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US protectionist fangs bare in Unocal bid
By Matthew Benjamin (usnews.com)
Updated: 2005-07-10 22:04
Small potatoes. The heated rhetoric of CAFTA's opponents belies the size of
the trade pact: The combined economies of the other six signatories to the pact
is less than one one-hundredth the size of the U.S. economy. Says Barfield, "It
will be virtually impossible for economists to measure the effects of this
agreement on the U.S. economy."
Not so when it comes to China. At its current pace of 9 percent or so annual
growth, the world's seventh-largest economy is rapidly scaling the ladder of
economic heavies. China is already America's third-largest trading partner and
ran a $161.9 billion trade surplus with the United States last year.
When China invests solely in U.S. treasury securities--it now holds $230
billion of U.S. government debt, second only to Japan--few seem to mind. But now
growing Chinese firms are flexing their muscles: This spring, Chinese computer
maker Lenovo Group bought IBM's personal-computer unit for $1.75 billion, and
Haier Group, the largest appliance maker in China, has a $1.28 billion bid
pending for Maytag.
So far, China has been investing the bulk of its trade surplus in U.S.
treasuries. The Unocal bid, partly subsidized by the Chinese government, shows
China is interested in a better return on its money. Still, American investment
in Chinese nonfinancial assets was about $4.2 billion last year, compared with
Chinese investment of $181 million here.
"U.S. foreign direct investment in China dwarfs their foreign investment
here," says Nicholas Lardy of the Institute for International Economics, "though
that might change if they buy one Unocal per year." Things being what they are
in Washington, however, it looks like the Chinese may not get that chance.
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