told I belong in the ‘blue’ column before.
I am hoping this will be the ‘straw’.
I am hoping a big deal is made of this in the media as was with Schiavo and is with Holloway.
I am hoping it is an issue that will bring us together as fellow Americans.
I am hoping people will see that it isn’t ‘just’ a few thousand jobs where people will be out of work for months until they are ‘re-trained’ or a position at Walmart opens up.
Yes. Our country has been slipping away from us for decades. Our own government is letting it happen and justifying it by convincing people it will only make our lives better. Whose lives will be better? The politicians because they will be their for us just to admire? and won’t have to make tough decisions? Oh wait. That is already what they don’t
do.
I’ve said it before and I’ll say it again.
I am with the crowd that says ‘Vote out ALL incumbents’. BOTH sides.

Posted by: Dawn at June 27, 2005 09:44 AM
Comment #63134

Aldous,
I was rather impressed with your sudden ability to have a rational discussion when I read through ‘Never Complain. Never Explain. Never Apologize.’
I was looking forward to it continuing here. I knew it may not happen though, because Bush had to be mentioned and the topic is oil.
Can’t have everything.

Posted by: Dawn at June 27, 2005 09:53 AM
Comment #63140


Where is Unocal getting its oil now? Is the origin of any of the Unocal oil in the US or one of its alleged allied countries? What % of the Unocal work force (those drilling for oil) are US citizens.

As part of the deal will we become “preferred” customers and/or be guaranteed a fixed rate for a period of years, etc.


Posted by: steve smith at June 27, 2005 11:07 AM
Comment #63151

So, Dawn, since we have immense common ground here to agree, what would you propose America do in terms of changing its policy toward US based multi-national corporations? Let’s face it, we have no control over foreign based multinationals.

And do you think there is any possible avenue at this point to improve our future in light of globalization and Friedman’s “The World is Flat”?

Posted by: David R. Remer at June 27, 2005 12:00 PM
Comment #63152

For an excellent op-ed piece on this topic…check out Paul Krugman’s article in the NY Times today.

China, which has been buying our T-notes for years, is tired of getting very little return on our IOU’s. The best bang for the buck is to re-invest those T-notes into American companies. Unlike the Japanese “attack” of 15 years ago, when Japan purchased mostly land and entertainment vehicles, China goes for the meat.

This is the battle for oil…nothing less. Cheap, efficient free flow of oil to keep their booming economy pumping. Where the US spends billions fighting for it, the Chinese purchase it with our own money!

Posted by: Big Kahuna at June 27, 2005 12:01 PM
Comment #63159

“Where is Unocal getting its oil now?”

steve smith,

Unocal gets a good percentage of its oil from S.E. Asia.


“Bush needs to draw the line. Businesses in China do what their government tells them to do, or otherwise their CEO’s families get billed for the bullet.”

Stephen Daugherty,

The line has been drawn. Our businesses tell our government what they want us to do.

Posted by: Rocky at June 27, 2005 12:41 PM
Comment #63163

Xiu Zhou,

Even at our worst, America would crush China if that was our design. As you know, China boxes up entire western factories for use there. And unless China is buying or stealing western technology for modernization, candle power would still be used.

No Xiu, those living and working under communism are not creators. Chinese CEOs are stealing from their companies and fleeing to the west.

So you see, China will always be a second rate nation. China’s dominance ended centuries ago when few borders existed.

Posted by: Ron at June 27, 2005 12:47 PM
Comment #63169

Don’t sell them a darn thing! Americans it’s more than $ you must see what is going on. China builds a blue water navy, China buys a nuclear platform to fire on our fleets from mother Russia. China is threatening to crush Taiwan, they build missiles like you wouldn’t believe. They control the entrances and exits to Panama Canal, they are all over S. America, the islands in the Caribbean, they are occupying our choke points. They are modernizing their forces to combat us eventually. Why do you not see it? Where is your want for strength? You mark my words we will end up fighting these Chinese someday!! All your money won’t buy you security, I assure you of that. Your money means nothing to them.

Posted by: michael c. bonacci at June 27, 2005 01:14 PM
Comment #63175

michael said: “You mark my words we will end up fighting these Chinese someday!!”

That is what they said about Russia in the post 50’s era. Never happened, michael. And Russia was far more ideologically irrational and unpragmatic than China.

China for all the many criticisms that can rightly be laid toward her, is run by some of the most pragmatic people in any government on earth today. They have a population problem - they are dealing with it. They have a food shortage problem - they are making immense progress on it. They have a future need to be a major global market player - they are dealing with it. They have a defensive problem being the last great Communist country in the world, - they are building their defensive infrastructure.

These people have absolutely no desire or aim to engage the US or anyone else in nuclear war and self-destruction except in self-defense. They observed the security Mutual Assured Destruction (MAD) which protected the USSR and US from nuclear exchanges. They have adopted MAD as well and for these pragmatic reasons.

They had a need to stimulate productivity, creativity, and international marketability. They responded extremley pragmatically by supporting capitalist growth and much freer banking and a far tougher stance on corruption.

The only rational fear anyone should have of China is in her immense international market potential afforded her by her vast relatively cheap labor pool and her ability to churn out extremely rapid growing educational prowess creating superior students in the areas of design, engineering, productivity managment and science.

Just as at the beginning of the 20th century, the US had vast market potential for growth and creativity and productivity, China is now poised in that very same position. And that is a force that cannot, and will not be stopped. The key for other nations in the world, as S. America has realized, is to hop on to the same tracks China is travelling on. There really is little other rational choice, just as America’s trading partners from 50’s through the 90’s had little choice but to follow America’s lead.

The future of economics belongs to China’s dynamic engines of productivity and creativity just now picking up their head of steam. America has but to acknowledge this and engage in mutual economic prospects with China while fighting for parity as best she can. In this regard, so far, I must commend the Bush Administration, for that appears to be the tact they are taking with China.

Posted by: David R. Remer at June 27, 2005 02:23 PM
Comment #63181

I wish I had the answers David.
Maybe Bush has a point in our becoming an ‘ownership society’.
It would be nice if somehow ownership of these American owned international companies, and the profits, were shared among all of us, instead of just the few at the top. Of course that would never happen.
I would probably get mean. Basically screw those that are screwing the American worker.
I don’t care if they claim the costs will go down for us to purchase. One cannot purchase ANYTHING without a job. I am just sick of hearing the same crap come out of Washington no matter who is in the White House.
The thing I propose our government do at this point is make companies that shut down facilities in our country and move the jobs overseas share the profit with the people they just put out in the cold with stocks, bonuses, or monthly stipends equal to at least what they get from unemployment.
Pass a law that keeps the CEO from getting the multi-million dollar bonus for cutting jobs and give it to those with the pink slip in their hand.
People would be hoping their job goes overseas.
I don’t know if any of that can be done, but it sure sounds good to me.

If I could roll back the clock - I would have started all of this ‘Free Trade’ in Africa - not China and India.

Posted by: Dawn at June 27, 2005 03:02 PM
Comment #63192

Oh David,
You are so caught up in your economic theories that you fail to see the threat. You are just like a money minded person. If you have a huge population you expand, if you have a food shortage you take more land! It’s basic and Russia never had the money that the Chinese do! And as far as nukes we will never fire them because of the world outcry!! It will be done by guns alone, plain and simple war is war and it has been waged since man has been here. Why would it be any different now! We haven’t come a long way! Good luck with your idealistic ways, I hope they are right!

Posted by: michael at June 27, 2005 03:22 PM
Comment #63195

Dawn said: “Pass a law that keeps the CEO from getting the multi-million dollar bonus for cutting jobs and give it to those with the pink slip in their hand.”

Dawn, now you are talking about corporate wealth redistribution. Ain’t gonna happen. America is rapidly moving in the exact opposite direction.

The way I see it, China comes out on top for one very basic elementary reason. China, not fearing socialist wealth redistribution, is investing in its labor force of today and the future, with infrastructure, mass migrations from rural to industrial and technological production centers, with radical investments in education and worker training, and a host of programs to increase the consumptive power of its citizens as well as their productive power.

The US is moving in the other direction. Investing heavily in corporate productivity, profitability, and expanding foreign markets, while cutting back investments in the labor force, their consumptive power, retraining and education and in its own domestic infrastructure. In the end, China come’s out on top with a huge domestic dynamic market growing their GDP on domestic production and consumption while at the same time, rapidly growing their export/import trade, largely in favor of trade surpluses with oil and food becoming their only major imports.

I have not read anything on China’s investments in an alternative non-fossil fuel future. Dependence on fossil fuel energy is their greatest constraint on growth and international relations liability in the future. But, being the pragmatists they are, I would bet they are developing such a long range non-fossil fuel energy plan as we speak. Unlike the US which talks a great game but, acts in accordance with corporate fossil-fuel profit dictates.

I mean look at Toyota. Their Prius hybrid vehicle has a showroom stay of about 7 days. The Big Three auto manufacturers non-hybrid cars have a showroom stay of 81 days. American corporations just don’t get it. Never have when it comes to vehicles, energy, and environmental costs which result in huge IRS taxing clean up costs which reduces consumer’s disposeable income which lowers demand for inefficient American products. They just don’t get it.

And that is the cost of free enterprise capitalism with its invisible hand moving economics haphazardly and without unified long range planning and goals toward sustainability. China’s centralized government has the ability and will to coordinate and force cooperation of corporations toward long term national goals. In the end, their mix of centralized planning and control, capitalism and relatively free enterprise, socialism, and infinite demand for improved quality of life by their citizens, has the potential to dominate global economics for the next century at least. At the heart of their potential success is real increases in standards of living for their citizens. As long as that requirement is fulfilled (and their appears to be no major obstacles), their people will work their lives with purpose and high degrees of motivation. Compare that with what American workers are experiencing.

Posted by: David R. Remer at June 27, 2005 03:47 PM
Comment #63220

Lets not forget that China is so wonderful in trying to improve the standard of life for their citizens that families are limited to a certain size.

For years they had a “restriction” on having girls. Now, they find that they have a severe inbalance and have way too many boys compared to girls.

The Chinese government has now placed an incentive on girl births. Even to the point of paying all costs up to an including education. I wonder how many abortions women will have in early pregnancy when a boy is indicated. This way they can start sooner to have a girl pregnancy and cash in on the incentive.

Now, you may think that to be a harsh statement but we are talking about segments of a culture that actually eat brains out of a live monkey’s head. Controlling the sex of it’s population is no problem.

Posted by: steve smith at June 27, 2005 04:51 PM
Comment #63226

Ron,

You are wrong to brand China as second-class country. It will just change in 10 years. Do we need to steal technology? 5000 years we dicover the use of diamond to polish bronze to produce sharp and clear mirror! What is westerners doing then? Eating raw rats they can catch with their stone tools!

Look at Japan. Can you produce car as good as Japanese’s? We learn our lesson from Japan, and we will beat you in every class of product you make, while being a truely independent, powerful, cash-rich nation.

Posted by: Xiu Zhou at June 27, 2005 05:01 PM
Comment #63231

Steve smith,

Indeed, to showcase your country’s advocated free market model, please close down all chinese takeaway shops when we bought Unical. I really don’t care. The CCP government don’t care. Although it is significant enough to you such that you mentioned it.

An advice though: don’t switch to Indian food just yet. They are taking away your full time job! Haha!

Posted by: Xiu Zhou at June 27, 2005 05:08 PM
Comment #63232

I really do not understand how you people can be so optimistic. When the Agentina style finanial meltdown in coming years during Bush’s watch, I will sure check out this forum to see how you guys are crying.

Unical is the test. Either we take it (and other assets) or we dump the greenback.

So long, USA.

Posted by: Xiu Zhou at June 27, 2005 05:11 PM
Comment #63234

Matty said,

Why not? You simply cannot avoid the power of 1.2 billion people. The Chinese said, “Call us LEGION, for we are many.”

The world according to Matty

Posted by: Matty at June 27, 2005 05:12 PM
Comment #63243

Xiu Zhou,

There is no question regarding the quality of workmanship on products from China and Japan. Many are superior to that produced anywhere else in the world.

One reason is that we have been so dependent on China for products due to labor costs that
we have discontinued making them at all.

The other would be the organization and control of the work force. Uniformed workers, highest technology equipment, work schedules of 6 and 7 days/week, exercise periods before and during the work day, job security for life if meeting standards and, unlimited supply of labor.

Make no mistake however, we here in the US have a resolve that is equal to none in the world. At a moments notice, even those of us who have differing opinions and may even appear divided, can unify to a cause immediately. When we do, there is no stopping and no catching us.

There has never been an issue, disaster or otherwise that we have not been able to rise above and be bigger and better for it. I would not make the mistake of overlooking that fact.

Posted by: steve smith at June 27, 2005 05:19 PM
Comment #63250

David,

“I have not read anything on China’s investments in an alternative non-fossil fuel future.”

China is also working with a hydrogen powered car.

American car manufacturers have moved into China because of cheap labor, but they cannot sell these cars in the States because they don’t meet the polution standards here.
The Chinese have fallen in love with the SUV, specificly those that are 4-wheel drive.

The major problem that China must overcome, besides feeding itself, is the great disparity with wealth between those that live in the cities, where the factories are, and those that live in the country, who are mostly subsistence farmers.

Comparisons to the USSR asside, there has to something said about a country that can call up an army of possibly half a billion soldiers.

Even armed with shovels that would be an army to be reckoned with.

Posted by: Rocky at June 27, 2005 05:32 PM
Comment #63256

Rocky, thanks for the info on the hydrogen fuel car. I forgot momentarily their massive and unprecedented river control and dam project which will produce huge amounts of hydroelectric power.

Pollution from their industrial side of GDP growth is also one of their huge liabilities. That is one of the issues driving their investments in education, innovation, and technological acquisition and espionage. Oh, yes, espionage. The US just countered last week indicating it too is going to invest far more significantly in espionage.

Corporate and government espionage is a hidden but burgeoning area of growth for future employees. I am encouraging my daughter to take Chinese as a foreign language. She wants Japanese. But, she still doesn’t have a clear picture of the past-future continuum. Perhaps she will change her mind by the time college comes around.

Posted by: David R. Remer at June 27, 2005 06:09 PM
Comment #63257

Someone once said that the great war ould be when the Bear and the Eagle fight the Dragon. And they said that a very long time ago.

Posted by: James at June 27, 2005 06:23 PM
Comment #63258

David,

When I was in Beijing in 1995 I worked with students from Beijing University. They had a program that sent students to the US to study physics, specificly optics. Those students then came back to China to help teach the stuidents that came behind them.
The Chinese are no dummies. They are in a financial position to now challenge the US for economic dominance on the world stage.

Posted by: Rocky at June 27, 2005 06:24 PM
Comment #63259

Question: China?

Answer: Star Wars and whatever those 100 Top Secret Space Shuttle missions were doing.

Posted by: James at June 27, 2005 06:29 PM
Comment #63263

CNOOC SHOULD NOT BE ALLOWED TO BY UNOCAL OR ANY OTHER US COMPANY!!!!!!!!!!!!!!!!!!!!!!!!!!
Neither should any other foriegn company.
I don’t trust any of them squint eyed rascals any ferther than I can throw my farm. And I donn’t trust a commie that far.

Posted by: Ron Brown at June 27, 2005 06:42 PM
Comment #63272

After the end of the cold war I thought we might all realise that we are all just people trying to earn a living for ourselves and our families. Perhaps we wouldn’t have to die in a nuclear holocaust for nationalistic or ideological pride. This thread is starting to sound like “here we go again” from the 1950s. But I guess the war on terror got boring pretty quickly, and that paranoia stomach needs filling again…

Posted by: Paul at June 27, 2005 07:59 PM
Comment #63277

James, well the Bear and the Dragon are getting pretty comfortable with each other as of late. Guess that leaves the Eagle the odd man out. No big surprise actually.

Posted by: David R. Remer at June 27, 2005 08:37 PM
Comment #63281

China is a bubble of a country. It’s fighting itself to keep its labor costs down. Tiananmen square was as much the quashing of independent labor as it was a crackdown on student democracy demonstrators.

The competitive edge of China is both artificial and temporary. Unfortunately, it is also sucking away American jobs and dollars because our government doesn’t dare call them on their violations of free trade, and our corporations are more interested in paying executive excessively, regardless of whether the company runs well.

Posted by: Stephen Daugherty at June 27, 2005 09:26 PM
Comment #63282

“I don’t trust any of them squint eyed rascals any ferther than I can throw my farm. And I donn’t trust a commie that far.”

Yeah, but, Ron Brown, how do you really feel?

Posted by: Rocky at June 27, 2005 09:27 PM
Comment #63293
I would bet they are developing such a long range non-fossil fuel energy plan as we speak.

David, China just started a new program: 10% renewable energy by 2020. That’s excluding the dams. Greenpeace loves it.

I’m glad to see everyone is more concerned with China than terrorism. Luckily, the Bush administration and the DoD never got distracted from the real enemy by the war on terror. While terrorism is an effective political tool for the GOP, they don’t actually want to fight it. After the initial failure to destroy al-Qaeda in Afghanistan, it’s like pulling teeth to actually get them to do something about it.

Posted by: American Pundit at June 28, 2005 01:18 AM
Comment #63302

Stephen said: “China is a bubble of a country. It’s fighting itself to keep its labor costs down. Tiananmen square was as much the quashing of independent labor as it was a crackdown on student democracy demonstrators.”

If you are looking into crystal balls Stephen, yours my show that. Other crystal balls would reflect something different depending on optics. But, if you are looking at current data and trends, I think your assessment is short on facts and data.

China is facing and fighting a host of internal problems, not dissimilarly from the US in the 1920’s and 1930’s, when mobs, prohibition, women’s suffrage, growing trends toward race riots, and the stock market crash all presented America with huge internal problems.

But with laws, social programs, regulation of banking and the stock markets, and investment in its labor force, America overcame, in much the same way China is likely to overcome its internal problems. Different mix of course of solutions, but, the tools will be the same. Like America in the ‘30’s, China’s present and future have immense untapped potential resources. If they nurture the development of that potential, the outcome is likely to be historically immense in proportion.

Posted by: David R. Remer at June 28, 2005 02:58 AM
Comment #63309

AP,

We are never your enemy. You pick us as your enemy.

Our traditional domain is in asia. We never have ambition other than have control over Korea and Vietnam (in term of history).

But since American is racist and you think less of us, and try to use nuclear weapon to extort us, we will prove to you we will beat you, and beat you to the ground.

And if you do not mind to fight two or more front wars, “Bring it on!”, Cowboys!

Posted by: Xiu Zhou at June 28, 2005 06:42 AM
Comment #63311

Xiu Zhou;

I fully understand what you are saying several of these Americans are living a false hope for peace! That will never happen while you or I or the current people are alive. As far as racist I agree with you totally, we are a race that thinks they are better then all. It is hard to not be racist here. China see chinese mostly, Americans see caucasions mostly, I don’t know what to say other then racism is a personal thing for each one to decide the merits of another. I will tell you your great country of China scares me so and has for a decade now! Why are these Americans so nieve to the threat? I bet they are lured into the safety umbrella that we kicked butt in 2 major wars, but do you not think Red China has seen that also? When China buys Unocal it will be all over but the crying! Get ready America!!!

Posted by: michael at June 28, 2005 07:27 AM
Comment #63312

Micheal,

Interesting thought…

But whatever your excuse is (phobia of China, safety umbrella…), USA has started the most speculative decline.

Roman outsourced their army to barbarian to fight, and as a result have the empire disappear in few hundred years.

You USA companies outsource the capital, techology, know-how, marketing technique, stock market access to TRADITIONALLY CIVILIZED AND WELL EDUCATED ASIAN! Your total destruction is only 10 or 20 years away.

So go kick some Middle-east butt when you can. The revolts by Iranian, N. Korean on military front, challenges from Japanse and us on the economic front, and cultural reverse-assimilation of Mexican and other latino on the domestic front will erase you arrogant, cold-blood, war-monger kingdom from the face of the earth.

And guess what, bin Laden will still be alive and laughing!

Posted by: Xiu Zhou at June 28, 2005 07:49 AM
Comment #63322

Arguably a war with China will require the US to have a host of allies. We seem to be losing those with each passing day.

While I do believe that a war with China is at least a decade away, once started it will be the last war ever for one or, possibly both sides due to the weaponry and technology used. WMD will be replaced with WPD (Weapons of Planetary Destruction).

Such a war will not include ground troops or, extremely limited numbers of ground troops. This war cannot be fought/won on Chineese soil. Also it has to be, given the massive numbers of Chinese combatants a “take no prisoners” war.

The US will have no choice but to abandon all rules governing warfare and human rights. Anything and everything goes.

Posted by: steve smith at June 28, 2005 09:15 AM
Comment #63327

Michael,

no need to justify your barbaric treatment and torture of prisoners due to “number of combatant” or whatever. There are just a few hundred taliban combatants and your soliders have tortured ‘em as good as they can. There are just harmless minor offenders in jails in Iraq and your soliders have tortured as good as they can. It is just a proof that people in USA are born psycho and sick, and tortune is part of your nature. And that’s why you won’t jail Jacko. He is soooooooo ordinary.

You are just a racist , so it is Ok to kill a lot of Chinese with WMD or nuclear weapon. If you fight against a French tomorrow, you will probably say, “Bonjour” before taking him a POW.

Well, never mind, USA will not be relevant anyway.


Posted by: Xiu Zhou at June 28, 2005 09:28 AM
Comment #63349

Xio,
I think you got me confused with steve. As far as torture it is wrong by all. If you think our Army did it then their is no convincing you it didn’t! As far as WMD’s I don’t think they will ever be used see either military has to take something not a bunch of burned out buildings and infrastructure. Gas may be used but a force has to be able to control it, or it’s spread if it is biological. Racism is bad and as a caucasion and I went to Red China I would be treated differently so it not only affects us but it affects you too.

Posted by: michael at June 28, 2005 11:18 AM
Comment #63361

An actual, physical, war with China?
If our leaders, on both sides, could come to an understanding that no ONE country needs to ‘control’ the world we wouldn’t have to worry about such things.
Xiu,
It’s nice to hear that China no longer tortures people.

Posted by: Dawn at June 28, 2005 12:28 PM
Comment #63413

Xiu Zhou,

Are you still caning people in the square to punish and humiliate them. How many women do you think will have Chinese government encouraged abortions because they are carrying boys and want girls due to the birth and lifetime support incentives offered by you government.

BTW I believe that you are actually a very knowledgeable and articulate individual masquerading through occasional mis-use of terms in these posts.

A bit off the topic but I am curious as to whether or not it is legal and acceptable to burn the Chinese flag in a public demonstration in China. If not, what would the penalty be.

Posted by: steve smith at June 28, 2005 04:24 PM
Comment #63417

I think everyone is forgetting that war has always been considered a foreign policy option.

Please bear with this next history review.

Only sixty something years ago, Japan went to war to control it’s access to material resources in SE Asia.

Germany, setting aside the horror of Nazism for a moment, was looking for territorial expansion and to secure Middle Eastern oil fields to drive its economic and military engine.

In fact, the ultimate fall of Germany during WWII could be foretold from as far back as 1940 - when German crude oil consumption SURPASSED its production. That shortfall drove them to prematurely attack Russia, to engage in a war they couldn’t win, in a wild risk to reach the oil they needed to keep going.

Thank God Germany did not have access to the natural resources to fulfill its ambition.

Natural resources, at any point in time, are finite. While changes in technology may expand the pie (or reduce our consumption of it), there are limits. Every barrel of oil the Chinese control is one barrel that is unavailable here. But it’s not just oil - what about mineral rights in South America(the list of resources they are beating us to is QUITE long)?

The US and China are already battling economically for the planet’s natural resources.

It is not implausible to think that the battle could change from greenbacks to tanks.

Anyone who argues against this, including my fellow Democrats, is deluded in thinking that history stopped when we became the world’s greatest power.

Posted by: Rusty at June 28, 2005 04:40 PM
Comment #63421

Straight from Reuter’s today

The Chinese company’s offer is largely backed by loans from its state-owned parent and a major Chinese state bank, and represents a premium of about 10 percent to rival oil company Chevron’s roughly $16.6 billion stock-and-cash offer.

But those financing arrangements also added to concerns raised by some U.S. lawmakers who contend that CNOOC is benefiting from Chinese government subsidies.

The political response comes amid other U.S.-China tensions, including U.S. discontent over China’s $160 billion trade surplus with the United States and concerns about China’s growing military strength.

SEEKING TO REASSURE

U.S. Treasury Secretary John Snow, who chairs the committee that would review the CNOOC bid on national security issues, said in a CNBC interview that talk of a review was premature since there was no actual deal yet to consider.

But Rep. Joe Barton, chairman of the House Energy and Commerce Committee, and Ralph Hall, chairman of a subcommittee on Energy and Air Quality, urged Bush not to even let the bid go to a review.

“If approved, the transaction would put vital oil assets in the Gulf of Mexico and Alaska directly into the hands of a company controlled by the government of China,” they said in the letter, a copy of which was provided to Reuters.

“We urge you to protect American national security by ensuring that vital U.S. energy assets are never sold to the Chinese government,” the letter said. “This sale would be a mistake under almost any circumstance, but it would be especially egregious at a time when energy markets are so tight and the U.S. is becoming even more dependent on foreign sources of energy.”

CNOOC would gain Unocal’s prized oil and natural gas reserves in Asia and the Gulf of Mexico as well as its proprietary drilling technology and mining assets. It has promised that almost all of Unocal’s U.S. oil and gas production would be sold into the United States.

A person familiar with CNOOC’s strategy said the company, in a bid to ease resistance to the deal, is also willing to carve out assets such as Unocal’s stake in the Colonial Pipeline and terminals that feed the Strategic Petroleum Reserve, and put them in a management trust or sell them.

The Colonial Pipeline is a 5,519-mile system that delivers fuels to terminals in 12 states in the southern United States. The Strategic Petroleum Reserve is the government’s emergency national oil stockpile.

Posted by: Rusty at June 28, 2005 04:49 PM
Comment #63453

Rusty, your facts, comments and perspective are very astute. Thank you for a level headed fact based assessment.

Only thing to add is Japan’s decision to war against the US. That was the US’s cutting off Japan’s oil supplies. Trying to thwart China’s ‘free market’ bids to access the energy it needs to grow, could have the same result, as you alluded.

But, one other thing should be added. The US subsidizes energy companies in the US. So, it is a flawed premise that China is somehow taking advantage of subsidies which should justify the US not cooperating. The US heavily subsidizes some of its largest import industries - need I say the world’s breadbasket is heavily subsidized by federal monies to farmers to grow and not grow according to dictates of the Agriculture Dept?

I am not advocating that China should be entitled to the purchase. I am arguing however, that this issue has all of the potential of reinforcing in the world’s mind that the US exempts itself from the very same rules which it requires of all other nations and their peoples.

Posted by: David R. Remer at June 28, 2005 09:13 PM
Comment #63454

Xiu said: “You are just a racist , so it is Ok to kill a lot of Chinese with WMD or nuclear weapon.”

Xiu, you have a right to express your perspectives and opinions here, and they are welcome. However, you have violated our Critique the Message, Not the Messenger policy with your comment above. Please comply with our policy or your comment privileges will be revoked.

Posted by: Watchblog Managing Editor at June 28, 2005 09:19 PM
Comment #63524
Are you still caning people in the square to punish and humiliate them.

Steve, I live in Singapore. That actually works. We should do it in the US.

Posted by: American Pundit at June 29, 2005 02:27 AM
Comment #63555

AP,

Thanks for the input. What types of “crimes” does one have to commit to warrant caning.

Posted by: steve smith at June 29, 2005 09:16 AM
Comment #63581

Xiu,

You discuss product development 5000 years ago. We are in 2005. The Chinese, Egyptians, Romans, to name just a few were great, once!

A great country does not further an agrarian tradition by eliminating females for males. Will China be buying females from Thailand, Vietnam? Homogenous China no more.

Posted by: Ron at June 29, 2005 11:01 AM
Comment #63592

When free market ideals clash with national security, as in the case of China buying Unocal, I hope that national security will win out because if it doesn’t, we really are in trouble. We don’t need a foreign dictatorship owning big chunks of our infrastructure. THey already own and control way too much here. We need to use our common sense quit acting as if all foreign investors were equal and pretending we have no adversaries in the world!

Posted by: Monica at June 29, 2005 11:20 AM
Comment #63604

David,

I appreciate your reply and understand the argument you are making. However, there is one fact that you fail to address and one I think no one commenting on this issue (including myself) has mentioned:

China does not permit majority foreign ownership of Chinese companies. If I am wrong on this fact, then please correct me. If not, certainly this fact alone justifies blocking the deal?

To twist some words and borrow from Ben Franklin, “Imperialism is only a problem in the third person - it is their imperialism, not ours, that is a problem.”

I have no illusions about how our imperialism benefits me and how selfish that is in many ways. However, I also have no doubts that their imperialism does not benefit me.

My concern is that, even in a world where everyone defends their own best interests, the Chinese are still playing by different rules(for example, executing dissidents and supressing the very speech we are engaging in right now).

Does China have a right to aggressively pursue what it believes is needed to bring glory and prosperity to the Middle Kingdom? Absolutely.

But we have the right to say “no, not this - you can’t have this.” We also have a right to say, “if you want this, come and get it.”

Most everyone draws the line in the sand somewhere. Our leaders, defending the interests of everyone in our nation (including those less generous than yourself, David), will be aggressive in drawing that line in the sand - as advocates for citizens of the US, that is their job.

David, I know we are deeply flawed as a nation. But as one who has traveled quite a bit, I still haven’t been to one I’d trade it for. Making a bad deal like UNOCAL will not fix one of those flaws.

Posted by: Rusty at June 29, 2005 11:36 AM
Comment #63776

AP,
If we caned people here, weather it works or not, and I believe it would, the American Communist Lawyers Union would have a fit and sue the whole country.

Posted by: Ron Brown at June 29, 2005 10:04 PM
Comment #64159

Xiu Zhou:

俺认为,你缺乏统战意识。而且忘记了“韬光养晦”的交代。

当你还不是鹰的时候,就认真装鸽子,越菜越好,千万不要怕被低估。跟没必要图口舌之快,把可能团结的对象也推到对立面去。
呵呵

Posted by: kaka at July 1, 2005 12:54 PM
Comment #64375

i just want you all to remember how we beat the germans. They ran out of fuel!

Posted by: david at July 2, 2005 12:59 AM
Comment #64596

Go way back when Control Data was selling computers to China. Anything for a buck. Big business in this country will sell us out for a profit if they can.They have little or no conscience. Now, if we just had politicians that put the country first…..period.

Posted by: Dee Lee at July 3, 2005 07:11 PM