Last week congressional bullying drove China to abandon its bid for Unocal, a small California-based oil company. Anyone inclined to celebrate should focus on the likely sequel: China will redouble its efforts to buy energy and other resources in shaky developing countries. This will undermine Western efforts to promote transparency and fight corruption there, damaging U.S. interests and values far more than a Unocal takeover.
To see why this is so, begin with China’s motives. China wants to control supplies of oil and other commodities because it’s scared of price shocks; owning oil or other mineral reserves provides anti-shock insurance. As Chinese economists argue, their economy is extremely vulnerable to external shocks because it’s extremely open. The Unocal defeat is not going to stanch China’s drive to buy foreign resources.