Brad Setser offers yet another excellent post on China’s buying spree of US assets, while I have argued that CNOOC’s bid for Unocal’s is a business matter and not a security issue - Setser correctly points out that there is a serious security matter related to the acquisition.

If the US wanted to fund its current account deficit by selling equity, it would need to sell off the equivalent of 40 Unocal’s a year — whether Chinese state firms, European firms, Japanese insurers or Saudi princes. That is a lot. But a $800 billion current account deficit is — as I consistently try to note — really, really enormous (among other things, the 2005 US current account deficit will be about the size of 2005 US goods exports).
Peter Schiff:

In other words, to finance just one year’s purchases of consumer electronics, granite counter-tops, vacations, automobiles, furniture, appliances, clothing, toys, and net interest and dividend payments, Americans will basically give away the equivalent of half of the companies that comprise the Dow Jones Industrial Average.

Warren Buffet agrees

Having China bid for U.S. companies such as Unocal “is an inevitable consequence of what we are doing in trade,” billionaire investor Warren Buffett said in an interview on CNBC. American purchases of Chinese shoes, furniture and textiles, give the Chinese dollars that they can spend, he said.
“Sometimes, they buy our government bonds, as their central bank has done, but other times they are going to buy our assets. If we are going to consume more than we produce, we have to expect to give away a little bit of the country,” Buffett said.

The scale of the debt the US is now taking on — or the scale of assets that the US would have to sell to avoid taking on debt — strikes at least me as a real national security issue, even if you agree with Sebastian Mallaby, and think that the sale of Unocal’s Asian assets is not.

Indeed, and it’s a shame that Congress men aren’t drafting letters on how the Federal budget deficit threatens US security interests.