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Analysis of China's resource hunt based on flawed ideas

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The China National Offshore Oil Corp's US$15.1 billion takeover bid for Canadian oil company Nexen announced on Monday is not, as many media have been reporting, China's largest attempted overseas acquisition.

That title goes to the US$18.5 billion bid that CNOOC made in 2005 for US energy company Unocal, although that deal failed to go through, scuppered by political opposition in Washington (in 2010 an even bigger attempt by Sinochem to buy Canada's Potash Corp failed to get the green light from Beijing).

But if the bid for Nexen is approved, it still won't be China's, or even CNOOC's, biggest announced foreign investment.

In October 2009, CNOOC said it would acquire 23 Nigerian oil licences in a deal estimated to be worth at least US$30 billion, although at the time the South China Morning Post did question the true value of the deal.

Even so, CNOOC's latest acquisition attempt is a biggie, and it's just the latest in a long series of foreign investments by China aimed at securing future supplies of commodities.

Some observers detect a sinister motive behind these investments. Others argue they have generated massive wealth in the recipient countries, many of which are in impoverished sub-Saharan Africa. Yet everyone agrees they have transformed the global market in natural resources over recent years.

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