As reported by Bloomberg News, China National Offshore Oil Corporation (CNOOC) stocks fell following Center for Security Policy President Frank Gaffney’s testimony Wednesday before the House Armed Services Committee that called attention to the adverse economic and national security implications of CNOOC’s $18.5 billion bid to purchase Unocal.

Gaffney pointed out that the PRC’s play for Unocal’s energy and rare earth mineral assets is hardly a normal commercial transaction, but rather part of Beijing’s long-term plan to dominate strategic energy resources, materials, minerals and technologies in order to provide a civilian economy that will serve China’s military needs, observing that "the PRC’s aim is inexorably to supplant the United States as the world’s premier economic power and, if necessary, to defeat us militarily."

Wednesday’s hearing lent substantial momentum to congressional opposition to CNOOC’s purchase of Unocal. While the House has already approved a spending measure that would block the Committee on Foreign Investment in the United States (CFIUS) from approving the merger, its support in the Senate is uncertain. Should the Senate fail to direct CFIUS to block the deal, as Gaffney concluded, "we will find ourselves on a collision course with Communist China."

To read Gaffney’s testimony click here. Asian stocks fall in U.S., led by CNOOC, Jilin Chemical shares

Bloomberg.com, 14 July 2005

Asian stocks dropped in U.S. trading. CNOOC Ltd. fell after Frank Gaffney, president of the Center for Security Policy, told the U.S. Congress that CNOOC’s $18.5 billion bid for Unocal Corp. is an "ominous" move by China to dominate energy resources for the benefit of its economy and military.

The Bank of New York Co.’s Asia ADR Index, which tracks the region’s American depositary receipts, declined for the first day in four, losing 0.6 percent to 109.58.

CNOOC, China’s largest offshore oil producer, dropped 74 cents to $62.86. The appearance by Gaffney, an assistant secretary of defense in the Reagan administration, is the latest sign of opposition CNOOC faces in Congress. China aims to defeat the U.S. "economically" or, if needed, "militarily," Gaffney said at a House Armed Services Committee hearing.

Jilin Chemical Industrial Co. slumped $1.80 to $22.30. The Chinese maker of petrochemical products said first-half profit dropped more than 50 percent because of higher oil prices.

Toyota Motor Corp. lost 52 cents to $74.08. The world’s second-biggest carmaker is recalling about 111,000 Liteace and Townace vehicles because of a defect in a power transmission part, Kyodo News Service reported, citing a report filed by Toyota with the Ministry of Land, Infrastructure and Transport.

Nikkei 225 Stock Average futures expiring in September closed at 11,700 in Chicago, up from 11,680 in Osaka and 11,685 in Singapore.

Center for Security Policy

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