The China National Offshore Oil Corporation's US$18.5 billion bid for Unocal looks set to spark a fierce debate in Washington over whether the deal poses a threat to America's national security and its overall trade and energy policies with Beijing. Two American lawmakers urged President George W. Bush to intervene and block the deal even before the bid was announced. No doubt, the Bush administration will take more political heat in the days to come. But the Bush administration should resist the political pressure and let the shareholders and market forces make the decision. If the US regulators block the deal because of political concerns, it would set a bad precedent that would have ramifications not only for Sino-US political and trade ties but also would impede Beijing's transition towards a market economy. Economically, the arguments that CNOOC's takeover of Unocal would threaten US energy security are thin and ill-advised. Unocal's output accounts for less than 1 per cent of America's total oil and gas consumption. More than 70 per cent of the US oil firm's proven oil and natural gas reserves are in Asian and Caspian regions, where it has been growing strongly. In a way, Unocal is more like an 'Asian' oil company that happens to have its headquarters in El Segundo, California. Politically, whether the US likes it or not, it is in Washington's interests to consider China's energy needs. As China becomes an increasingly important economic player on the world stage, it is keen to secure its own resources to fuel its booming economy. It has already become the world's second largest consumer of oil, after the United States, with its demand helping drive up global oil prices over the past year. Mr Bush himself said last month that the US must help China become more energy efficient and reduce its dependence on foreign oil by finding alternative sources of energy. 'It is in our economic interest and our national interest to help countries like India and China ... That would help take the pressure off the global oil supply, take the pressure off prices here at home,' he said. It is now Washington's turn to help out. What are the alternatives? If Washington blocks the bid, Chinese oil companies may well be forced to deal with Iran and Sudan again, as some cynics have pointed out. In addition, Boeing is trying to sell China more passenger planes and US carmakers are expanding their assembly plants on the mainland. They all need fuel to run. On a more serious note, the latest buying spree by mainland companies is part of Beijing's crucial foreign exchange reforms to make its currency regime more flexible, which the United States has been demanding. One critical step is to allow Chinese firms to use their foreign exchange reserves to buy foreign assets, particularly those in the United States, as part of efforts to relieve pressure on the yuan. CNOOC's bid follows that of the Haier Group for the American appliance maker Maytag for US$1.3 billion, and Lenovo's US$1.75 billion deal for IBM's personal computer business. And even more importantly, as Exxon Mobil chief executive Lee Raymond said earlier this week in New York, it would be a 'big mistake' for the US Congress to interfere with the bid in a move that would run counter to free market principles. 'The United States is dependant, and will be for a long, long time, on significant imports of oil,' Mr Raymond said at the Reuters Energy Summit. 'To the extent that they preclude the Chinese from buying assets here, it could easily come back and reflect that we won't be able to buy assets in a foreign country.' 'Bush should let the shareholders and market forces make the decision'