There was once a political joke in the United States: How to make a smartly dressed Senator fly into a rage? The answer is: Let the Chinese buy up an American company!
Nowadays, there is a "ready version" for the joke: At a hearing on US-China economic ties held by the US Senate Financial Committee, the politicians were unable to contain their anger when they heard the news that the China National Offshore Oil Corporation (CNOOC) was going to buy up the US Unocal Corp., demanding the government to stop the deal. Originally it is a normal business act beneficial to both the buyer and seller, these American politicians saw from there the "threat to US national security".
A look at modern world's economic development, transnational merger and acquisition (M&A) can be said as a must for the rise of an economic entity. The United States whipped up a wave of M&A of European enterprises after World War II, Japanese enterprises also took advantage of the opportunity of the revaluation of the yen for global expansion, as it develops to this date, the Chinese economy has reached the stage necessary for the realization of internalization through overseas purchase. Whether it was Haier buying up the US home appliances firm Maytag Corp., or the China National Offshore Oil Corporation's proposed purchase of Unocal Corp., Chinese enterprises' M&A is nothing more than a commercial transaction to the mutual willingness of both parties, today, under the circumstance of economic integration, it is completely unnecessary for the experienced and knowledgeable US congressmen to feel surprised at the deal. In terms of the amount, Switzerland has made the most investments in US enterprises, second comes Japan, but people haven't heard that the two countries constitute any threats to the security of the United States. According to statistics from the US Department of Commerce, US investment in China is 13 times greater than Chinese investment in the United States. If overseas M&A would really bring any threat to security, then it should be China that feels worried.
What CNOOC is to buy is not a company that makes military aircraft or masters missile technology, in the last analysis, what CNOOC is to buy is nothing more than oil used to start up a motor vehicle. Boeing Company is going to sell more airplanes to China, US auto-makers are also building factories in China and they also need oil. Now oil price remains high, directly buying oil obviously is not so worthwhile as extracting oil for oil enterprises. Oil enterprises of various countries all over the world are seeking opportunities for expansion overseas, US largest oil companies -- Mobil and Exxon -- draw 70-80 percent of their incomes from outside the country. The oil company CNOOC is going to buy has only 1 percent market share in the United States, besides, CNOOC promised that after the purchase it would not change the marketing line of oil and gas produced in the US proper, the transaction will by no means affect energy supply on the American market, so-called "threat to security" is all the more out of the question.
Due to vicious leakage of secret by Western media, CNOOC has suffered loss in the opportunity of the transaction. The price offered by CNOOC has given the United States great benefit: Saving the Unocal on the verge of bankruptcy, guaranteeing employment for the company's staff, offering very favorable purchasing terms for the company's shareholders, and increasing investments for the United States. US politicians' hostility toward China's M&A reminds people of US attitude toward Japan over 20 years ago. At that time, wealthy Japanese enterprises bought houses, lands and factories in the United States, US politicians, as if confronted by a formidable enemy, claimed that if the purchase were not stopped, Japan would buy up the whole of America, adding that Japanese enterprises would take US technologies and work opportunities back to Japan, and thus hollowing out American industry. Subsequent fact proved that such worries were superfluous, Japanese actions at that time provided the US with huge amounts of capital and nearly 630,000 job opportunities. Whether or not CNOOC can realize its wish is now still unknown. Transaction invariably involves a bargaining process, if the deal finally fails, it is only very normal, an old Chinese saying puts it well, "justice remains even if the deal fails". However, if someone insists on adding excessive political factors to normal commercial actions and thus messes up the transaction that is beneficial to both sides, then it is really senseless. Free trade has long been advocated and promoted by the US government, the United States has on many occasions censured Russians for not opening the door wide to the American oil companies. This time how is America prepared to handle the CNOOC-related question? This will test US sincerity for free trade.
Published on the Global Times, June 27, this article by Shan Renping is translated by People's Daily Online