There's no threat in proposed acquisition.

CHINA National Offshore Oil Co., a state owned enterprise, has put in a bid to buy El Segundo-based Unocal Corp., topping an earlier bid by Chevron Corp. Who will win this bidding war is not yet certain--CNOOC or Chevron. U.S.-China economic tensions were already running high, and now China wants to buy an old-line American energy company when oil prices are $60 per barrel. Washington should stop this acquisition, according to some--but not me.

Three things need to happen. First, if CNOOC wins the bidding war, the acquisition should be approved because there is no legitimate way for Washington to stop it. Second, this high-profile debate should be used as an occasion to review the existing law that addresses foreign acquisitions of U.S. companies. And third, we should review more broadly our economic relationship with China, using the current tensions to strengthen our economic interdependence.

The Committee on Foreign Investment in the United States is an inter-agency task force within the administration headed by the Secretary of the Treasury (plus Defense, State, Homeland Security, Commerce and others). CFIUS is responsible for reviewing potential acquisitions of American companies by foreign companies, rejecting any acquisition in which our national security would be compromised. But there is no codified definition of "national security." National Security is whatever the committee says it is.

Even with this unlimited definition, I cannot find any realistic threat to national security from selling Unocal to CNOOC. Oil is a commodity (not a product), with prices set in global markets with trading all over the world, 24/7. Consumers neither know nor care where the oil that was made into gasoline for their cars originates from. Except for some minor quality differences, oil is oil. CNOOC buying Unocal would represent purely a change in ownership of some oil and gas assets. There would be no increase or decrease in either the supply or demand conditions in oil anywhere in the world. What's the fuss?

Let's assume that CNOOC buys Unocal and pursues the presumably worst-case scenario from America's perspective: China reserves all Unocal assets for its domestic use. China then would not need to buy that amount of oil from Mexico or Saudi Arabia or wherever. That oil would be available on the market for the U.S. or any other nation in the world. Remember, there is no change in the global demand or supply of oil--so no global change in either price or availability--just a change in ownership. There is no national security threat here. China has no chance of cornering the global oil market.

The most important bilateral economic relationship in the world is between the U.S. and China. Any actions that increase U.S.-China economic interdependence improve our national security. More trade and inter-connected economic ownership is good, not bad. Many countries around the world own U.S. companies or pieces of them. If CFIUS were to stop this transaction, observers all over the world would hear our calls for more trade, but see our action to stop this transaction--most unfortunate.

We need to work to foster China's transition from a command-and-control economy to a market economy. China is a complicated and changing place, and CNOOC is not like any American company. We need to engage China, not to cut her off. Blocking this acquisition would send a chilling anti-market signal to China and to the rest of the world.

We do have plenty of grievances with China's economic behavior. This acquisition is a perfect time to thoughtfully review our existing laws, and to decide just what sort of messages we might wish to send to China in order to push her just a little faster down the road toward a market economy.

Donald H. Straszheim is chairman and chief executive of Straszheim Global Advisors LLC.