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• China National Offshore Oil Company¡¯s Bid for Unocal: Pros and Cons
• Li Ka-shing Donates 40 Million to Berkeley for Stem Cell Research
• Lien Chan Plans to Visit the US, Mid-July

China National Offshore Oil Company¡¯s Bid for Unocal: Pros and Cons

6-29: The recent bid by China National Offshore Oil Company (CNOOC) to obtain the US oil company, Unocal, has raised the fears of many US congressmen. Recently, forty-one Democrat and Republican politicians sent a letter to the Treasury Department voicing concerns that the Chinese company¡¯s acquisition of Unocal poses a threat to US security.

Unocal, however, is not the only US company approached for a Chinese acquisition. The Chinese company, Lenovo, recently acquired IBM¡¯s PC business, and a Chinese appliance manufacturer, Haier, is currently in talks to acquire Maytag. These moves by Chinese businesses have prompted a xenophobic backslash in a form similar to the anti-Japan sentiments that arose in the 1980s. In spite of such Congressmen¡¯s fears, neither the business community nor the White House have seriously heeded their pleas¡ªand with reason.

Halting the Unocal deal risks endangering the continued entry of US businesses into China. The few Chinese firms that have gained a national reputation in China, now feel that in order to compete with US and other international competitors, they also need to acquire an international status. Purchasing a pre-established international brand name is a natural shortcut for acquiring that status. Such acquisitions also increase Chinese companies¡¯ stake in encouraging government action on intellectual property rights enforcement. As a result of this change, the Chinese government had only recently begun to seriously crackdown on copyright violations. Thus, it is no surprise that US business leaders have been either silent or critical of US politicians¡¯ calls to stop the deal. A halt to the acquisition could reduce China¡¯s eagerness to cooperate on financial and trade reforms.

In terms of future US energy security, none of the experts are worried. US politicians argue that because Unocal is a state-owned oil company, it is competing unfairly; however, outside of the US, few oil companies are private. Most oil is managed through a state industry. Moreover, Unocal makes up less than one-percent of US oil consumption. In addition, most of its holdings are in Asia, with the largest being under development in Indonesia. China, therefore, has an interest in developing oil reserves of closer geographic proximity. Even if the US government did halt CNOOC¡¯s acquisition of Unocal, China would still acquire the resources elsewhere, leaving the same net effect on global oil prices.

In terms of the deal itself, it is in the US interest to give the deal over to CNOOC. The US oil company, Chevron, has also made a bid for Unocal, but it is offering a lower price and is planning to cut jobs. CNOOC has promised to maintain jobs in the meantime and has offered a higher price per share. Thus, for Unocal¡¯s employees and shareholders, CNOOC offers the better deal.

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Li Ka-shing Donates 40 Million to Berkeley for Stem Cell Research

6-24: Hong Kong billionaire, Li Ka-shing, donated 40 million dollars to the University of California-Berkeley to fund a center for stem cell research and brain imaging technology. The center will focus its research efforts on cancer, brain diseases such as Alzheimer's, infectious diseases such as HIV and dengue fever, and stem cell biology.

The center is currently in the works, but the donation will help to jumpstart construction of the $160 million center. The university plans to break ground in 2007 and complete construction by 2009. While the donation was not the largest that Mr. Li has ever given, the donation is the largest that the university has ever received.

Mr. Li is the lead pioneer among a new generation of Hong Kong philanthropists. The Chinese mainland¡¯s ¡°new rich¡± are and are only slowing beginning to open their pocketbooks to charitable causes, like the SARS and the recent Tsunami. Yet, Hong Kong¡¯s cosmopolitan businessmen have taken on many western philanthropic practices as their own. It is estimated that total annual giving in Hong Kong is at least $1.4 billion and rising.

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Lien Chan Plans to Visit the US, Mid-July

6-28: Lien Chan, leader of the Taiwan opposition-party the Kuomintang (KMT), will travel to the capitol on July 16 to attend the International Democratic Union (IDU) Summit. Accompanying Lien Chan will be KMT member and former US representative, Stephen Chen, as well as KMT Deputy Chairman, Helen Lin, who also serves as the only female chairperson on of the IDU.

The Summit draws leaders from all-around the world. Last year, the Summit was attended by four presidents. This year, as the Summit is hosted by the Republican Party, President Bush will also be hosting some guests in the White House.

It is expected that during the Summit, Lien Chan might meet with President Bush to discuss important issues concerning Taiwan, especially the developments in cross-straight trade and security from Lian¡¯s historic trip to the mainland in late April.

During his trip to the Chinese Mainland in April, Lian was able to establish a good relationship with Chinese President Hu Jintao and open a new communication channel between Taipei and Beijing. Meeting with Lien may help President Bush to develop a new perspective on US-China-Taiwan relationship, whereas the KMT still presents a strong presence in Taiwan politics.

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