By itself, the possible sale of Unocal Corp. to the Chinese firm CNOOC is hardly a big deal. Even if it were to happen (which seems to be growing less likely), Unocal accounts for only a couple tenths of 1% of global oil production.
But the very idea of such a sale raises a huge question: Despite the substantial benefits provided by trade and international investment, how much American economic interaction with China is too much? At a time when China is the world's most impressive rising economy, yet still an autocratic state with, among other things, a declared willingness to use force against Taiwan under some circumstances, the United States needs to know where to draw the line.
There are three broad ways by which economic interaction with China could create a strategic threat to the U.S.
First, China could obtain advanced technologies not otherwise available to it that could increase its military capabilities quickly and dramatically.
Second, by becoming a critical source of key commodities, China could gain leverage over the U.S. that would allow it to coerce us in a crisis. (It is principally this worry that motivates opponents of Unocal's possible sale to China National Offshore Oil Corp.)
Third, through design or by happenstance, China could gradually develop a type of economic relationship with the U.S. that would contribute gradually to our own decline, and hence its relative rise in the international pecking order.
All three of these scenarios deserve to be taken seriously. But, in fact, it is only the last one that should cause the U.S. angst at the moment.
Consider the other two possibilities first, though. It clearly would be worrisome if China gained from abroad the kinds of advanced military capabilities that it cannot yet build at home. These could include sophisticated command-and-control aircraft and other advanced military communications systems, stealth technologies for planes or submarines, or state-of-the-art supercomputers.
Unfortunately, Russia is selling some of these kinds of defense systems to China. But for the moment, at least, Europe has retained its ban on arms sales to China, Israel has been dissuaded from further transactions by pressure from Washington, and the U.S. is well prepared to stop such transfers by a combination of export-control laws and the Treasury Department's Committee on Foreign Investments in the United States. The situation clearly bears further vigilance. But in policy terms, our strategy is already clear and already in place.
