The failed bid for Unocal, a small US oil firm, by CNOOC, a state-owned company from China, perfectly captured America's ambivalence towards open markets.
While US policy makers regularly trumpet their belief in free trade and so on, the reality can be different. American cotton farmers receive huge subsidies, while not so long ago, the Bush administration slapped duties on imported steel. In the case of Unocal, woolly thinking and anti-Chinese hysteria combined to sink CNOOC's $18.5bn (£10.5bn) bid. Yesterday, the Chinese firm withdrew its offer, citing the strong opposition the bid had generated on Capitol Hill.
For the Financial Times the CNOOC bid exposed "the disturbing mood of anti-China hysteria now gripping Washington." Many congressmen believed CNOOC was making a grab for oil supplies. But as the FT and others point out, every barrel of Unocal oil China might have diverted for its own use would mean that China would buy one less barrel from elsewhere. That would leave global supply and prices unchanged.
But the Survived Sars blog thinks CNOOC is better off for not buying Unocal. This blogger argues that there too many examples of companies falling flat on their face by making ill-conceived takeovers in foreign markets.
As Survived Sars points out: "Many Chinese companies looking to expand into emerging markets have the worst examples of all to follow: the legion of foreign companies that lost billions trying to access the China market in the mid-1990s, when costs were high, access was low, and bureaucracies remained absurd."
He could have also mentioned the Japanese companies that overpaid for US film studios and prestige properties in the 1980s only to beat a humiliating retreat later on.
The US may have legitimate concerns about China's military buildup and its human rights record, but to pick on CNOOC seems to be an overreaction.
