Chapter 44 The shocking inside story of CNOOC's bidding for Unocal

CNOOC's bid to acquire Unocal has triggered years of hostility toward China in the United States.In past elections, candidates' criticism of China has been little more than insinuations, and they have only lashed out at American companies for moving business overseas.This time, attempts by Chinese state-owned companies to buy American energy companies have sparked uproar in Congress, reminiscent of the "red fears" of decades past. There are countless ties between Unocal and the US government. Whether it is Afghanistan under the rule of the Taliban regime or after the US invaded Afghanistan in 2001, Unocal's actions in Afghanistan represent the will of the US government.What American politicians are concerned about is that once a Chinese company acquires Unocal, it means that the Chinese government will know the secrets of Unocal.Of course, the most critical thing is the anxiety of these politicians about China's rise.

This also involves a new decision of the Chinese government - to use financial reserves to ensure the continuity of energy supply.China was an oil exporter in the 1970s.In the 1990s, China's industrialization accelerated, the demand for oil increased day by day, and domestic oil fields were overexploited, so China changed from an oil exporter to an oil importer.Although China's domestic electricity consumption is basically provided by coal power generation, the construction of roads and the increase of automobiles have greatly increased the demand for oil.Since entering the 21st century, China's demand for oil and raw materials has reached an unprecedented level.The United States' accusations against China have made the United States clearly realize that if China cannot guarantee its own energy supply, the future Chinese economy will become vulnerable under the pressure of the United States.

American criticism of CNOOC's attempted takeover of Unocal is largely due to the special close relationship between CNOOC and the Chinese government.Opponents claim that they do not believe that the motives of the Chinese government and CNOOC are purely commercial, and that the Chinese government must support CNOOC's actions out of national interests.Because once CNOOC successfully acquires Unocal, China can obtain the oil and natural gas resources previously controlled by Unocal from the United States and the European Union.Competing with CNOOC for the right to acquire Unocal is Chevron, which has the advantage of having an American background and good lobbyists within the Washington government.Americans believe that China has not followed the principle of fair competition, whether it is in free trade or in regard to the acquisition of Unocal.Therefore, it is impossible for the United States to treat CNOOC's behavior as a simple corporate acquisition.Senator Byron Dorgan of North Dakota said: "There's a political question that has to be figured out. When Chinese state-owned companies try to buy American oil companies, is it still free market competition? Of course." No."

CNOOC's bid for Unocal has once again drawn U.S. attention to China's currency reserves and the huge gap between imports and exports between the two countries.Democratic Senators Charles Schumer of New York and Republican Senator Lindsey Graham of South Carolina jointly introduced a bill to Congress that would require China to revaluate the yuan and export currency to China. A retaliatory tariff of 27.5% was imposed on all goods to the United States.Although this proposal is just a lot of noise and little action and no substantive action has been taken, for China, this is a warning signal sent by the US government.The U.S. government blames China for the trade imbalance between the U.S. and China, which it believes is detrimental to the health of the U.S. economy and a source of tension between the two countries.The Unocal acquisition made the situation clear, which showed the world that Sino-US relations have entered a new stage.China's transformation from a planned economy to a market economy really made Americans happy, but now Americans' attitude towards China has once again fallen into suspicion and distrust.

Facing hostile behavior from the US Congress, CNOOC withdrew its bid for Unocal, a deal that Chevron ultimately won.American hostility toward China is partly orchestrated by Chevron.Of course, if there is no long-standing American hostility towards China, no matter how Chevron's lobbyists instigate it, the Americans will not be so indignant about CNOOC's bid for Unocal.Therefore, China's dissatisfaction and counterattack is also expected.CNOOC publicly issued a statement saying: "In commercial transactions, it is regrettable that such an obvious political stance is made. Such a political environment is very unfavorable to our pursuit of success and poses great risks to us in safeguarding our own commercial interests. Created a lot of uncertainty."

In fact, CNOOC can also say (of course it is impossible to say so), that no one really competes fairly in the face of international trade.Hidden costs, license restrictions, opaque subsidies, import duties, etc., are all common means in international trade.Every country, especially developing countries, is protecting important raw materials, because it is related to the development of the country. In the 19th century, the world stage was occupied by Europeans; in the 20th century, the Americans demonstrated their strength in Latin America and the Middle East; now China is advancing along the path guided by Deng Xiaoping, and it is investing heavily in oil and natural gas to meet the needs of national development. It should come as no surprise that stocks, fuels and commodities have seen repeated moves.

In addition to bidding for Unocal, CNOOC also participated in oil and gas bidding projects in Iraq.Iraq's geopolitics, though altered by the US invasion, have always been in China's interest in seeking markets abroad.The chairman of the board of directors of CNOOC has repeatedly stressed that the bid for Unocal is purely for commercial purposes.However, Americans have been speculating whether there is a deeper strategic intention behind the business. Before CNOOC faced such a complicated situation, China had already exerted great influence in the world.This is China's rise after a century of dormancy.Initially, the term "peaceful rise" appeared in official documents at various conferences and forums in China and around the world. "Peaceful rise" shows that China is currently committed to domestic development and has not yet reached the stage where it can influence the world.After careful consideration by Chinese leaders that this wording might cause psychological uneasiness in the international community, Chinese President Hu Jintao described China's current development process as "peaceful development".

China's self-perception image is different from the outside world's perception of it.China has always regarded itself as a developing country, and it is trying to gain a firm foothold in the world and strive for the right to speak on international issues.To achieve such a goal, China has struggled for many years and won a permanent seat on the UN Security Council - a seat that was occupied by China's Taiwan during the "Cold War".What China needs most now is its status in the world and the right to speak internationally.China regards the United States as the dominant superpower in the world, it has a stronger military, and its economy is much stronger and more mature than China.The United States’ accusations against China in many aspects, such as the implementation of a fixed exchange rate system, human rights issues, the Taiwan issue, and the ambition of a great power, do not explain the United States’ concern for China’s development, but just demonstrate the United States’ intention to contain China’s development.

The Chinese leaders are also very clear that some remarks made by the U.S. government are just political tools for the American voters.CNOOC's failed bid for Unocal is not as distasteful to the Chinese as it appears.CNOOC continues to work closely with rival Chevron on projects to develop fields in Western Australia.In an interview with the media, Fu Chengyu, general manager of CNOOC, publicly expressed his satisfaction with the current cooperation with Chevron in fluent English.Just months before CNOOC lost out to Chevron's savvy lobbyists, another upstart Chinese company successfully bought its American competitor.