Cnooc Ltd., China's third largest oil company, has made an unsolicited $18.5 billion cash bid for U.S. oil company Unocal Corp. in an effort to break up its pending acquisition by Chevron Corp. This is the largest foreign acquisition ever attempted by a Chinese company, and marks the first time Chinese and U.S. companies have engaged in a takeover battle. It is anticipated that this latest sign of China's hunger to gain direct control over more energy assets to feed its booming economy could set off political fireworks in Washington, feeding larger concerns about China's growing global economic ambitions.
However, it's not the first. Much has been said of the Chinese century in recent times. About how it's breathing down our neck in the "flat world". Rik Kirkland, on a recent visit to China, said, "China is what the U.S. economy might look like if it were run by a consortium of folks from McKinsey, Goldman Sachs, and the CIA. Sure, they'd get plenty wrong, but more often than not they'd get it right. The proof was all around us: in the capital's skyscrapers and software parks; in our discussions ("China needs to make enterprises, not universities, the center of innovation because they'll respond better to the market," said Minister of Science and Technology Xu Guanhua); and, of course, in the numbers. Of all the dazzling stats China has posted, the most impressive is this: In 20 years it has lifted some 400 million of its 1.3 billion people out of grinding $1-a-day poverty."
The growing economic buoyancy in China is also the subject of Friedman's flat and increasingly flattening world. However, I am surprised that for all the focus on China, little is said about our fiscal rules and competitiveness in "China's century". All the politicians seem to do is engage in China bashing including curse them for following the same currency policy that they have pursued for the past decade and recommend reimposing quotas and import controls. Geoffrey Colvin, in this insightful article "Our Leading Export? Nonsense about China" talks about how all these frantic efforts to cut back Chinese imports is nothing but political theater and disingenuousness. Also, none of these debates mention the interest of the American consumer. The simple truth is that we do not stand to benefit from curbing Chinese imports or on a broader scale, imposing a protectionist policy. For example, consider the textiles industry. The industry itself employs less than 0.5% of working Americans. But, more than 32 million households (comprising more than 80 million people) get by on an annual income of less than $25,000 each. For them, isn't savings on basic necessities—clothing—precious? This itself is a case for the end of textile quotas.
Article comments
1 - Tan The Man
Thomas Friedman is a brilliant guy. I saw a few interviews that he promoting his this book and was floored by his comments. It's so different than what most other people say when discussing the changing world. I'm currently reading his book, Longitudes and Attitudes.
2 - Deepa
I like some of his works too. However, its a flat world was not one of my favorites. Also, if you want a contrasting perspective, read this review of his work:
http://www.nypress.com/18/16/news&columns/taibbi.cfm
3 - carmine
Great post. Friedman seems on target with regard to fact that real international competitiveness for America depends upon our developing an even stronger ability to do what we do best in America: original empirical science that informs new technology. Yet as we try to compete in simple soft services we are doomed. A Chinese accountant or programer or even McDonald's order taker will do it better than we and certainly cheaper.
4 - gonzo marx
sorry, i refuse to accept that ANYONE can neccessarily "do it better" than an American when it comes to anything..
mileage may vary by Individual..but overall, any competent person that is properly trained for a Task and qualified to do so can accompklish the job, it doesn't matter where they come from for the most part...
the "cheaper" as in immediate cost for the bottom line of the current quarter, there i can agree...however...
as many in the Service sector found out, though it may be cheaper in the short run to hire Indian call centers, if you lose business due to poor service or cultural conflicts, it hurts your bottom line in the long run
plenty of other examples..technology in china..in the short run it might have made some sense to ship a hi-tech manyfacturing facility there, but 6 months later..the factory disappears with it's trade secrets...and across town a brand new factory opens up, selling an identical product in direct competition, run by the same people that managed the previous facility
can you say Intellectual property laws?
China, and some other countries...don't have them....
check for yourself..don't believe me, but what looks attractive to an accountant in the short term, is not always what is best overall...
hopefully we, as a Nation, learn that before the Bank of China and the Bank of Japan foreclose on our country's mortgage...
Excelsior!
5 - Aaman
Gonzo, you may refuse to believe whatever you choose - in a Flat World, individual beliefs don't really count for much:) Also, in a Flat World, it's all about 'better, faster, cheaper' - and if the business model doesn't fit those criteria, it fails - that's capitalism. When the Brits set up the mills of Lancashire, that was the model, when the Southeners subsidiszed their cotton, that had its effects, and when the Japanese optimized their assembly lines, that was the same model.
And isolationism never works, in the long run
Of course, in the long run, we're all dead
6 - gonzo marx
Aaman, i'm not speaking about isolationism..merely Thoughtful approaches aimed at ensuring that the citizens of our Nation get at least a fair shot....that's all
far too many of these so called "trade agreements" give away the store for some small, or completely fictional, short term gain..
ask any rice farmer that wants to sell his goods in Japan...the US can grow any kind of rice you would like, far cheaper than in Japan...yet we can't sell there....yet they can sell anything they like in our country, even going so fat as to get serious breaks in some cases
just one example among the myriad
and that is what i am talking about here...
it boilds down to business Ethics amongst american corporations, and trade deals made by our government FOR our people and Nation
i tend to side over "people" that actually breathe..rather than "corporate citizens"...and, silly me..being an American, i would like to see our Citizens get at least an even break in any competition...maibnly by keeping the "private" interests and other lobbying factors OUT of international trade negotiations...
just me, your mileage may vary...
Excelsior!
7 - Aaman
After the age of Imperialism, perhaps it's time for a little flattening after all.
Incidentally, education is a huge contributing factor to success - every kid I know from India went to college.
Talking about International Trade, wasn't it the US that pushed for globalization and open markets? I seem to remember forceful negotiations in almost every country, mandating restructuring. And furthermore, global corporations all consume far more American products than any other - Dell, Microsoft, IBM, Pepsi, McDonalds, 3M - the list could go on
Again, do it "better, faster, cheaper" - that's all it takes, really.
I agree that flatenning has negative effects on many individuals - but since labor follows capital, go where the money is, is one suggestion. We did.
8 - gonzo marx
cheaper is all the criteria that is being used at the moment...that is part fo the problem
i do heartily agree that education is THE single most important factor....but i have long been an advocate fo college level education for all americans...and considerable beefing up of our K-12 system's curriculae
but we all know i am a freak...
Excelsior!
9 - tapsearcher
Free Trade is like a dog chasing it own tail. Globalization is a never ending story of a race to the bottom. Economies are chopped up into pieces and spread across the globe. Nothing is balanced in geopolical fashion. Instead of dwelling on the Flat World by Friedman, we should be preparing for the post Globalization era. Friedman's book will soon be a relic of our times. Click on Tapsearch Com Flatworld.
History tells us what happens when workers have no voice in their destinies.