Unocal Deal Raises Hackles over China
SCOTT SIMON, host:
China has described its bid for the California-based oil company Unocal as a peaceable attempt to secure oil in a market that's increasingly competitive. But in the US, the $18 billion bid has stirred wider concerns over US national interests. The House of Representatives has approved a measure to block a Chinese takeover of Unocal and the Committee on Foreign Investment in the United States is expected to take a close look if Unocal shareholders accept China's offer. Joe Nocera, our friend, is a columnist for The New York Times and joins us from WFCR in Amherst.
Joe, thanks for being with us.
Mr. JOE NOCERA (New York Times): Thanks for having me, Scott.
SIMON: Let's try and outline the national security concerns, if we can, because on the one hand, the United States and China are obviously significant trading partners, even trying to politically cooperate in a number of realms. And, yet, on the other hand, they are certainly rivals in many questions around the world.
Mr. NOCERA: Right. And that makes the deal so complicated for the administration. There's the Taiwan issue, where we were obviously on opposite sides. There's the Korean issue, where the administration would love China to be our ally. You know, and then there's the clear fact that China is going to find ways to get oil whether or not it buys a US oil company that has 53 percent of its reserves in Asia, as is the case with Unocal. They are trying to cut a deal with Russia to build a pipeline from Siberia. They've already cut a $70 billion deal with Iran. And there's a genuine fear that China will begin to go to those parts of the world where the United States buys oil and also go to those parts of the world where we have enemies.
SIMON: Does this aggravate what is sometimes already a fractious trade relationship with China?
Mr. NOCERA: What's really going on here is that this deal is yet another signal that China is becoming an economic superpower and will someday be on par with the United States. And it feeds into all these fears that we have about China, some of which are legitimate. I mean, it's hard to manufacture anything in the United States since it can be done so much more cheaply in China. And now there's legitimate worries about service jobs gravitating to India and China. And now all of a sudden, you know, the Chinese are saying, you know, `We want the oil, too.' And for many people in the United States, it's very scary. It's much scarier, in fact, than the threat the Japanese seemed to pose 20 years ago.
SIMON: Well, let me get you to assess that because some people have raised that concern. This is a time when Japan was, for example, buying, I guess, Rockefeller Center was the signature purchase.
Mr. NOCERA: Right. There was certainly a lot of hysteria in the '80s over Japan, which turned out to be unfounded. And there are two fundamental differences between Japan then and China now. The first difference is that Japan was in a bubble, and their own wealth was really not predicated so much on internal economic growth as it was on exports and on a real estate bubble and a stock market bubble. And, secondly, the Japanese did a lot of stupid things with their money. They bought golf courses and Rockefeller Center as opposed to, for instance, oil companies.
China is an economy that's in transition the way the United States was in transition post-Depression, you know, around World War II when the economy shifted from agrarian to manufacturing and an urban economy. So the United States economy today grows at a rate of about 3 percent. The Chinese economy's growing at a rate of about 9 percent or 10 percent. They need oil.
SIMON: Joe, thanks very much.
Mr. NOCERA: Thanks a lot, Scott.
SIMON: Joe Nocera, columnist for The New York Times.