Building anti-Chinese sentiment in Washington -- the key reason cited by Chinese National Offshore Oil Co (CNOOC,
Government-controlled CNOOC on Tuesday dropped its bid for Unocal Corp citing a political uproar in Washington as the main obstacle for the deal. That cleared the way for Chevron Corp, the second-largest US oil company, to complete its acquisition of Unocal next week, although its offer was worth US$700 million less.
CNOOC's defeat followed a decision by appliance maker Haier Group Ltd (
"Anyone can see that CNOOC bid failed because of political obstacles, not business factors. CNOOC's lack of success marked the first serious failure of the Chinese government's policy of encouraging its enterprises to go out into the world. It's also a bitter experience for China's attempt to expand its supply of energy resources," said the Hong Kong Economic Journal.
CNOOC's defeat came amid an unprecedented upswell of opposition in Washington toward China that might deter future takeover attempts and could even complicate broader relations.
"I hope they're not discouraged from thinking about investing in the US in the future," said Robert Kapp, former president of the Washington-based US-China Business Council. "Whether this has a polluting effect on long-term relations remains to be seen but I don't discount that possibility."
China did not immediately issue any public comment. Its Foreign Ministry issued a statement on its Web site yesterday saying that Foreign Minister Li Zhaoxing (李肇星) had exchanged opinions on bilateral relations in a phone call to US Secretary of State Condoleeza Rice. It gave no details.
The official Xinhua News Agency noted that the timing for a deal was bad, given the recent surge in crude oil prices and mounting US worries over future energy security.
But it commented, "What confuses energy experts both at home and abroad is that what should have been a simple win-win scenario was without reason politicized by the US government."
Ultimately, CNOOC's offer succumbed to an upsurge in antagonism in Washington, despite ever-closer economic ties with China, Kapp said.
"Clearly for the last seven months Congress has been very, very inflamed, almost allergic [to China.] For the most part it's been all China threat, all the time," Kapp said.
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