Win or lose, CNOOC's unsolicited US$18.5 billion spoiler bid for California-based oil company Unocal marks a defining moment in both the history of China's modern economic development and its always delicate relationship with the United States. The audacious gambit by China's third-largest oil and gas company is but the latest in a series of overseas takeovers by mainland companies, the high point of which had, until now, been Lenovo's agreement late last year to acquire IBM's personal computer business for US$1.75 billion. CNOOC's attempt to trump Chevron's US$18 billion offer for Unocal dwarfs all that has gone before it, both in its scale and strategic importance. Lenovo's acquisition was widely seen as a good deal for IBM and at best a dubious one for Lenovo, whose shares subsequently took a beating from investors. For all the national security concerns articulated by some in Washington, PCs are glorified typewriters-cum-calculators and IBM was glad to rid itself of an increasingly low-margin commodity business. Similarly, Unocal's strategic significance in the US energy equation is easily overstated. More than three-quarters of its energy reserves are concentrated in central and southeast Asia, and just 21 per cent in North America. Moreover, the company's US output accounts for less than 1 per cent of national consumption. Sensitive to the politics already in play, CNOOC has been at pains to point out that the merger would be a perfect fit. Unlike Chevron, it has no operational overlap with Unocal and would effectively be acquiring an international arm. There would be no need to lay off any of Unocal's workers, as Chevron plans to do. CNOOC also has powerful allies, beginning with its financial advisers Goldman Sachs and JP Morgan. More broadly, the US business lobby may hesitate to join a protectionist backlash against CNOOC's bid, not least because its members have much to lose if treated similarly in China. None of this will be enough to stop a small but vocal political lobby in Washington that is reflexively hostile to China's emergence as an economic and, inevitably, a military power, especially at a time when oil is trading at above US$60 a barrel. But fear - especially irrational fear - has no place in a takeover battle whose spoils should go to the company that presents the best offer to Unocal's shareholders. Surely even the Bush administration, its military adventures in the Middle East and fixation on energy security notwithstanding, understands that. The only legitimate concerns over CNOOC's bid belong to its minority shareholders, who cannot help but wonder if the company is putting China's geopolitical concerns and those of its state-owned parent company above its own. Analysts have been sceptical, noting that CNOOC's parent needs to secure overseas supplies for a series of coastal LNG terminals it is building. CNOOC's acquisition of Unocal's Asian assets will provide exactly that. The generous financing CNOOC is receiving from its state-owned parent - a US$2.5 billion interest-free bridging loan and an additional US$4.5 billion, 30-year loan at 3.5 per cent - reinforces the impression that the Chinese government wants CNOOC to succeed, and lends ammunition to critics who contend CNOOC has an 'unfair' funding advantage. Even the US government has to borrow at 4 per cent. At the very least, CNOOC's inability to organise a bid in April has cost it dearly, and reflects poorly on the company's leadership. Instead of edging out Chevron's offer the first time round it has had to trump it belatedly, and will pay even more dearly if its American rival responds with a counter-offer. There is, however, a credible argument to be made that it is a price worth paying. Like the world's other big oil companies, CNOOC, is grappling with meagre home energy reserves and scrambling to secure deposits abroad.