Why China Is Buying

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The Chinese company's "it's just business" approach won't mute the deal's critics in Washington. To them, a takeover of Maytag is one thing--"We don't go to war over washing machines," said Republican Congressman Richard Pombo of California--but energy is a different story. With the Chinese government subsidizing the deal--CNOOC's parent company, wholly owned by the state, will give it an $8.5 billion, 30-year loan at just 3.5% interest--cries of predatory financing are inevitable. So too are complaints (accurate enough) that there is little chance a Western oil major could buy outright one of China's biggest energy companies if it wanted to. A level playing field China is not, and with trade tensions between Washington and Beijing strained already, the Bush Administration promises to scrutinize any proposed deal carefully.

To which free traders respond: Don't bother. If a Chinese company wants to pay a hefty premium to (mostly) U.S. shareholders, and guarantee the bulk of Unocal'S jobs to boot, why should those shareholders be prevented from selling? After all, Japan 15 years ago wasn't exactly an open economy when its flagship companies began buying everything from Rockefeller Center to Hollywood movie studios. The Japanese, it turned out, got taken like tourists. --Reported by Eric Roston/Washington