Mishandling the China Challenge

摘要

If you look at two recent events, you might well conclude that the Chinese are a lot smarter at handling the United States than we are at handling them. This week China National Offshore Oil Corp. (Cnooc) ended its bid for the American energy firm Unocal, scared off by rising opposition to the deal from Congress. The deal would not have given China any special lock on energy supplies. The only real downside to its collapse is that we will never get to see the merger fail, as it likely would have, and recognize that the Chinese had overpaid for a second-tier firm. Recall that before the Japanese went on their real-estate spree in the 1980s (which scared Americans silly and produced the 1988 law that allows the government to block such deals), they bought oil reserves and other such commodities, thinking they'd gain special advantage through direct ownership of them. But markets didn't work like that then and it remains to be seen if that strategy would work now.