China's CNOOC Ltd. on Tuesday (8/2) abandoned a bold $18.5 billion offer to acquire Unocal Corp. in the face of strident political opposition, clearing the way for the U.S. oil producer to conclude a deal with larger U.S. rival Chevron Corp.

The move ends a takeover battle that became a flashpoint for Sino-American trade relations and the global scramble to secure energy supplies, spawning Congressional hearings and drawing vehement indignation from U.S. lawmakers.

Financially, CNOOC's cash offer in late June easily topped Chevron's sweetened $17.4 billion bid for Unocal, whose shares on Tuesday began trading roughly in line with the Chevron bid.

But CNOOC's higher offer was overshadowed by a fierce backlash in Washington over a Beijing government-controlled company attempting to buy American oil assets as crude prices raced to record highs.

"The political reaction has scared off the board of Unocal, the shareholders and CNOOC itself," said Edmund Harriss, fund manager at Guinness Atkinson, which holds CNOOC shares.

"I don't think anybody really anticipated quite what a maelstrom they were entering into."

Calling the political response "regrettable and unjustified," CNOOC (0883.HK) said in a statement it was reluctantly withdrawing its offer. It said it considered increasing the offer, and would have done so were it not for the political environment in the United States.

"This political environment has made it very difficult for us to accurately assess our chance of success, creating a level of uncertainty that presents an unacceptable risk to our ability to secure this transaction," the company said.

'IT WAS BIG, ALRIGHT'

Some members of the U.S. Congress had sought to block a CNOOC deal almost from the start. Allowing Unocal to pass into Chinese hands would boost Beijing's leverage over Central and Southeast Asia, some said, while others complained China was subsidizing the bid with interest-free and low-interest loans.

Last week a congressional conference committee added a provision to a broad energy bill that would have delayed the necessary government review of CNOOC's offer by months.

"No surprise -- it looks like Chevron has pulled off a pretty good political campaign and got a lot of support," said Jason Putman, an analyst at Victory Capital Management in Cleveland, Ohio, which owns Unocal shares.

In Washington, critics of the Chinese bid welcomed CNOOC's decision to bow out of the race.

"The big idea was that Beijing could buy its way into the American oil business. It was big, alright, but not well-considered, and it collapsed largely because Americans still know the difference between cash and freedom," said a spokesman for the House Energy and Commerce Committee Chairman Joe Barton. "They thought we could be bought."

END OF A LONG ROAD

Though CNOOC did not place a bid on the table until late June, it had set its sights on Unocal -- which boasts a prized portfolio of Asian assets stretching from Indonesia to Myanmar -- much earlier.

CNOOC was said to have been in talks to buy the El Segundo, California company as early as January, but failed to put in a bid during the auction process. Instead, Chevron won the race to buy Unocal for about $16.4 billion in April, an offer it was forced to sweeten last month when faced with the counter-bid.

Though Unocal steadfastly backed Chevron through the battle, it made clear in public filings that it had been willing to accept the Chinese bid under certain conditions -- including a higher offer -- which CNOOC chose not to meet.

CNOOC shares, which had struggled over fears of a bidding war and the assumption of excessive debt, rose to a record high in Hong Kong trading on Tuesday before the company withdrew its bid, gaining 2.8 percent to HK$5.50. Its shares closed up nearly 6 percent on the New York Stock Exchange.

Unocal shares, which have risen nearly 50 percent since the start of the year, ended up 16 cents at $64.53, while Chevron shares rose nearly 2 percent to $59.56 a share on the NYSE.

Unocal shareholders are due to vote on the Chevron offer on Aug. 10. If they approve it, the deal could close on that day.

Unocal would not comment on the CNOOC pullout except to say it believes a Chevron deal provides the best value for shareholders. Chevron did not address the CNOOC move either but said it looked forward to closing the deal on Aug. 10.

Sources: Reuters

China has revalued its currency, the yuan, for the first time in a decade - a move welcomed by the US, a long-time critic of its exchange-rate policy.

The announcement on Thursday (7/21) was widely seen as the first step towards the liberalisation of China's currency.

The yuan will no longer be pegged to the dollar, but will float against a basket of currencies.

It will also appreciate against the dollar, mollifying critics who say a cheap yuan has helped Chinese exports.

"I welcome China's announcement today that it is adopting a more flexible exchange rate regime," said US Treasury Secretary John Snow in a statement.

"As we have said, reform of China's currency regime is important for China and the international financial system."

Moving 'in tune'

Mr. Snow said the US would watch China's implementation of its new system, which will see the yuan float against a basket of currencies, rather than linking it at a fixed rate to the US dollar.

China's currency had been pegged at 8.28 against the dollar, but the new move effectively strengthens it by 2.1%, to 8.11 to the dollar.

"The Chinese have now put in place a system to allow their currency to move in tune with the global economy," Mr. Snow said.

Meanwhile the International Monetary Fund (IMF) said it was ready to "work with the authorities on the continuing evolution for the exchange rate system".

After the announcement the euro came under pressure from a rallying Japanese yen, which rallied sharply across the board - including against the US dollar.

Japanese officials welcomed the yuan's revaluation, saying it would benefit both the economies of China and Japan.

The dollar dropped against several Asian currencies following the Chinese announcement, sinking from 112.50 yen to 110.38 yen, its lowest level since 30 June.

Malaysian move

Criticism had been strongest in the US, where many blame China for the decline of domestic industry.

However the White House also welcomed the move, with presidential spokesman Scott McClellan saying: "We are encouraged by China's announcement today that they are adopting a more flexible market-based currency system."

And Thomas C Dawson, director of external relations at the IMF said: "The change in China's exchange rate regime announced today represents a move in the direction of greater exchange rate flexibility.

"Greater flexibility is very much in China's best interest, as it would provide more room for monetary independence, enhancing the government's ability to manage the economy.

"We would encourage the authorities to utilise fully the scope for flexibility in the new exchange rate arrangement."

In an announcement on state television, the Chinese government said that from Friday the yuan would be allowed to trade in a tight range of 0.3% against a basket of foreign currencies.

However, it did not indicate which currencies they would be.

In a move that seems to be coordinated with the Chinese decision, Malaysia has also scrapped its currency's link with the dollar.

The Malaysian ringgit had been pegged at 3.8 to the dollar since September 1998, in the aftermath of the Asian financial crisis.

Tariffs threat

Malaysia's central bank said it did not expect the currency to deviate widely from its current level against the dollar.

The Chinese revaluation came a day after US Federal Reserve chairman Alan Greenspan warned that China faced a "very serious" risk to its economy if it did not allow its currency to rise in value.

Senior US politicians had threatened to impose tariffs against China if it did not revalue the yuan.

However despite the warm reactions, some analysts reacted with some caution to Beijing's decision.

"This looks like a very minimalist move," said Mark Cliffe, an economist with ING. "It maybe relieves the pressure from the US with tariffs on the table in Congress but it remains to be seen if it is enough politically and economically."

The shake-up of the way the yuan is valued was "clearly more symbolic than anything else" said John Ip, a senior economist with Morley Fund Management.

Source: BBC

China's central bank said on Tuesday(7/26) that last week's 2.1 percent revaluation of the yuan did not mean there would be further adjustments to the currency.

In a statement posted on its Web site, www.pbc.gov.cn, the People's Bank of China said foreign media reports describing the long-awaited revaluation as an initial adjustment were incorrect.

It stressed that reform of China's foreign exchange regime would be a gradual process.

Earlier, a senior central bank official told Caijing magazine China had the power to keep the yuan largely stable, helped by higher U.S. interest rates and a cooling domestic property market.

"We are fully capable of keeping the yuan basically stable at a reasonable and balanced level," the July 25 edition of the semi-official magazine quoted Yi Gang, an assistant central bank governor, as saying.

Yi joined other Chinese officials in pledging yuan stability after the central bank last week revalued the yuan and said it was ending the Chinese currency's decade-long peg to the U.S. dollar by referring it to a basket of foreign currencies.

Key factors helping the yuan's stability were higher U.S. interest rates, with short-term U.S. interest rates exceeding that of China by 2 percentage points, and the Chinese government's success in curbing the property market, Yi said.

"The cycle of U.S. interest rate rises has yet to end," he was quoted as saying.

"Excessively rapid increases in China's property prices have been initially contained," Yi said.

Foreign speculators have put money into China's property sector in recent months while some domestic firms and residents have been converting dollars into yuan, putting upwards pressure on the yuan along with trade surpluses and investment inflows.

Source: Reuters

China has successfully connected power grids for its northern, northwestern and central regions to form a huge integrated power grid, a local official in charge of power supply in central China's Henan Province said on Wednesday.

The newly integrated power grid is believed to be the world's largest and will facilitate a more efficient distribution of energy throughout China, said the official with Henan Power Corporation. The move is also expected to help ease the current strain on power supplies in the country, the official added.

According to the official, the northern China power grid was connected with the central China power grid after a 500-kilovolt power transmission line was put into operation.

Combination of the two power grids involved 14 Chinese provincial-level regions, with the combined installed generating capacity totaling 140,000 MW.

The connection between the central China and northwest China power grids was made possible on the basis of the operation of a 330-kilovolt current-transforming substation in western Henan Province.

The integration of all the three power grids has enabled power to be more efficiently distributed in a united grid of both direct and alternating current for all provincial-level areas across the country, except for Xinjiang Uygur Autonomous Region, Tibet Autonomous Region and the two island provinces of Hainan and Taiwan.
  
Sources: People's Daily

Nearly one third of China's copper consumption comes from recycled waste and mixed coppers, said an official with the Chinese society of non-ferrous metals industry Saturday.

Wang Jiwei, an official with the society, said that China has geared up for reusing and recycling used coppers, in a bid to release the tension of copper resource shortage, and has brought positive influence to both domestic and international copper markets.

Statistics provided by Wang's society show that China recycled and reused 1.16 million tons of "waste" and mixed coppers in 2004, accounting for 28 percent of the country's total consumption, up 14 percent from that of the previous year. The above figures exclude coopers reused directly by cooper processing enterprises, totaling one million tons.

Last year witnessed an increase of 25 percent import of waste coppers, while the electrolytic cooper import reduced by 12 percent.

Ranking the world's No.1 copper consumer, China is in dear shortage of copper mine resources. A great gap between copper demand and production has spurred more enterprises to resort to recycled coppers.
China has already formed a structure for reusing waste coppers, with import and distribution centers established in port cities and other areas..
 
Sources: xinhuanet