Communist China Continues Its March to Capitalism – Reaches Agreement to Purchase Major Canadian Oil Company and Establish North American Operations

Paying the Price for All That Borrowing From China

The strategy of China’s ruling Communist Party has been clear for years.  In order to feed China’s huge and growing demand for raw materials, the country is going around the world and buying up resources and companies that control those raw materials.  China has learned something it took the West centuries to learn.  It is more effective and less expensive to buy rather than conquer.

The latest Chinese acquisition is Canadian oil giant Nexen, which China will purchase, regulatory approval pending, for about $15 billion.

China’s Cnooc has agreed to buy Calgary-based oil group Nexen for $15.1bn plus debt, a bold step that marks the increasing confidence of Chinese energy groups expanding overseas.

The deal, if completed, would be China’s largest overseas acquisition of a listed company, and comes at a time when Chinese companies are increasingly scouring the world for deals during the global downturn.

But this is more than just a purchase of an energy company.  With the purchase China will be establish a huge North American management infrastructure. 

Under the terms of the latest deal, Nexen management will become the new face of Cnooc in North America, with an expanded mandate that will cover Cnooc’s assets in the US, Canada and Caribbean.

Cnooc will make Calgary its North American headquarters and the Hong-Kong listed company will list shares on the Toronto stock exchange.

So America, just keep buying all that Chinese stuff, and keep shipping all those dollars to China and keep borrowing all those dollars back so we can have budget deficits with low taxes.  And then plan to sell of the nation’s commercial crown jewels to pay for everything. 

Sounds like a plan, doesn’t it.