Republicans Abroad Hong Kong chairman Mark Simon wrote recently that CNOOC's bid for Unocal should be stopped because CNOOC is ``a state-owned securer of natural resources'' rather than a ``real company.''

This complaint seems a bit disingenuous when the United States government uses taxpayer dollars to finance, among other things, the Strategic Petroleum Reserve.

And given that the Bush administration is perfectly happy for Beijing to purchase US Treasuries, under what principle would it disallow the purchase of oil that is only nominally ``American?'' One barrel of oil is pretty much like another, isn't it?

In any event, the net value of Unocal's reserves has, presumably, been correctly priced by the market as reflected in Unocal's present stock price. If Beijing is willing to overpay, then Unocal's shareholders can take the cash and re-establish other, lower-cost operations courtesy of the mainland taxpayer. To argue otherwise, one must claim that the markets have under-priced Unocal - that the markets do not work very well after all, an argument Republicans, in particular, might find hard to sustain.

Yet there are good reasons for the West to be concerned by China's - and Asia's - growing economic prowess. Clyde Prestowitz's new book, Three Billion New Capitalists: The Great Shift of Wealth and Power to the East, details familiar problems - the dollar's status as the world's reserve currency has allowed Washington to print money to buy what it wants, leading to overconsumption and indebtedness, while US secondary schools are declining.

Some of the purported threats, like the CNOOC bid, seem less urgent. Prestowitz claims that America's laissez-faire attitude has allowed foreigners to capture entire industries. But this implies foreign firms know something US investors do not, and that the government would know better.

US companies no longer manufacture TVs and DVD players - and if Haier gets its way with Maytag, perhaps washing machines as well - but these are businesses with relatively low added-value. The countries the United States lost these industries to are themselves now losing them.

America has so far managed to hang onto and monopolize most of the profitable industries based around IP creation. Asia may grab industries, but the US still creates them.

The fundamental change will not arise from Asia's large pool of cheap labor, the three billion new capitalists of Prestowitz's book, but the three billion new consumers that will at some point follow. It is this demographic, not the export-oriented nature of the economies, that will make China's and India's economies larger than those of the US and Europe, and ultimately quite a bit larger.

This brave new world may look very different from the one we inhabit.

Not only do large economies throw off large amounts of cash, but they will also have the size to begin setting standards - US companies' dominance comes with the propagation of American technical standards, pricing based on the US economy and US views on such legal concepts as trademark, copyright and patents.

A mainland economy two or three times America's may change these calculations.

Prestowitz is at least trying to yank the ostrich's head out of the sand. China and India's rise may be pre-ordained, but the timing is not.

Prudence would indicate that even if the US can dodge the bullet of the mainland and other countries dumping their US dollar reserves in reaction to American profligacy (what Prestowitz refers to as an economic 9/11), strategic planners should be prepared for a world in which the United States will need to compete where the size of its economy no longer confers unmatchable economies of scale and the ability to direct the global economy around its own interests. What should America do? Get out of Iraq - America cannot afford to hemorrhage hundreds of billions of dollars in poorly planned and executed military actions.

Next, remove America's addiction to petroleum through a combination of incentives (government-funded research into new light-weight materials, taxes on petrol and inefficient vehicles).

Then, find out why America's educational system, the best in the world for the top students, fails the bulk of US youth so abysmally - and then fix it.

Finally, stop partying, start saving and studying, and put energy into competing for those three billion new consumers rather than complaining about them.

pgordon@iagroup.com.hk

Peter Gordon is the co-founder of Paddyfield.com