« Posner's Comment on Chinese Purchases of American Companies | Main | On Chinese Ownership: Some Reactions-BECKER »

08/07/2005

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c031153ef013482fc8a97970c

Listed below are links to weblogs that reference Chinese Ownership of American Companies: A Problem? BECKER:

» Becker & Posner oppose Congressional regulatory action against Chinese acquisitions from Big Cat Chronicles

Becker-Posner blog has an interesting discussion on the appropriateness for allow the free market to work, even when the acquirer who comes calling hails from China.  They make general arguments, although they also specifically mentio...

[Read More]

» Becker & Posner oppose Congressional regulatory action against Chinese acquisitions from Big Cat Chronicles

Becker-Posner blog has an interesting discussion on the appropriateness for allow the free market to work, even when the acquirer who comes calling hails from China.  They make general arguments, although they also specifically mentio...

[Read More]

» Becker & Posner oppose Congressional regulatory action against Chinese acquisitions from Big Cat Chronicles

Becker-Posner blog has an interesting discussion on the appropriateness for allow the free market to work, even when the acquirer who comes calling hails from China.  They make general arguments, although they also specifically mentio...

[Read More]

» On Mexifornia, Eurabia and Healthcare from The Brussels Journal
Paul Craig Roberts, Assistant Secretary of the Treasury during the Reagan administration and one of the young economists who convinced Ronald Reagan of the merits of supply-side economics,  (aka Reaganomics)  has an article on vdare.com warning [Read More]

» Daily linklets 15th August from Simon World
James Tien goes a-crawling. South Korea has again blocked blogspot and typepad, according to Kevin, Jodi and Nomad. The second instalment of lost in, or gained from, translation? Bringing hitchhiking into the 21st century. Cultural imperialism in Chin... [Read More]

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Jahed

Sorry, that should read "While their energy needs are going unfulfilled".

ben

Jahed,

"...a preemptive move on their part to purchase Unocal and fuel themselves for war with Taiwan..."

There is a world market for oil and refined fuels. What does buying Unocal get that it could not obtain elsewhere?

Jim

Great article love reading your blog.I hope the American Governemtn steps in and stops the Chinease from buying this oil company.

Patrick R. Sullivan

'A 767 isn't a weapon but 9/11 proved otherwise.'

You weren't asking about products that resulted from 'corporate means of production' (such as 767s), but about the corporations. And, the hijackers didn't buy the 767s, they stole them.

'Information about oil pipelines, choke points in oil distribution, distribution patterns of fuel oil for US naval use, isn't a weapon. But all that information could be obtained from the corporate servers of Unocal. That information likely isn't publicly available.'

Sure it is, and by means that are far cheaper than buying Unocal.

'It's an interesting issue, how in the post industrial world information can be used as a means to inflict damage on an enemy and how assets used in commercial applications can be used in new ways.'

That has yet to be demonstrated here.

'And that is my point, why give an enemy any means of inflicting damage to the US?'

No one is 'giving' them anything, and you've failed to explain how the ownership of Unocal could be used to our detriment.

'So at the moment, China has an infinitely high trade barrier preventing Chinese companies from being sold to foreigners....'

Actually, the Chinese seem to be wide open to foreigners investing in China.

'If China asked to be able to sell cars into the US but did not allow GM to sell US made cars into China, I don't think any free trader would find that acceptable.'

Free traders--properly understood--would recognize that is the Chinese' loss if GM were to be prohibited from selling cars into China. And, America's gain from Chinese cars being sold in the U.S.


'A free trader would not accept a closed Chinese auto market but some people here would accept a closed Chinese corporate market? Isn't that both inconsistent and unacceptable to a free trader?'

No, it's a red herring.

'China can buy US companies but the US cannot buy Chinese companies.

'Why would the US accept such an asymmetric arrangement? Doesn't that seem, well, kind of less than optimal?'

Yes, but I fail to see what anyone can do--short of war--that could force China to sell its companies. And, the benefits to owners of American corporations being sold to Chinese companies remains.

Sam

Patrick Sullivan:

>>'A 767 isn't a weapon but 9/11 proved otherwise.'

>You weren't asking about products that resulted from 'corporate means of production' (such as 767s), but about the corporations. And, the hijackers didn't buy the 767s, they stole them.

As I said, my point was that 9/11 showed that commercial products, industrial intellectual property, all kinds of seemingly innocuous products and information can be used against the US in surprising ways.

But, IMO, the salient point is that if you believe China is hostile to the US, that changes everything. Selling weapons, corporations, even providing services to a country hostile to the US may be hazardous. Selling something to an ally is one thing, selling something to an enemy makes no sense.

>'Information about oil pipelines, choke points in oil distribution, distribution patterns of fuel oil for US naval use, isn't a weapon. But all that information could be obtained from the corporate servers of Unocal. That information likely isn't publicly available.'

>Sure it is, and by means that are far cheaper than buying Unocal.

I disagree. Ever tried to find out that kind of proprietary corporate information? Anyone who has been involved in the due diligence process prior to buying a company can tell you that the breadth and depth of information available from the outside, compared to what an insider knows (think of Enron, or Worldcom or any of the corporate insider scandals) is vastly different.

If what you said is true, then how could any of the insider trading scandals have occurred? All the relevant information would have been publicly available. But it clearly wasn't.


As a trivial example, just try to get the customer list of a company, or their future sales or product delivery schedule. You'll see how hard it is to get that kind of mundane corporate information, let alone strategic corporate information on a real time basis. You might be able to buy that information once, but to be aware of changes as they occur, that requires a continuous inside presence. Being the owner of the company would ensure that.

But I don't know why China wants to buy Unocal. Perhaps it's a mixture of information and access to oil assets. I disagree with Prof Becker on the issue of China promising not to ship Unocal controlled oil only to China. If China were to do that, who or how would anyone enforce their "promise".

>'It's an interesting issue, how in the post industrial world information can be used as a means to inflict damage on an enemy and how assets used in commercial applications can be used in new ways.'

>That has yet to be demonstrated here.

Curiously, that was my point. When an ally of the US buys a company, you can be fairly certain that their aim is purely commercial. When a hostile country tries to buy a company, you at least ought to be wary of what their plans might be.

As I said, no one thought that providing flight training to the 9/11 hijackers bombers was dangerous, until it was too late.

China has taken a hostile stance to the US, why do anything beyond buying consumer toys from them? The upside is the return of some of the $700B in US dollars China has accumulated. But the downside risk is unknown, unlike if a Japanese or Dutch company bought Unocal. However, I don't think anyone can say that the risk is zero, given China's provocative behaviour over the past few years.


>'So at the moment, China has an infinitely high trade barrier preventing Chinese companies from being sold to foreigners....'

>Actually, the Chinese seem to be wide open to foreigners investing in China.

AFAIK, foreigners are prohibited from investing in certain industries (which, last time I checked, the petroleum industry was on that list) unless you have a majority Chinese partner. At the moment, a US company can't buy the Chinese equivalent of Unocal. If you google on "Catalogue for the Guidance of Foreign Investment Industries," you'll see the sectors still under investment control.

>'If China asked to be able to sell cars into the US but did not allow GM to sell US made cars into China, I don't think any free trader would find that acceptable.'

>Free traders--properly understood--would recognize that is the Chinese' loss if GM were to be prohibited from selling cars into China. And, America's gain from Chinese cars being sold in the U.S.

Here we entirely disagree. One country maintaining a trade barrier while demanding the other side have no barriers. Isn't that literally the opposite of "free" trade?

>'China can buy US companies but the US cannot buy Chinese companies.

>'Why would the US accept such an asymmetric arrangement? Doesn't that seem, well, kind of less than optimal?'

>Yes, but I fail to see what anyone can do--short of war--that could force China to sell its companies. And, the benefits to owners of American corporations being sold to Chinese companies remains.

The NAFTA and CAFTA treaties were negotiated without resorting to war. That kind of treaty is feasible.

But your idea that the US has to resort to war to persuade China to allow the US to buy Chinese companies, something the US can do in Canada and Europe, I suspect illustrates my point. If you think the US has to go to war with China for something as simple as the right to buy certain Chinese companies, then there is obviously something seriously wrong with the US/China relationship. If that is the case, then why allow them to buy US companies with strategic assets like Unocal? You don't have to go to war for the right to buy certain companies if China is a state friendly to the US.

If the US allows China to buy US companies and does not insist on reciprocal treatment from China, than what incentive does China have to eventually grant US companies the right to buy Chinese corporate assets? If nothing else, that's simply poor negotiating. That might have been part of the reason some US politicians objected to the Unocal purchase. IMO, it's just a dumb thing to do.

As I said to another poster, my position on the issue of allowing China to buy Unocal is: Not yet. The current level of trade, basically non strategic goods and services, is mutually beneficial for both countries and not a threat to the US. Going beyond that point, to trading corporate assets and finally weapon sales, IMO requires China to be much less hostile to the US and to China's own neighbours.

Corey

"One country maintaining a trade barrier while demanding the other side have no barriers. Isn't that literally the opposite of "free" trade?"

Yes, and it is also exactly what the US does with respect to "developing" nations on a daily basis. G8 nations constantly discriminate against foreign produced finished goods while demanding free access to labor and raw materials, as well as free markets in which to sell G8 produced finished goods.

China won't allow foreign ownership of their companies because they would not be in a position where they could prevent capital flight. It is the same position that the US took (before any of us were born) while our economy was "developing".

On Becker's rationale, I don't see any problem with Chinese ownership. I would presume that everyone here considers both Unocal and the Chinese Gov't to be competent parties to exercise "freedom of contract"? :) Don't tell me that all the Lockean free-market, corporations-are-people-too love goes away when we cross a national border?

nate

On another topic: Cavuto on Fox had an interesting debate yesterday. It covered airlines in the U.S.

Should U.S. airlines be allowed to fail?
Should the lights be turned out and the doors locked at some airlines?
Why or Why Not?

How long should bankruptcies last? Why?

It would be interesting to get some guidance from you on this. If Posner can not comment due to court concerns, maybe just a blog from Becker?

Patrick R. Sullivan

'As I said, no one thought that providing flight training to the 9/11 hijackers bombers was dangerous, until it was too late.'

That happens not to be what you said. You were arguing that corporate means of production could be used as weapons. You've switched your ground to something completely different.

'Ever tried to find out that kind of proprietary corporate information? Anyone who has been involved in the due diligence process prior to buying a company can tell you that the breadth and depth of information available from the outside, compared to what an insider knows (think of Enron, or Worldcom or any of the corporate insider scandals) is vastly different.'

Actually, for publicly traded companies a lot of this information is available, such as sales volumes and/or to whom you're selling. Analysts get most of this info.

At any rate, you're shifting the ground of your argument to insider trading scandals rather than provide any coherent idea of how the ownership of a company like Unocal could be used as a weapon.

'At the moment, a US company can't buy the Chinese equivalent of Unocal.'

There is no Chinese equivalent of Unocal. But, if there were, it hardly makes sense for our government to do harm to us because the Chinese govt. does harm to their people.

Brad

It seems to me that you can have whatever stipulations you demand when you're talking about an 18.5B dollar deal. If you want you set conditions where we are able to see exactly where all the oil coming out of American ground is going you can do that too. Even right up to tracking each of the tankers.

Seeing as we can, essentially, ensure that all of the oil is STILL going to the same market that we buy it from anyway then why not let the Chinese spend the money covering the cost of getting the oil out of the ground? (And the continued investment of running the operation thereafter.)

In fact, the sale of Unocal could be the driving force that helps to ease Chinese-US trade barriers. It has to start somewhere and this could have been the catalyst.

And the best part is that the oil will always be in American ground. If China will act as China wants to regardless of economic incentives, as is being postulated, then why not let them over-invest in the US and then act as is required to any situation as it arises?

The ball is always would always be in our court.

One last thing I've noticed, many comparisons are made regarding one country invading another. I think many of these comparisons can be disregarded unless we think that China plans to invade the US.
Tiawan is a different animal with different incentives and conditions.

Finally, the Taliban didn't attack us on 9/11. Al-quida (or however that's spelled). So there was no economic deterrent for 9/11 as it wasn't the official Afghan gov't attacking us. Pls stop bringing 9/11 into this . . . that's just emotional propoganda.

brad

I've got to re-read these post before I put them out there. I practically sound Chinese! ;)

nate

what do you think of efficient market hypothesis? why?

what are your thoughts on CAPM?

what do you think of "absolute return" strategies?

Anonymous

nice
مركز تحميل

Anonymous

thanks
بنت الزلفي

Anonymous


شات سعودي

Anonymous

العاب
___
ÿ¥ÿßÿ™

Anonymous

ÿßÿ®ÿ±ÿßÿ¨
___
دليل

Anonymous


Thank you, you always get to all new and used it
شات صوتي

Anonymous

Thank you, you always get to all new and used it
ÿ¥ÿßÿ™

ÿØÿ±ÿØÿ¥ÿ©

Anonymous

ÿØÿ±ÿØÿ¥ÿ©
___
صور

Anonymous

Greeting. It is nobler to declare oneself wrong than to insist on being right - especially when one is right.
I am from Micronesia and learning to speak English, give true I wrote the following sentence: "Personal belongings you take on vacation such as a laptop, camera or clothing are generally covered by your primary homeowners or renters insurance policy."

Thanks for the help ;), Magdalen.

Anonymous

If you have to do it, you might as well do it right.

Anonymous

Very interesting site. Hope it will always be alive!

Anonymous

Great site. Keep doing.

Anonymous

Great site. Keep doing.

Anonymous

Great work, webmaster, nice design!

The comments to this entry are closed.

Become a Fan

May 2014

Sun Mon Tue Wed Thu Fri Sat
        1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31