The Chinese bid for Unocal.(Correction, Please!)

ITEM: St. Louis Post-Dispatch columnist David Nicklaus opined in that paper's July 17 issue: "You know the world is changing when the Chinese .foreign ministry--run, of course, by the Communist Party--starts lecturing the U.S. Congress on the value of free markets. This unsolicited dose of Econ 101 came after a House resolution expressed reservations about a Chinese bid for Unocal, the U.S. oil company." This buyout bid was made by CNOOC, the China National Offshore Oil Corporation.

ITEM: Reuters reported on August 2 that CNOOC abandoned its bid to acquire Unocal. CNOOC's bid "was overshadowed by a fierce backlash in Washington over a Beijing-controlled company attempting to buy American oil assets as crude prices raced to record highs," said Reuters. "'The political reaction has scared off the board of Unocal, the shareholders and CNOOC itself,' said Edmund Harriss, fund manager at Guinness Atkinson, which holds CNOOC shares. 'I don't think anybody really anticipated quite what a maelstrom they were entering into.'"

CORRECTION: The maelstrom should not only have been anticipated, it was deserved--despite media characterizations that CNOOC was simply trying to compete in the marketplace in the face of an obstructionist U.S. Congress. In truth, this was neither a "free market" acquisition effort nor a contest between competing suitors; it was a calculated, subsidized move by a hostile Communist regime to gain a strategic advantage over the United States.

Even Beijing was eventually forced to admit the existence of subsidies in CNOOC's bid, though arguing they weren't as large as some claimed. Prior to the withdrawal of CNOOC's bid, Reuters had noted: "The loans [to CNOOC] include a $4.5 billion loan at a below-market annual rate of 3.5 percent, and a $2.5 billion interest-free loan.... The interest on the $4.5 billion loan would not ...