Requiem for CNOOC/Unocal

The New York Times looks at the demise of the CNOOC/Unocal deal. I think they get it right. This was a case of transferring legitimate political grudges onto a deal that was completely legitimate.

Many economists, while not necessarily disputing that claim, would still say that the political reaction was far out of proportion to the case.
They are particularly dubious about arguments that Cnooc’s bid would have jeopardized national security, noting that oil is a globally traded commodity and that Unocal’s reserves contributed only about 1 percent of American oil consumption.

Let’s hope that the floating of the Yuan has helped relieve some of the tension. Although it looks like we have more ground to cover.

China is likely to let the yuan gain 5 percent against the dollar by 2007, not enough to slow its economy or end U.S. criticism that the nation has an unfair trade advantage, according to a Bloomberg survey.
The People’s Bank of China will allow the yuan to reach 7.7 per dollar, based on the median forecast of 37 traders, strategists and investors. The central bank let its currency rise 2.1 percent on July 21 after a decade of being pegged at about 8.3 to the U.S. currency.
Additional appreciation of 5 percent is unlikely to appease lawmakers such as U.S. Senators Charles Schumer and Lindsey Graham, who said last month’s shift was a first step and the currency remains undervalued.

Posted by Eddy Elfenbein on August 3rd, 2005 at 3:53 pm

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