Chinese firms pull back from US confrontation.

Reading the acres of editorial on the subject, the US it would appear feels besieged. Its reign as the world's most powerful country is under threat  - and it doesn't like it. It's a long way off yet, of course, but some  of the comment appearing in highly respected publications, seems to us to  border on paranoia. You can be excused for feeling a little déjà vu; it was a  similar story in the '80s, but on that occasion Japan was the bogey man and the Reagan government introduced the controversial "voluntary export  restraints" on Japanese steel and cars. Today, the US seems to blame China for all  its ills. That massive trade deficit, says Washington, "is because China  won't float the yuan." In Manufacturing, the US protagonists say,  "how can  we compete with labour which is so cheap it's virtually slave employment?"

And right bang in the middle of this hot potato, is Chinese oil firm China National Offshore Oil Corporation (CNOOC.) It's got a nice Western  friendly face, employing both former Shell big cheese Evert Henkes, and Kenneth Courtis ex Goldman Sachs.

But even so, when the company made a swoop on Californian based oil company Unocal, in competition with the American-pie-like Chevron, Senators  didn't like it. Never mind that the oil company only accounts for 1% of US oil,  and never mind the fact that most of its assets are in Eastern Europe or  Asia, never mind the fact that CNOOC made lots of promises about US jobs being safe, the outrage in Capital Hill could be heard in Beijing. And when  the US said that its investigation into the takeover could take four months,  the Chinese eventually got the hint and dropped the approach, saying "the unprecedented political opposition that followed the announcement of our proposed transaction was regrettable and unjustified."

US critics of the deal made much of the fact that the $17bn offer would largely be financed by cheap, if not free, money from the Chinese government, is just not fair.

But, ultimately, the US is likely to be the loser. China will retaliate, by making it that much harder for US firms to buy out their own assets. And right now, with China growing, and the US the richest country in the  world, that's precisely what should be happening. Forget about talk that buying  up Chinese firms is riddled with difficulty and shrouded in almost incomprehensible regulation, given time these problems can be solved-  and time is still with the US. The new might of China- (why do people keep forgetting to mention India, which will ultimately be even more powerful  96 Ed) can be a threat or it can be an opportunity. In trying to stop the inevitable, the US will be no more successful than King Canute. It would  be better off embracing the new Tiger of the global economy, working with  it. A billion consumers thrust into the global market should benefit all, but  not if US intransigence forces Chinese commerce to retreat behind another  great wall.