China

The latest 'œthreat' from China has nothing to do with missiles, Taiwan, or avian flu, said Sebastian Mallaby in The Washington Post. A state-owned Chinese company bid $18.5 billion last week to buy the U.S. oil company Unocal, triggering new waves of paranoia over China's growing economic clout. Washington and Wall Street were already fretting over China's financing of U.S. debt and the pressure of its booming economy on oil prices. 'œNow they can also worry about China's acquisition of U.S. companies.' If this all feels rather familiar, it should. Fifteen years ago, Japan alarmed Americans when it began buying up U.S. companies and real estate. Pretty soon, 'œthe protectionists' warned, Japan would swallow America whole, and we'd all be taking our orders from Tokyo. That didn't happen, did it? Stirring up fear of foreign domination may make for colorful speeches on the floor of Congress, but there's no rational reason to oppose China's Unocal bid.

Actually, there is, and it's called national security, said Paul Krugman in The New York Times. The current challenge from the Chinese 'œlooks a lot more serious than the Japanese challenge ever did.' In their heyday, the Japanese spent their money on 'œprestige' investments with little return'”essentially pumping cash into the U.S. economy for the privilege of owning Rockefeller Center and a couple of movie studios. The recent Chinese investments look far more strategic. Indeed, China's bid for Unocal may mean that it's preparing for 'œa sort of 'great game' in which major economic powers scramble for access to far-flung oil and natural-gas reserves.' In other words, this may be nothing less than the opening shot of a new Cold War. 'œIf it were up to me, I'd block the Chinese bid for Unocal.'

The Wall Street Journal

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