Beijing Trying To Buy Unocal

The Communist People's Republic of China is becoming more capitalistic every day, now bidding $18.5 billion to try to snatch Unocal Corp. from Chevron, which is offering $16.4 billion for it. The deal follows on these, listed by the NYTimes:

This week, a consortium of investors led by the Haier Group, one of China's biggest companies, moved to acquire the Maytag Corporation, the American appliance maker, for about $1.3 billion, surpassing a bid from a group of American investors.

Last month, Lenovo, China's largest computer maker, completed its $1.75 billion deal for I.B.M.'s personal computer business, creating the world's third-largest computer maker after Dell and Hewlett-Packard.

(Disclaimer: Chevron is a current client; Unocal is a past client.)

The consumer product aquisitions are somewhat troubling in their own right, but going after a US oil company is a matter of much greater concern. The deal attracted the attention of two home-state (Unocal is based in LA) Congressmen, Duncan Hunter and Richard Pombo, who wrote President Bush, urging:

"As the world energy landscape shifts, we believe that it is critical to understand the implications for American interests and most especially, the threat posed by China's governmental pursuit of world energy resources. The United States increasingly needs to view meeting its energy requirements within the context of our foreign policy, national security and economic security agenda."

Indeed. As fellow SoCal blogger Dawn's Early Light points out (here, here) acquisition and transportation of oil will be on an even par with Taiwan in future US-Chinese relations. The battle has started with Beijing's attempt to purchase Unocal, and we need to begin protecting our strategic assets now.

The administration is free-market driven, but in this case, it must firmly and quickly tell Beijing, "Hands off!" Signals are important, and the signal to send this time is "We will not roll over."