China's Global Buying Spree: A Market-Led Bargain?

Strategic Insights -

The US government is expressing concerns about China's growing influence in the global economy, particularly in the oil and energy sectors. China National Offshore Oil Corp. (CNOOC) is bidding to acquire California-based Unocal, a move that could provide Beijing with a significant foothold in the US energy market. While CNOOC operates like a commercial firm, its strategy is dictated by the Communist Party, which wants to spend $18.5 billion to buy Unocal as part of China's efforts to ensure its energy needs. The deal has raised questions about the fairness of government-backed enterprises competing in the global market.

Key Takeaways:

  • China's CNOOC is 70 percent owned by the Chinese government and its strategy is dictated by the Communist Party.
  • The Chinese government has offered $18.5 billion to buy Unocal, a move that is part of China's efforts to ensure its energy needs.
  • CNOOC operates mainly like a commercial firm but receives heavy backing from the government.
  • The US has asked the World Trade Organization to declare as illegal the $15 billion or so in government aid being offered to Airbus to launch its new A350 passenger plane.
  • China's global buying spree is mainly for natural resources and is a concern for Congress.
  • CNOOC's purchase of Unocal could end up helping both China and the US.

Statistics:

  • China National Offshore Oil Corp. (CNOOC) is 70 percent owned by the Chinese government.
  • CNOOC is bidding to acquire California-based Unocal for $18.5 billion.
  • The US has asked the World Trade Organization to declare as illegal the $15 billion or so in government aid being offered to Airbus.
  • China's global buying spree is mainly for natural resources, with over $100 billion spent on foreign assets in the past five years.

Sources:

  • The Christian Science Monitor
  • World Trade Organization