Third, in and of itself, this deal may seem fairly innocuous. However, it also represents a "camel's nose under the tent" probe by the Chinese government for bigger and bolder acquisitions that may not be in the strategic interests of the United States -- remember the controversy five years ago when China tried to buy Unocal.
Finally, deals like this play an important part in China's currency manipulation as China seeks to diversify out of U.S. government bonds and acquire hard assets like oil reserves which represent a better inflation hedge. To be clear here, to maintain the grossly undervalued Chinese yuan's fixed peg to the dollar, the Chinese government must circulate U.S. dollars back into the U.S. One way to do this is to buy U.S. government bonds, which is how China has acquired almost $2 trillion of U.S. treasuries. But buying hard U.S. assets like oil reserves is now seen in Beijing as a better way for China to manipulate its currency because hard assets are better inflation hedges.
In the final analysis, the best way to look at this deal is as just another monthly payment by America on its mortgage to China. Until China freely values its currency, lowers its Great Walls of Protectionism around its various markets and resources, and plays by the rules of free trade, Chinese companies, whether state-owned enterprises or not, should not be allowed to acquire American companies.
Peter Navarro is a contributor to The Street and author of "Seeds of Destruction."