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.