Tuesday, July 05, 2005

US vs China business war

MSNBC published, from the Washington Post, an story about just how pissed China is about the US congress not wanting to Unocal to be sold to a Chinese oil company.
This sounds like pretty strong language for diplomacy. If the US government persists in trying to block the sale of Unocal's energy assets, especially the 70% of Unocal's properties located in Asia, expect China to retaliate in spectacular fashion. China holds a winning hand in this business war. All they need to do is start dumping some of their vast treasury bill holdings. Then watch the credit markets panic and interest rates leap.
Probably, this will not happen. A little backroom diplomacy - and congress will realize that 'free trade' is more important than energy independance. One way or another, China will aquire Unocal, or at least the Asian oil and gas holdings.

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