Beijing Opera, a Historical Treasure in Fragile Condition

By RICHARD BERNSTEIN

Zhang Qi rehearsed for the main role of Hu San Niang in the opera Hu Jia Zhuang in Beijing.

BEIJING — “Watch out for that sword,” the rehearsal director shouted.
“I don’t want anybody’s head getting cut off because you don’t know what you’re doing.”
Lots of weapons were on stage at the Beijing Opera Academy of China here the other day. Teenage future opera stars were armed with lances, spears, swords and daggers as they carried out an elaborately choreographed, intricate, stylized and acrobatic fight scene, all to the clash of cymbals, drums, wooden clappers and a substantial orchestra of Chinese string and woodwind instruments.
Here and there in this ever more steel and glass city where old neighborhoods disappear from one month to the next, there is a glimpse of what the previous city was like — quiet, tree-shaded streets with small storefronts and bicycles, a locust tree leaning over a wall that hides an old courtyard house.
This modest and slightly shabby theater in the academy exists in a neighborhood in the southwest part of the city that has not been entirely torn down and rebuilt yet.

The academy occupies the former site of the Beijing Dance Academy and does not seem to have been physically upgraded or modernized.

It still has dingy corridors, ancient washrooms, rusting bunk beds (six to a room), a single fluorescent bulb hanging from the ceiling and an ancient radiator in front of the window.
And, of course, nothing could more suggest old Beijing than Beijing opera, with its masks, its stylized movements, its atonal, strangely modern arias, its fantastically intricate scenes of battle, and, probably most important, its audience of connoisseurs who know when to shout a throaty “hao!” — good! — after an especially well-executed movement or song.
The worry though is that, like the city’s old neighborhoods, Beijing opera could fall victim to China’s rampant commercialism and modernization.

If it did, it would be a bit like Italy consigning Verdi or Donizetti to a few small halls in Milan and Rome, or to those folkloric shows for tourists who mostly do not know much about what they are seeing.
“Objectively speaking, right now there are some difficulties,” said Qiao Cuirong, a senior professor at the National Academy of Chinese Theater Arts, summing up the current state of Beijing opera.

“People are interested in money and modernity and Western things, so our own culture has lost something.”
It would be premature to say that Beijing opera has turned into an antique relic, but clearly it is not what it was in the late 18th to early 20th century, when it was northern China’s most popular theatrical entertainment.

The big national spectacles of recent years have included the 2008 Olympic opening ceremony, which, while drawing on China’s rich tradition, did not echo the traditional opera.

There was also the lavish production of Puccini’s “Turandot,” directed by the celebrated filmmaker Zhang Yimou. That production was a Western import that was once banned in this country because it was deemed insulting to China.
Beijing opera certainly was not helped by the fact that during the turmoil of the 1966-76 Cultural Revolution, the form was deemed feudalistic and reactionary.

But then again so was just about every other art form, including Western music and modern dance, both of which have since made vigorous recoveries.
But Beijing opera faces particular difficulties, aside from the aging and fading away of a knowledgeable audience.
“The more you know about Beijing opera, the more you love it,” said Liu Hua, a former performer and now a teacher at the school.

“The problem is that it takes a lot to know it, and fewer and fewer people have the time or the inclination.”
Also, Beijing opera is an especially demanding form, both to perform and to witness.
“It takes a very long time to study, at least 8 to 10 years just to get in the door as a performer,” Ms. Qiao said.

“And the whole thing is very slow. It’s not like a movie, and right now people want things to be fast. That’s why we’re losing the young crowd.”
Still, there seems, perhaps paradoxically, to be no shortage of students, as all those highly talented and professional-looking teenagers on the school stage the other day indicated.

Young people start their training at age 11, going to one of the several Beijing opera academies around the country aimed at producing professional performers.
“Children really like it,” Ms. Qiao said.

“Another reason is that some parents love it, and they want their children to learn it, even if they’re not thinking about having them become professionals.”
The early training lasts for six demanding, rigorous years.

Given that Beijing opera is fading in popularity, especially among the younger generations, it seems strange that so many young people would want to go through it.
“It’s such good training that the students can go in almost any direction even if they don’t end up in the opera,” Ms. Liu said.
“A lot of our students end up on television or in the movies,” she added.

“There are a lot of martial arts movies, and our students are all good at martial arts. Some of them become popular singers or actors. They’re not worried about their future.”
The Chinese Ministry of Culture, anxious about the form’s survival, lavishly subsidizes it, renovating theaters, commissioning new works, paying substantial salaries to the bearers of the tradition, like Ms. Qiao.
This year, for the first time ever, the state-run Chinese Central Television has been holding a national Beijing opera student competition, with the finals to be televised in October.

During the preliminaries in Beijing recently, 24 contestants, each with a supporting cast of extremely acrobatic soldiers and others, took the stage in an awesome display of skill and talent.
The emphasis was on what a nonconnoisseur might think of as the best parts — the battle and martial arts scenes, with performers in astonishing costumes leaping and somersaulting in midair, twirling, jabbing, tossing and juggling an arsenal of weapons and batons, singing at the same time.
And there was the knowledgeable audience — theater entry was free, which is perhaps itself a sign of the form’s fragile standing with the public — shouting approval and applauding enthusiastically.

“We teachers are doing our job, and the government’s Culture Ministry is supporting us,” Ms. Qiao said.

“Everybody’s doing their best to keep this as a cultural treasure, whether people go to see it or not.”

Obama sanctions on North Korea are also aimed at China

The tough economic sanctions set by President Obama against North Korea and its elite are a risky move, but they are set amid a new US strategy to stand up to China and its expanding influence in Asia.
The Christian Science Monitor

The Korean Peninsula has known neither war nor peace since a conflict there in 1950-53 ended with an unstable truce.

In March, however, the mood changed. North Korea sank a South Korean warship, the Cheonan, killing 46 sailors.

It was the largest military attack by the North since the end of the Korean War.
On Monday, President Obama gave his strongest response yet.

He slapped tough economic sanctions on key players and institutions in Pyongyang, aimed at ending the country’s nuclear-weapons program and its export of nuclear material to other countries.
It was an unusually strong response from a US president who prefers talking over exerting pressure, and who wants the United States to focus on rebuilding its economy.

But Mr. Obama was forced to act.
North Korea is not only more threatening to the region and the world with its new nuclear weapons and missiles, but its chief ally and economic supporter, China, did not even condemn the naval attack or admit that the North did it – despite clear evidence.
Obama’s new sanctions were likely aimed at Beijing as much as at the regime of Kim Jong-il. They may be part of a larger Obama strategy to stand up to China as it tries to dominate Asia with its expanding economic and naval might.

The Korean Peninsula, as it was during the cold war, could once again become a proxy battleground for a larger struggle between China and the US.
These are volatile days in North Korea.

Mr. Kim appears ill, and eager to have his youngest son, Kim Jong-un, accepted as his successor at next month’s meeting of the Korean Workers’ Party.

The country is in dire economic straits after recent flooding and after many people lost their savings last year as a result of a disastrous currency renomination.
China, meanwhile, wants a stable North Korea rather than a unified Korea that might allow US troops to be stationed along the Chinese border.

Beijing is now trying to de-escalate the current tensions by pushing Kim to resume talks with the US (along with Japan, South Korea, and Russia). But the US won’t resume talks until North Korea agrees to end its nuclear program.
Obama’s sanctions up the ante about resuming talks.

They are aimed at denying Kim and the elite around him access to banks and businesses – many of them in China – which provide the hard currency that helps keep the regime in power and pays for its nuclear program.

They are a way to finally force Kim to relent and get rid of those weapons.
Obama’s move runs the risk that the North may lash out, precipitating further violence.

Still, the evidence of Kim’s nuclear exports to countries such as a Syria is clear.

And the naval attack in March, combined with China’s unwillingness to punish North Korea, leaves Obama with little choice but to push hard on Kim and his associates.
If Obama succeeds, he will also improve his ability to persuade Iran to give up its nuclear ambitions.
The sanctions are targeted at organizations in the North that bring in luxury goods for the elite and at top individuals who develop and sell weapons of mass destruction.

The US also plans to punish foreign firms that do business with these individuals or organizations.

And the American Navy plans to beef up its interdiction of North Korean ships suspected of carrying dangerous weapons.
Will this new US pressure force Kim to relent?

And will the sanctions send a signal to China that it must rein in its dangerous ally?
Obama is playing a game of chicken in Asia right now. The sanctions seem well crafted at North Korea’s elite.
Within days, the world may find out if his risky move will pay off.

If Only China Were More Like Japan

China is heading toward a Japanese-style economic debacle but the process won't be as gradual or peaceful
By John Lee

Now that China has officially overtaken Japan as the world's second-largest economy, there is growing speculation by influential Chinese and U.S. economists, such as Wu Jinglian and John Makin, that China will soon endure its own "lost decade" as it suffers a Japanese-style malaise. The idea that contemporary Japan offers a glimpse of China's economic future is credible, given similarities in the two growth models.

But Japan's economic decline has at least been a gradual and comfortable one for the Japanese people and government.

For the Chinese Communist Party and the nation's people, following in Japan's footsteps would likely be much more traumatic.
Before there was conclusive proof that Japan was in an extended period of stagnation, some economists were warning about the dangers of over-reliance on exports and fixed investment to drive growth.

Common wisdom counseled that Japan held advantages intrinsic to contemporary East Asian systems.

For example, unlike the myopic policies pursued by constantly changing governments in Western systems, the dominance of Japan's Liberal Democratic Party (which ruled nearly without interruption from 1955 to 2009) allowed long-term policy thinking and implementation to occur in Tokyo.

In combination with a populace of clever, responsible, hard-working people, Japan was well-placed to manage the necessary transition toward a more sustainable growth model.
Although "capitalism with Chinese characteristics" does not seek to replicate any particular model, its similarities to the Japanese approach are striking.

Like Japan in the 1970s and '80s, China is nearing the end of its reliance on exports and fixed investment to drive growth—and looking to shift toward policies that can enhance domestic consumption.

To achieve this, it is seemingly blessed with an authoritarian government that can concentrate on policies that need not sacrifice the country's long-term interests for short-term political expediency.

JAPAN BUILT SOLID CIVIL INSTITUTIONS
Yet, as Beijing's response to the global financial crisis reveals (bank lending jumped, from $750 billion in 2008, to $1.4 trillion in 2009), China is becoming more—rather than less—dependent on an unsustainable model to drive economic growth.

Domestic consumption as a proportion of gross domestic product is actually declining.

At just over 30 percent, it is the lowest of any major country in modern economic history.

The figure has declined, from more than 50 percent in the 1980s, to 40 percent at the turn of this century.

It was around 36 percent prior to the global downturn in 2008.
Similar models tend to lead to similar problems, as do the demographic problems in China, which will soon resemble Japan's.

Worse, differences between the two political economies may bode ill for China.

When the Japanese economic malaise began, the country had built solid institutions: rule of law, property rights, and a stable political system.

The latter was clearly evident when the LDP lost power last year and initiated a handover without turmoil or bloodshed.

Even though the Japanese development model is frequently described as a state-led approach, the private sector generally received around three quarters of the country's capital.

This meant that prosperity was broadly distributed during the growth years.

Even in structural decline, most Japanese are living the "good life"—and have grown rich before getting old.
In contrast, these institutions in China are relatively undeveloped, even after three decades of reform.

Moreover, the Chinese model of development has taken the state's role to unprecedented levels. Even though state-controlled enterprises (SOEs) produce between one-fourth and one-third of all output, they receive over 75 percent of the country's capital.

During the flood of lending from 2008 to 2009, state-controlled enterprises received over 90 percent of all capital; private industry received less than 5 percent.

Heavy bias toward the state-controlled sector reversed what had occurred during the first 10 years of reform (1979-1989) and was the direct result of the Chinese Communist Party having retaken control of the levers of economic power following the Tiananmen protests in 1989.

ASIA'S MOST-UNEQUAL INCOME SPREAD
Focusing on China's unmatched bias toward its state-controlled sector is not merely about the inefficient use of capital, although that is putting serious strains on the sustainability of its economic model.

Since so much of the country's wealth is concentrated in approximately 120,000 SOEs (and their countless subsidiaries), a relatively small group of well-placed, well-connected insiders benefit, while opportunities to prosper are denied to the vast majority.
For example, household incomes have increased by around 2 percent to 3 percent a year since 2000, while the coffers of the state-controlled sector enjoyed double-digit increases.

Despite impressive GDP growth, about 400 million people have seen their net incomes stagnate or decline over the past decade.

According to official data, the number of illiterate Chinese adults increased, from 85 million in 2000, to 114 million in 2005.

From 2001, a 2006 World Bank study indicates, the income of China's poorest 10 percent was declining by 2.4 percent every year, suggesting that absolute poverty increased when national GDP was growing by double digits every year.

It is no wonder that within one generation, China has gone from being the most equal (albeit from a low base) to the most unequal country in Asia, in terms of income distribution, according to World Bank calculations.
The fact that the vast majority of Chinese have missed out on the fruits of economic growth has serious ramifications for social and ultimately, political stability.

Instances of mass unrest—124,000 in 2008 according to official figures—are increasing at more than twice the pace of GDP growth.

Beijing now spends more on internal security than it does on the People's Liberation Army.

By the CCP's own calculations, the country needs 8 percent GDP growth per annum for the Party to remain in power.

Unlike Japan, the vast majority of Chinese people will grow old and never be rich. This suggests that we are witnessing the rise of a profoundly fragile power.

It would be better for China if it were a lot more like Japan.

Economic malaise eventually led to a peaceful change of government in Tokyo.

If the same were to occur in China, the transition might not be as smooth.

In China's Success, a Need for Change

By ALAN WHEATLEY

BEIJING — Three numbers should suffice to give Chinese economic policy makers a sleepless night: 65.4 million, $28.7 billion and $2.45 trillion.
In order, they are the estimate by a government researcher of how many apartments stand vacant in China, many of them bought as speculative investments; the country’s trade surplus in July; and the international reserves the central bank has accumulated as it holds down the value of the renminbi.
Together, they encapsulate the distortions of an economy that favors investment by suppressing the cost of capital and other inputs at the expense of consumers, whose spending power is held down by low wages and low deposit rates.
Unable to sell at home all that it produces, China exports the rest.
This template has powered 30 years of headlong economic growth that has catapulted China past Japan to become the second-largest economy, after the United States.
But it is a formula that Beijing readily agrees is unsustainable: China needs to rely more on household spending, especially as its export prospects are darkening as the West tightens its belt to purge excess debt.
Many experts are confident that a pragmatic China will succeed in making the transition in the coming decade to a new economic model anchored by urban-based consumption, technological improvements and a greater role for market forces.
Doubters, though, have two prime reservations: First, that China has waited too long to wean itself off investment-heavy exports.

And second, that the ruling Communist Party will fail to overcome the vested interests resisting changes.
“The imbalances cannot continue at this rate for another 10 years. That’s simply not possible,” said Michael Pettis, a professor of finance at Peking University.
He said the pressure to change could become overwhelming within two to three years, or even sooner if trade conflicts flared up.
“They’re embarking on change at a time when the rest of the world may not give them much time to shift,” Mr. Pettis said.

“Over the next decade we’re going to see average growth rates of 5-6 percent, heavily front-loaded.”
His skepticism is shared by some at the heart of the Chinese establishment.
Zhou Tianyong, a professor at the Central Party School in Beijing, which trains rising Communist Party officials, has long argued that China needs steady but far-reaching political changes.
In a new book, “Where Is China Headed?”, Mr. Zhou said China could be heading for a political crash unless it reduces bloated government, unshackles small business and ends distortions in the housing market.
“Which way will we go down?” Mr. Zhou wrote.

“If we choose the right route we can avoid falling into a development trap; if we choose the wrong one, we may fall into a ‘China trap’ of social and political turmoil, slow economic growth, enduring lack of prosperity, and weak and declining national competitiveness.”
The “China trap” looms if policy makers continue to promote a pattern of economic growth that “privileges industry, big corporations, big capital and big projects,” he said.
Shifting gears will be difficult, he contends, because of the habits China has formed and the entrenched interests that have built up.
And there is the rub.

Does the Communist Party have the will to remove some of the power and wealth it has bestowed on its favorites?
Chinese markets for the factors of production are riddled with distortions that subsidize producers, exporters and investors, according to Huang Yiping and Wang Bijun from the China Center for Economic Research at Peking University.
Labor, capital, land and energy are all cheap, they write in “China: The Next Twenty Years of Reform and Development,” a collection of Chinese and Australian essays.
This is equivalent to taxing the owners of these inputs, mainly consumers, which is why household income and consumption have plummeted as a share of gross domestic product, they said.
“All these suggest that factor-cost distortions have been a fundamental force behind China’s structural imbalances, which alongside other problems such as inefficient resource use and pollution could seriously affect China’s ability to sustain its rapid growth in the future,” they said.
Seen in that light, the problem is not one of economic policy but of political economy.
Yao Yang, an economics professor at Peking University, bemoans that the government, its cronies and state-owned enterprises are forming powerful interest groups.
Writing in the same volume of essays, Mr. Yao said the Chinese Communist Party should realize for its own sake that there is no alternative to fuller democratization if it wishes to maintain high economic growth and enhanced social stability.
“The emergence of strong and privileged groups will block equal distribution of the benefits of economic growth in society, which will then render futile the C.C.P.’s strategy of trading economic growth for people’s consent to its absolute rule,” he said.
Diana Choyleva, who follows China for Lombard Street Research, a consulting firm in Hong Kong, said that because of the new international environment it would become clear in the next two years whether Beijing has the appetite to change.
“I want to believe that they’ll move in the right direction, but every time the going really gets tough you don’t seem to get that response,” she said.
Richard McGregor, a financial journalist, said the Communist Party should not be counted out despite the political risks that the next stage of economic change entails.
“Does unraveling the state’s economic interests irreparably damage the party’s political clout? There is no easy way to chart a course through this thicket, but the Party’s adaptive abilities should not be underestimated,” Mr. McGregor wrote in a new book, “The Party.”

US Southeast Asia pose risks China clash

By Clifford McCoy

SINGAPORE -- As the United States strengthens its military-to-military ties in Southeast Asia, the risk is rising that the "soft power" competitive dynamic for regional influence with China could soon return to the "hard power" confrontation of the Cold War.
Stepped up US military links through a series of joint exercises and new defense agreements with countries in the region, in tandem with renewed political engagements, are apparently aimed at containing China's growing influence.

With China already on edge over large-scale US-South Korean naval exercises held in the East Sea/Sea of Japan in July and directed at North Korea, state media in Beijing announced that China simultaneously carried out military exercises in the South China Sea, claiming them as the largest of their kind.
Despite that competitive show of force, Washington appears undeterred in reasserting its strategic interests in the region.

United States Defense Secretary Robert Gates has committed to attending the inaugural meeting of defense ministers from the Association of Southeast Asian Nations (ASEAN) in Hanoi in October -- and the South China Sea is expected to be a hot topic of discussion.

The US commander of the Pacific Command, Admiral Robert Willard, told reporters in Manila on August 18 that Chinese assertiveness in the South China Sea was causing concern in the region, but the US would work to ensure security and protect important trade lanes.
In the latest move to strengthen military ties, the United States courted its old adversary Vietnam with a week-long series of bilateral exercises focused mainly on damage control and search and rescue, held aboard the USS John S McCain after it docked in the central Vietnam port of Danang on August 10.

At the same time, a delegation of Vietnamese military and political officials were hosted aboard the carrier USS George Washington as it steamed through the South China Sea.

The exercises and visit were billed as part of wider celebrations to mark the 15th anniversary of US-Vietnamese relations.

Military-to-military ties have improved steadily since being restored by a 2003 port call to Ho Chi Minh City by an American naval vessel, and earlier this year Vietnamese shipyards repaired two ships of the US Military Sealift Command.

Enemy cum ally
The exercises were followed on August 17 by the first high-level defense dialogue between Washington and Hanoi.

US Deputy Assistant Secretary for Defense Robert Scher met Lieutenant General Nguyen Chi Vinh in Hanoi for talks that reportedly focused on military exchanges, training and collaboration in search and rescue, and humanitarian and disaster-relief operations.

The sale of US defense equipment was reportedly not discussed, and Vietnam still remains banned under US legislation from receiving so-called ''lethal-end'' military equipment such as small arms, fighter aircraft or combat vessels.

Previous talks in 2008 were on the State Department-Foreign Ministry level.
While none of these military-to-military moves are particularly provocative to China, they are steps towards building trust between US and Vietnamese armed forces.

Vietnam has recently shown signs of being receptive to a US military presence in the region to counterbalance China and provide more muscle behind its claims in the South China Sea.

With the high-level dialogue now complete, Washington and Hanoi can now move on to more substantive arrangements.
In June, US President Barack Obama and Indonesian President Susilo Bambang Yudhoyono announced in Jakarta that the two countries would form a Comprehensive Strategic Partnership. The agreement, signed by Scher and Indonesian Director for Strategy and Planning Major General Syarifudin Tippe, is intended to further integrate existing defense collaboration.
A new defense cooperation agreement covers training, defense industry collaboration, procurement of military equipment, security dialogue and maritime security.

This was followed on July 22 by a US announcement that it would resume cooperation with Kopassus, Indonesia's elite special forces unit.

The announcement followed a meeting between Gates and President Yudhoyono.
United States assistance to Kopassus was cut by the so-called Leahy law, which bans training and other assistance to foreign military units where there is credible evidence they have committed gross human rights violations.

Since the 1970s, domestic and international human rights organizations have accused Kopassus of human rights abuses in Aceh, East Timor, Papua and during riots in Jakarta in 1998.
The ban can be waived, however, if the US secretary of state certifies that "effective measures" have been taken by a foreign government to bring members of the relevant unit to justice. Washington has said training will not be offered to Kopassus immediately and it has reserved the right to vet individual Kopassus members before participation in any US-led training.

The agreement, however, removes the last obstacle to resuming full military relations between the two countries.
Additionally, it provides the US potentially greater influence with Indonesia's politically powerful military given Kopassus's traditional role as a stepping stone for future military leaders.

The US supported Indonesia's military throughout the Cold War, but relations soured in 1991 when the US Congress cut Indonesia's eligibility for international military education and training (IMET) and to purchase certain types of "lethal" military equipment after soldiers massacred more than 100 peaceful demonstrators in East Timor.

Then-president Bill Clinton cut all remaining military ties when Indonesian troops and local militias rampaged through East Timor in the wake of a vote to secede from Indonesia in 1999, although they were quietly restored the following year.
The events of 9/11 and the Bali bombings in 2002 gave new impetus to improving relations with the world's most populous Muslim nation, and military relations have since steadily improved.

In 2003, despite strong opposition from Congress, funds were released for training Indonesian officers.

This was followed in 2005 by the repeal of an arms embargo.

Between 2006 and 2009, the US Global Train and Equipment Program provided Indonesia with over $47 million to fight smuggling, piracy and trafficking.

The installation of radar systems, particularly in the Makassar and Malacca straits, has been sponsored by the Department of Defense.
In 2009, the US and Indonesia co-hosted the Garuda Shield multilateral military exercises in Bandung. More than 1,000 soldiers from nine countries participated in drills focused on peace support operations.

In June this year, another multilateral exercise was held in West Java to boost cooperation and professionalism in UN peacekeeping operations.

Jointly organized by the Indonesian and American militaries, soldiers from Thailand, Philippines, Bangladesh, Nepal and Brunei Darussalam also took part.

Indonesian troops also take part in the annual Cobra Gold exercises in Thailand.
Cambodia is yet another ASEAN country in which the US has taken military interest.

In July, the US and Cambodia co-hosted the Angkor Sentinel '10 multilateral military exercises involving 1,200 soldiers from 23 countries.

Although aimed at providing training in peacekeeping operations, many observers saw these first exercises between the two countries as a way for the US to get closer to Cambodia's military.
The US has provided Cambodia with over $4.5 million in military equipment and training since 2006 and Cambodia joined the Cooperation Afloat Readiness and Training (CARAT) regional naval exercises for the first time this year.

The warming trend has not come without controversy as human-rights activists protest against the inclusion of Cambodian military units linked to human rights violations in US military training programs.
Stepped up US interest in improving defense ties with Vietnam, Indonesia, and Cambodia is seen by observers as a component of Washington's new strategy to re-engage with Southeast Asia and to re-assert its commitment to the region's security.

This re-engagement has often been viewed as aimed at countering China's growing assertiveness in territorial disputes and naval presence in the region, concerns shared by several ASEAN members.

Both Vietnam and Indonesia occupy strategically important geographical positions in the South China Sea and the straits of Malacca and Makassar.

They share a historical wariness of Chinese ambitions that may make them more willing to partner with the US.
United States Secretary of State Hillary Clinton irked Beijing in July when she declared the US has a "national interest" in seeing disputes over territorial claims in the South China Sea settled through multilateral talks, which she said the US was prepared to facilitate.

China sees the area as in its own strategic sphere of interest and is particularly sensitive about the issue.

Clinton's remarks were seen as siding with Vietnam, the Philippines and Malaysia over territorial disputes that involve sovereignty over potentially large oil reserves.
In an August 16 annual report to Congress prepared by the Department of Defense, predictions were made about increased Chinese patrols in the South China Sea.

It also raised concerns about increased investments in weapons, such as long-range missiles, submarines, and aircraft carriers, that would allow Beijing to project power into the area.
The rising rivalry between Washington and Beijing for influence in Southeast Asia has until now focused mainly on soft power initiatives involving diplomatic exchanges, official aid and economic incentives.

But aggressive Chinese statements about sensitive issues and overwrought reactions could jeopardize the peaceful competition.

A return to the hard-power politics of the Cold War is something most ASEAN nations would prefer to avoid. But as US-China competition shifts toward security issues, countries may increasingly be pressured to choose sides.

China military risks treading on policy toes

* PLA less finely meshed with civilian government
* Rising budget makes military more powerful
* Military is loyal but "experience gap" emerging
By Chris Buckley

BEIJING -- China's military, emboldened and ambitious for respect, risks steering a course that jars with the country's foreign policy soft-sell, raising the risk of confusion and blunders in a region already wary of its expanding reach.
People's Liberation Army officers have loudly warned that national interests are threatened by neighbours' rival claims in the South China Sea, and decried planned U.S.-South Korean drills in the Yellow Sea, between Korea and China.
"A country needs respect, and a military also needs respect," wrote Major General Luo Yuan in the PLA's paper.
Stressing the point, the PLA navy will hold artillery exercises on the Yellow Sea from Wednesday.
Beneath that public assertiveness, lie questions about evolving Chinese civil-military relations, a murky area with broader implications for foreign policy, especially in Asia.
The Chinese military remains firmly subordinated to the ruling Communist Party, but it has grown less finely meshed with civilian leaders, and that matters for coordinating and communicating policy, especially under pressure.
"Civil-military relations in China are very different from the old days. There used to be a symbiosis. Now they are more distinct spheres," said Nan Li, a professor at the U.S. Naval War College on Rhode Island, who specialises in the PLA.
"Inter-agency coordination is a big problem," he said.
With China exploring how to use its fast-expanding military, such internal uncertainties could have consequences in the region, where the U.S. keeps a big military presence.
"It clearly has tremendous implications for real policy choices both in Beijing and abroad," David Finkelstein, an expert on the Chinese military at CNA, an institute in Virginia that studies security issues, said of PLA-civilian ties.
"China's global security interests have expanded faster than the capacity of its traditional bureaucratic institutions to handle them," he said.
Lobbying or wrong-footing among civil and military players could make Chinese policy-making even even less like a tightly-rehearsed orchestra, and more like a band with members competing for attention, risking miscues or confusion.
One PLA strategist recently warned as much.
"With no concrete leadership for national security, when many departments become involved, coordination is difficult, responses tend to be tardy, counter-measures lack focus, and constantly problems emerge in certain links among the institutions dealing with matters", the strategist, retired Rear Admiral Yang Yi, wrote in a study published late last year.

DEMANDING RESPECT
The PLA has received two decades of annual rises in its official budget that average out at a 12.9 percent increase every year.

That rise has made it more powerful, and more impatient with foreign pressure, said PLA Senior Colonel Liu Mingfu.
"In the past, the focus was on economic development and our budget was low and we were marginalised. But now it's very different. We understand that a prosperous country needs a strong military", he told Reuters earlier this year.
In June, the U.S. Defence Secretary Robert Gates took on what he saw as PLA pushiness.

He claimed it was thwarting efforts to improve military ties, going against Chinese government efforts to ease tensions.
Gates' complaint came after vehement criticism of Washington by PLA officers, and Beijing's rejection of Gates' hopes to visit and revive military ties put on hold by China over U.S. weapons sales to Taiwan, the self-ruled island that China claims.
PLA officer-commentators have recently renewed tough words aimed at Washington.

These public growls appear aimed at a domestic audience hungry for a strong voice, said Li, the analyst from the U.S. naval college.
But by creating public and elite expectations that China will stand tough, such talk may narrow room for quiet back-downs or sow uncertainty abroad about who is steering policy in Beijing.
"Compared to the past, the influence or constraining role of Chinese public opinion on Chinese foreign policy is striking," Wang Wen, a senior commentator at the Global Times, an often ardently nationalist newspaper, wrote recently.

NOT A ROGUE
In Zhongnanhai, the Chinese Communist Party's walled compound where big decisions are made, the real problem may be ill-coordination, not disloyalty or outright division.
The Party demands unswerving military loyalty, especially to the top leader, currently Hu Jintao, who is also chairman of the Central Military Affairs Commission, the top body on PLA affairs.
"The PLA is still the Party's army. They're not running a rogue foreign policy," said Finkelstein, the CNA analyst.
But under the canopy of Party-PLA unity, an "experience gap" has emerged, said Finkelstein.
Since the passing of China's revolutionary elders Mao Zedong and Deng Xiaoping, both deeply involved in military command, Chinese leaders have had little to do with the PLA until they reach the cusp of top power.

In turn, PLA commanders are more focused on external priorities.
The naval analyst Li said an example of the trouble that can create was China's anti-satellite test in 2007, when the foreign ministry appeared ill-prepared for the test, which created international worry over space debris and Beijing's space plans.
By saying that the South China Sea is also an area of "core national interest" for China, the country's policy-makers have also risked their credibility, because their navy is not strong enough to enforce control of the sea, said Li.
"By elevating it to a core national interest without the means to defend it, China's deterrence is weakened," he said.

China's civilian-military ties

BEIJING (Reuters) -- China's ruling Communist Party keeps a tight grip on the country's military, but civil-military relations have been evolving in ways that could affect the country's conduct abroad.
Here are some facts about how the People's Liberation Army is run:

UNDER THE THUMB OF THE PARTY
The People's Liberation Army is under the control of China's ruling Communist Party.

The ideological and organizational bond between the two was forged during the revolutionary wars that brought the Party to power under Mao Zedong in 1949.
Mao and later Deng Xiaoping, who rose as China's reformist leader from the late 1970s, both had deep roots in the PLA, and their military prestige was an important part of their power.
Both men also served as chairmen of the Central Military Commission (CMC), the peak body through which the Party exercises control of the PLA.

LEADERS NOW LESS ENMESHED IN THE MILITARY
Since the death of Deng, China's leaders have not come to power with a strong resume of prior military experience.
Deng's successor, President Jiang Zemin, and Jiang's successor since late 2002, Hu Jintao, both rose through civilian Party and government postings that exposed them to limited dealings with PLA commanders until they emerged as top leaders.
The tradition of PLA deference to the Party leadership remains powerful.

Both Jiang and Hu matured in their military role by having a hand in military appointments and giving speeches and statements setting out PLA tasks and doctrine.
The PLA is strongly represented on the Party's Central Committee, the body that usually meets once a year to consider and bless broad policies.

In the current Central Committee, PLA officers make up around 18 percent of the more than 370 full and alternate member members.
But the PLA has nobody on the Party's Standing Committee, the Party's nine-strong inner-council, which steers day-to-day policy and key decisions.

"PROFESSIONAL" PLA FOCUSED ON EXTERNAL TASKS
Observers say the diluting of the old bonds between Party leaders and the PLA make coordination more difficult in the country's top-down bureaucracy, as does the modernization of the Chinese military, which has made it a more complex organization.
Chinese President Hu has tended to follow CMC nominations on PLA promotions, giving him less of role in directly cultivating followers in the military.
"Under Hu, PLA nominations have basically become professional and functional, with fixed terms and little connection to civilian factional networks and major policy debates," wrote You Ji and Daniel Alderman.

ROOM FOR MIS-COORDINATION AND MISCOMMUNICATION
Some analysts say, however, that China's civil-military relationship also opens the way for problems, such as tardy communications, poor coordination and troublesome bureaucratic jostling that has to be taken to the very top for resolution.
The civilian government led by Premier Wen Jiabao has limited direct say over military affairs, and the government's Ministry of Defense serves as the PLA's window for dealing with the outside world, and not as an effective policy-maker.

(Sources: Nan Li, "Chinese Civil-Military Relations in the Post-Deng Era"; You Ji and Daniel Alderman, "Changing Civil-Military Relations in China"; David Finkelstein, vice president and director of China Studies, CNA; Reuters)

Tibet dispute would lead to greater tension inside China

Washington (PTI) -- "China's engagement with the Dalai Lama or his representatives to resolve problems facing Tibetans is in the interests of both the Chinese government and the Tibetan people," the Obama Administration said in its annual report to the US Congress.
The report said that "failure to address these problems will lead to greater tensions inside China and will be an impediment to China's social and economic development."
Noting that the US continues to encourage both sides to engage in a substantive discussion that will work to achieve concrete results, the report submitted to the Congress this month said the US government believes that the Dalai Lama can be a constructive partner for China as it deals with the difficult challenge of continuing tensions in Tibetan areas.
"His views are widely reflected within Tibetan society, and he commands the respect of the vast majority of Tibetans. His consistent advocacy of non-violence is an important principle for making progress toward a lasting solution," the report said.
"Encouraging substantive dialogue between Beijing and the Dalai Lama is an important foreign policy objective of the United States. We continue to encourage representatives of the PRC and the Dalai Lama to hold direct and substantive discussions aimed at the resolution of differences, without preconditions," it said.
The Administration believes that such a dialogue may lead to a solution to or provide the best hope for alleviating tensions in Tibetan areas and contribute to the overall stability of China, the report said.
While welcoming the resumption of the dialogue in 2010, the report expressed disappointment that eight years of talks have not borne concrete results.

"We are concerned that in 2009 the PRC continued its negative rhetoric about the Dalai Lama, as well as repression and religious restrictions in Tibetan areas," it said and urged both sides to engage in substantive dialogue.
The Dalai Lama has repeatedly disclaimed any intention to seek sovereignty or independence for Tibet and has stated that he wants China to preserve Tibetan culture, religion, and its fragile environment through genuine autonomy, it said.
The report informed the Congress that since the US government does not recognise Tibet as an independent state, the US does not conduct official diplomatic relations with the Tibetan government-in-exile in Dharamsala in India.

China denies central bank chief has fled

BEIJING (AFP) — China on Tuesday denied rumours that the country's central bank governor Zhou Xiaochuan had fled after the bank posted huge bond losses, a report said.
Several Chinese websites reported Monday that the People's Bank of China had incurred a 430-billion-dollar loss on bonds from US mortgage giants Fannie Mae and Freddie Mac and that Beijing might punish some people including Zhou.
The websites cited the Ming Pao Daily as their source, but the Hong Kong newspaper denied publishing any such articles, Dow Jones Newswires reported.
The reports fuelled rumours among Chinese Internet users that Zhou had left the country.
"They say that Governor Zhou has fled...," said central bank deputy governor Hu Xiaolian. "But in actual fact Zhou was chairing a PBOC meeting."
Chinese shares were down 0.44 percent in afternoon trade.
"Usually market volatility is in response to economic news, data or analysis. People will speculate on such factors. But to speculate on this sort of thing is extremely abnormal," Hu said.
The central bank was at pains to prove Zhou was at work, issuing two statements Monday with photos of the PBOC governor meeting with a Japanese official and a former Italian official.
The Ming Pao Daily said its "editorial department clarifies that it hasn't made any such report, and it strongly condemns the act of using Ming Pao's name to spread false information."
The newspaper said it had reported the incident to the Hong Kong police and mainland authorities.
The central bank declined to comment on the report when contacted by AFP.

Philippines counts cost of China's fury at deaths

By HRVOJE HRANJSKI

Philippine National Police officers light candles and offer prayers at the flower bedecked site where eight Hong Kong tourists were killed in a nearly 12-hour bus hostage standoff on Aug. 23, 2010, involving a dismissed police officer, at Manila's Rizal Park in the Philippines, Tuesday, Aug. 31, 2010. The "Mass for Peace and Non-violence" was held as the Philippines worked to calm China's outrage over the bloodshed.

MANILA, Philippines — Tens of thousands of people have marched in Hong Kong to denounce the Philippines.

Thousands of tourists canceled flight and hotel bookings. Two Chinese recipients of Asia's most prestigious award failed to show up for the Manila ceremony.
After a violent hostage drama that killed eight tourists from Hong Kong, Asian powerhouse China is angry and the Philippines can do little to restore calm.
Barely two months into his presidency that promised to rid the Philippines of corrupt and incompetent officials, President Benigno Aquino III asked for China's forgiveness while vowing that "someone will pay" for the embarrassing official handling of the 11-hour hostage-taking Aug. 23 that unfolded live on television.
The gunman, a dismissed policeman demanding his job back, was accused of killing the eight tourists before police snipers finished him off.

Survivors said he became enraged after watching on TV inside the bus as police handcuffed his brother for interfering in the negotiations.
"Bring out the truth. Let those responsible, whoever they may be, be held accountable. No whitewash. No scapegoats," Manila Auxiliary Bishop Broderick Pabillo said in a memorial service held with Buddhist monks Tuesday at the site of the carnage in a historic Manila park.
As Aquino assured Chinese officials of a thorough investigation that is expected to take two to three weeks, China's fury took its toll.

Flag carrier Philippine Airlines and budget airline Cebu Pacific reported more than 1,000 cancelations from the Chinese territory of Hong Kong alone.
"It created a domino effect," said PAL spokeswoman Cielo Villaluna. "We are hoping that the situation will be temporary."
In the prime beach resort of Boracay, hundreds of Chinese tourists scrapped their bookings, said regional tourism director Edwin Trompeta.

Losses could top half a million dollars, he said.
Emotions ran high in Hong Kong on Sunday when about 20 legislators led some 80,000 people in a march that "shows the anger and unity of the Hong Kong people," lawmaker Cheung Man-kwong said.

Hong Kongers blasted Manila police for what they called an amateurish rescue attempt.
"Everyone saw how the Philippine government mishandled the situation before TV cameras and the chaos in the country. As a Chinese person, I need to demand justice," 49-year-old worker Andy Wong said.
In another setback, two of three Chinese recipients of the Ramon Magsaysay Awards, named after a popular Philippine president and considered as Asia's equivalent of the Nobel Prize, failed to show up in the Philippines for a gala ceremony scheduled for Tuesday evening in Manila.
Ramon Magsaysay Award Foundation President Carmencita Abella said one of them, local official Fu Qiping, was reported to be sick and another, Pan Yue, vice minister at the Ministry of Environmental Protection, did not reply.
"We respect the sensitivities of the Chinese. We understand we are now in a situation wherein they are demanding some measure of justice," presidential spokesman Edwin Lacierda said.
Although the bungled police response incensed people in both China and the Philippines, the fallout did not involve any high-level policy issues, Filipino political analyst Ramon Casiple said.
"In a wider context both sides did not want an escalation because there are no policy issues," he told The Associated Press.

"It's not in China's long-term interest to fight the Philippines and the vice versa."
"But the danger of an escalation is still there. The Philippines should avoid provocative actions and ensure a transparent investigation that will satisfy this call for justice," he said.
China is the country's third largest trading partner after the U.S. and Japan. Two-way trade reached $6.7 billion last year.
It has been one of the major investors too, although two major contracts under the previous administration to build a telecommunication and a railways network fell through amid suspicion that Philippine officials received kickbacks.

China had denied any wrongdoing.

U.S. Likely to Find China Subsidized Aluminum

By ROBERT GUY MATTHEWS

The U.S. Commerce Department is expected Tuesday to find that $550 million in imported Chinese aluminum was illegally subsidized by the Chinese government, people familiar with the situation said, potentially leading to higher import duties as early as next week.
The preliminary decision could boost costs for some U.S. manufacturers, pitting some U.S. aluminum companies against their American manufacturing customers.
The decision, in the latest big U.S. trade case involving China, comes as the White House faces increasing concern about the labor market and the fragile economy.

It underscores the delicate balance between free trade and jobs.

The Commerce Department on Friday reported that imports surged at a 32.4% annual rate in the second quarter, the fastest pace since 1984.
Following the success of the U.S. steel industry in cases of dumping brought against foreign producers, several midsize and small domestic aluminum companies banded together alleging that Chinese-made aluminum extrusions hurt the U.S. industry between 2007 and 2009.
The $3.57 billion domestic annual market for aluminum extrusions—shapes squeezed out of aluminum—includes companies that assemble the extrusions for aluminum siding, door frames, bicycles and other products.

The aerospace industry uses other types of aluminum and isn't affected by the extrusions case.
A worker at an aluminum factory in Dalian, Liaoning province, in January.

China is the world's largest exporter of aluminum extrusions, with such exports increasing more than 10-tenfold since 2001.

Canada and Australia have made claims similar to the Commerce Department's.

Canada last year levied dumping duties on Chinese aluminum extrusions, and a case is pending in Australia.
Once the preliminary duty is announced, the penalty can be assessed in about a week.

Importers of Chinese aluminum extrusions would then have to post cash deposit or bonds for the assessed duties.
Typically, a government subsidy involves providing an industry with cheaper resources or favorable tax treatment.

A full investigation and a final ruling—at which point the amount of the duty could well change—typically take several months to a year or so.
China's share of the U.S. extrusion market rose to 20% last year from 8% in 2007.

At the same time, U.S. manufacturers' capacity-utilization rate, which measures how much of a factory is in use, fell to 50% from 68%.

Overall, Chinese aluminum exports have been falling, because the country is using more of the metal to fuel its internal growth.
Chinese producers and importers say the weak U.S. economy, rather than imports, has hurt U.S. producers and that some of the companies complaining to the Commerce Department had purchased Chinese aluminum extrusions for product manufacturing.
Peter Koenig, an outside counsel for Zhaoqing New Zhongyua Aluminum Co. which makes aluminum extrusions in China and has a U.S.-based import division, said the company hasn't received benefits, grants or loans from the Chinese government. "There is really not a foundation to have a subsidy finding," he said.
The aluminum industry, which filed its last trade case in 2004, has been far less active in filing trade cases than the steel industry.

Late last year, the U.S. steel industry won its biggest case against Chinese importers, which, according to the ruling, had dumped $2.8 billion of illegally subsidized steel.

Steelmakers won another case in June that saw further duties against $200 million in illegally subsidized Chinese-made drill pipes.
"I think the domestic aluminum extruders are pushing for this tariff after the success the steel industry has had in reducing Chinese imports," said Bruce Schwartz, president of fence maker Jerith Manufacturing Co., near Philadelphia.

He is concerned that the Chinese will be able to avoid penalties by sending complete fences instead of extruded fence parts.

"If a product like my fence or an aluminum ladder is shipped fully assembled into the U.S., it will completely avoid the tariff, giving a significant price advantage to the Chinese producers," Mr. Schwartz said.
He said he laid off workers as a result of the weak economy and didn't expect to rehire them at this point even if the ruling leads to fewer imports and higher prices for Chinese products.
Duncan Crowdis, president of Bonnell Aluminum, which makes door frames for office towers and hotels and is one of the domestic petitioners, said Chinese imports have overwhelmed the market and depressed prices.

His Newnan, Ga., company, a unit of Tredegar Corp., has cut its work force to about 850 from 1,300 in 2007.

Prices, he said, have fallen between 30% and 50% over that time, mostly as a result of Chinese imports, but also because of the weak economy.
The U.S. International Trade Commission, which investigates whether foreign products are illegally dumped or cause injury to domestic producers, this year issued its ruling in this case and found that U.S. aluminum extruders were injured.

It is expected to announce an antidumping duty in October. That duty would be in addition to the duty levied for illegally subsidies.

China aims for formidable presence in Indian Ocean

WASHINGTON (PTI) -- China is aiming at having a formidable naval presence in the Indian Ocean and is reflected in the country construction of ports in the region, an eminent US scholar said today.
"The rise of China as a sea power is one of the biggest development of the last one decade," said Robert Kaplan of the Center for a New American Security -- a Washington-based think tank.
"Why is China rising as a sea power? Because it has the luxury to do so, and it has the luxury to do so because it settled most of its land borders. It's at the high point of its land ascendancy," he told CNN in an interview.
He said the fact China becoming a sea power across all this area -- and India, too, is rising and becoming a sea power -- brings China and India into competition for the first time in their histories.
If China dominates East Asia, the marginal seas like the South China Sea and the East Sea, that makes it a great regional power.
"But once China has a presence in the Indian Ocean, it becomes a great power," he said.
China is busy building ports in Chittagong in Bangladesh, Hambantota and Sri Lanka and Kyaukpyu in Burma.
"Why are they doing this? To have military bases? No. The Chinese are far more subtle than that," he noted.
"They want throughput, warehouse access for their goods, so that they can at some point have their own sea lines of communication between the hydrocarbon-rich Persian Gulf area and China itself.
"So, for China to protect its own shipments of energy and its commercial goods between the Middle East and Asia requires a presence on the Indian Ocean," Kaplan said.

Obama is right to be hard-nosed on China

By Minxin Pei

When Barack Obama was elected president, Beijing thought that he would be tough on human rights and trade, but not on national security.

A year and a half later, Mr Obama’s policy could hardly be more different.
Instead of pressing China hard on its poor rights record, Mr Obama has put the issue to the back burner.

Secretary of State Hillary Clinton confirmed as much on the eve of her visit to China in February 2009.

To avoid antagonising Chinese leaders before his own visit to Beijing in November last year, Mr Obama even postponed a private meeting with the Dalai Lama.

On the whole, his administration has done precious little on the issue.
The story on trade is much the same.

Despite mounting congressional pressure on China’s de facto dollar-peg, Mr Obama has refused to label China a “currency manipulator.”

Indeed, except for imposing a few modest anti-dumping penalties, his trade policy is indistinguishable from that of President George W. Bush.
However, on national security, the Obama administration has shown a surprisingly hard edge, particularly in the past few months.

Against Beijing’s protestations, Washington dispatched a large naval force to conduct joint military exercises with the South Korean navy in the Sea of Japan, as deterrence against Pyongyang.

To counter China’s growing influence in Southeast Asia, the US has also resumed its aid to the Indonesian military, and recently sent a carrier battle group in an unprecedented joint naval exercise with Vietnam.
Washington also announced a controversial plan to sell civilian nuclear technology to Hanoi.

In its recent annual report on the strength of the Chinese military, the Pentagon levelled harsh criticisms at China’s military modernisation programme and its impact on Asia’s balance of power.
Perhaps the biggest bombshell was dropped by Mrs Clinton in Hanoi in July.

Speaking to the Asean regional forum, she all but declared that the US would not allow China to coerce its smaller neighbours.

For the first time, Washington designated the South China Sea as an area where it had a national interest in “freedom of navigation, open access to Asia’s maritime commons and respect for international law”.

This might look neutral, but Beijing (which recently signalled that it regards the South China Sea as among its “core interests”) must have felt stunned and stung.
Why has Mr Obama’s China policy taken such a turn?

Beijing’s own missteps share part of the blame.

Chinese leaders rebuffed early efforts to woo Beijing into a closer relationship.

Mr Obama’s China visit last November was viewed as a debacle because Beijing limited his access to the Chinese public.

China’s over-the-top reaction to America’s long-scheduled arms sales to Taiwan, and Mr Obama’s (belated) meeting with the Dalai Lama earlier this year, did not help.

China also obstructed US attempts to impose sanctions on Iran and condemn North Korea’s sinking of a South Korean warship.
More important, Mr Obama has reverted to long-standing American principles in dealing with a rising great power.

For while the US can confidently manage China’s mounting economic prowess, and count on economic progress to liberalise the Chinese political system, the world’s sole superpower can ill-afford to allow its new rival to become Asia’s hegemon.
In many ways, Mr Obama’s evolving China policy is more grounded in reality.

By abandoning the touchy-feely rhetoric of “strategic partnership”, Washington’s balanced but hard-nosed new China strategy more accurately reflects the complex dynamics of economic co-operation and geopolitical competition that underlie its ties with Beijing.

It is also a policy that should reassure China’s nervous neighbours that America is committed to maintaining Asia’s strategic balance.
In the years ahead, as Washington pursues this policy further, we should expect more frequent eruptions over security issues, even as the two countries keep close economic ties.

In its essence, Mr Obama’s revamped China strategy is a continuation of Mr. Bush’s “strategic hedging” – a strategy certain to endure as long as China remains a one-party state, and continues a realpolitik foreign policy that challenges the America-led liberal world order.

CHINA AND INDIA: A WAR OF GIANTS

By Eric Margolis

The highly respected British magazine "The Economist" featured a front-page article in their 21 August issue about the possibility of a major war between China and India.
I've been thinking about this scenario for over a decade, and authored a book, "War at the Top of the World," that warned of the dangers of a future Sino-Indian conflict.
Just thinking about this topic staggers the imagination. China and India account for 2.3 billion people, a third of the world's total population.
My book was directly inspired by meeting the Dalai Lama in the mid-1990's.

I heard him give a long, very interesting speech on the Indian-Chinese border conflict, which I had studied in depth as a result of my deep interest in the Himalayan region.
The audience that came to hear His Holiness expected to hear a warm, fuzzy talk about the meaning of life.

Instead, they were totally bemused by the Dalai Lama's discussion of South Asian grand strategy and the Tibetan-Indian border that had been drawn by Imperial Britain with no regard to China. People often forget the Dalai Lama is the temporal leader of Tibet as well as its spiritual guide.
I was the only person in the audience who understand the subject or who asked questions about the talk.

After, His Holiness took me aside and we conversed at length about the contested border, from Ladakh and Kashmir in the West to India's Assam and Northeast Frontier Agency (today Arunachal Pradesh), and Tibet's future.
We also talked for a long time about cats, but that's another story that will be in my next book.
So from my encounter with the Dalai Lama came my first book, "War at the Top of the World" (now in its fourth, revised edition), which also covered then little-known Afghanistan and the endless conflict over Kashmir between India and Pakistan.
In "War," I predicted that the first major crisis of the 21st Century would occur in Afghanistan.
9/11 happened soon after 'War" came out. I was swamped by calls from the media to talk about Afghanistan and a certain Osama bin Laden.
"How did you know?" everyone asked me in amazement.
"Because I was watching that part of the world when few others were doing so," came my reply.
In 1962, India moved troops into remote valleys high on the eastern Himalayas claimed by China.

Beijing proclaimed it would "teach India a lesson."
It certainly did.

Marching over the high mountains, Chinese troops quickly outflanked static Indian forces -- as they did with American troops in Korea in 1950.

The Indians were routed.

The People's Liberation Army took much of Arunachal Pradesh, and stood before tea-producing Assam, only a relatively short distance to Calcutta.
Satisfied by his "lesson," Chairman Mao ordered his troops to withdraw.
Proud India was humiliated and deeply shocked.

Since then, India has built up its forces in the region to over three army corps of 100,000 mountain troops, backed by high-altitude air bases and a network of new roads and supply depots.
The long, poorly demarcated border has been tense ever since.

India claims two large chunks of territory in the west held by China: Aksai Chin and a slice of Kashmir given by Pakistan to China to allow a military road connecting Tibet with Chinese Xinjiang.

I have explored both frozen wastelands, both over 15,000 vertiginous feet.
China claims most of Indian-held Arunachal Pradesh on the eastern end of the Himalayan border, known as the McMahon line.
India has only grudgingly accepted China's 1950 takeover of Tibet and has harbored anti- Chinese groups dedicated to liberating the mountain kingdom.

At the same time, India quietly asserted control of two other Himalayan mountain kingdoms, Bhutan and Sikkim.
India sees the growing array of Chinese bases in Tibet as an extreme danger. China's air, missile and intelligence bases in Tibet look down on the vast plains of India.
India's leader, Jawaharlal Nehru, once complained of this danger to China's Premier Chou Enlai. Chou laughed and retorted, "If I wanted to destroy India, I would march 100 million Chinese to the edge of the Tibetan plateau and order them to piss downhill. We would wash you into the Indian Ocean."
Tibet controls most of the headwaters of India's great rivers.

Delhi has long feared that China may one day dam and divert their waters to China's dry western provinces.
Other serious potential flashpoints exist.

India's old foe, Pakistan, with whom it has fought four wars, is China's closet ally.

Beijing arms Pakistan and has built up its nuclear arms program.

An Indian-Pakistan war over divided Kashmir, or an Indian intervention in a fragmenting Pakistan or Afghanistan, could draw China into the fray.

A new port in western Pakistan at Gwadar will give China port rights on the Arabian Sea.
Burma (today Myanmar), on India's troubled eastern flank, which is rent by tribal uprisings, deeply worries Delhi.

Strategic Burma is rapidly becoming an important forward Chinese base.

A new road links China with Burma, and provides China's navy a badly needed port on the Andaman Sea, and thus access to the Indian Ocean.
India believes China is trying to strategically encircle it.

To the west, Pakistan; to the north, Tibet; to the east, Burma. To the south, China is busy cultivating Sri Lanka.
In spite of million man armed forces and nuclear weapons, India feels increasingly threatened by China's rise.

The Indians know full well that China expects obedience from its neighbors.

Even a small border clash between these two assertive giants could light the fuse of a broad and very frightening conflict.

The scramble for oil and gas offers ample causes of yet more conflict in Central Asia and even the Gulf, where today America's rules supreme.

China warships dock in Burma, rattling rival naval power India

China and India have overlapping ambitions in the Indian Ocean. So as China flexes its naval reach, India is left debating how to assume leadership in the Indian Ocean.
By Ben Arnoldy

New Delhi — Two Chinese warships docked at a Burmese port Sunday, highlighting China’s expanding naval presence near Asia’s other rising giant, India.
Chinese news agency Xinhua described the friendly port call as a first-ever in Burma – also known as Myanmar – by Chinese warships.

It comes amid heightened tensions between Beijing and New Delhi, including India's reported suspension of military exchanges with China.
Though the two Asian heavyweights share a disputed border in the Himalayas, the Indian Ocean could become a more serious flashpoint for their overlapping ambitions.

Beijing is developing ports around India to help secure Chinese maritime routes while India’s security establishment is debating how best to assume leadership in the Indian Ocean.
“With this particular port of call I don’t think there is anything that needs to be done. Just watch very closely,” says P.K. Ghosh, a senior fellow at the Observer Research Foundation in New Delhi and a retired Navy officer.

But China, he says, is sending a signal.

“The underlying message is a strategic message: ‘Look, we are in the area and we can operate in the region.’ ”

China's 'string of pearls'
In recent years, China has expanded port facilities in countries that border India, including Pakistan, Bangladesh, Sri Lanka, and Burma.

Indian strategists refer to the projects as a “string of pearls” encircling India in its strategic back yard.
Dr. Ghosh points out that the ports are commercial structures, not designed to be naval bases. But, he adds, “if a push comes to a shove, they can definitely use it for a base.”
The Indian Ocean will only grow in importance for both India and China as their interconnectivity with the global economy grows.

The Indian Ocean is the Silk Road of the 21st century, moving Gulf oil and African minerals to the world’s two most populous nations.
The securing of the sea lanes – once the province of Great Britain, then the US – could evolve cooperatively, rather than competitively, to include India and China.

Indeed, both countries have participated in a global effort to protect ships from pirates off Somalia.
But for India to realize its ambition to be able to project its Navy over a distance to secure economic access abroad, it will need access first to regional ports – some of which are now under Chinese expansion.
“We saw that happen in Sri Lanka. When Delhi slept over Colombo’s invitation to build a new port at Hambantota, China stepped in,” said C. Raja Mohan, the strategic affairs editor of the Indian Express, at a talk given before a packed public audience in New Delhi last month.

India and China: a complicated relationship
Compounding the issue is the wariness in New Delhi about China.

While the two Asian giants have found common cause over climate change and expansion of bilateral trade, diplomatic tit-for-tats dating back to the 1962 Chinese invasion continue to hamper better relations.
The two countries failed to resolve their border disputes in the Himalayas earlier this decade, prompting India to beef up border infrastructure in the face of Chinese incursions.
Recently, Beijing denied a visa to an Indian general who planned to join a military delegation to China – reportedly because he oversaw Army operations in Indian-controlled Kashmir.

An Indian newspaper reported Saturday that India had responded by suspending military exchanges.

When asked by the Associated Press, China said this was news to them while India refused to comment.
Meanwhile, the Indian Express reported Saturday on Page 1 that the state-run People’s Daily posted in a discussion forum an article titled “How likely is China’s launch of a limited war against India?”
While the Indian press plays up Chinese “provocations,” officials in Delhi tread lightly, taking care to avoid direct clashes with Beijing.

India's next steps
But among Indian naval experts, China’s moves have spurred along a debate over how India should assert itself in the Indian Ocean.
During his talk in New Delhi last month, Dr. Mohan argued for a more assertive approach that includes basing agreements and naval assistance to “weaker states of the Indian Ocean littoral.”
“No great power has built a blue-water navy capable of projecting force without physical access and political arrangements for ‘forward presence,’ ” said Mohan.

“This would mean creation of arrangements for friendly ports and turnaround facilities in other nations that will increase the range, flexibility, and sustainability of Indian naval operations.”
Mohan says this makes Indian strategists uncomfortable.

For decades they have rejected anyone building “foreign bases” in the Indian Ocean – something India itself must now do, Mohan argues.
Ghosh argues against becoming the big brother of the region.

In 2008, he helped organize the Indian Ocean Naval Symposium, a forum for talking and cooperation on common issues between the naval chiefs of 28 Indian Ocean nations.
“Initially there was a lot of apprehension in the minds of a lot of countries as to what was the hidden agenda,” says Ghosh.
India, he says, went to great lengths to explain this wasn’t an effort to become big brother but to create a forum with the Indian Navy – the largest in the region – as the “unintrusive fulcrum.”
For now, that’s the right posture for India, argues Ghosh.
“I firmly believe that if you’ve got to carry a big stick, please talk softly,” he says.

“I think there are a lot of negativities associated with being visualized as a hegemon.”

China’s Central Bank Chief Rumored To Have Defected

By STRATFOR
Zhou Xiaochuan, governor of the People's Bank of China, the central bank, delivers a speech at the Caijing Annual Conference 2009 on December 13, 2008 in Beijing,

Rumors have circulated in China that People’s Bank of China Gov. Zhou Xiaochuan has left the country.

The rumors appear to have started following reports on Aug. 28 which cited Ming Pao, a Hong Kong-based news agency, saying that because of an approximately $430 billion loss on U.S. Treasury bonds, the Chinese government may punish some individuals within the PBOC, including Zhou.

Although Ming Pao on Aug. 30 published a report on its website indicating that the prior report was fabricated by a mainland news site that had attributed the false information to Ming Pao, rumors of Zhou’s defection have spread around China intensively, and Zhou’s name has been blocked from Internet search engines in China.
STRATFOR has received no confirmation of the rumor, and reports by state-run Chinese media appeared to send strong indications that Zhou is in no trouble at the moment.

However, the release of this rumor and its dispersion throughout the public is significant, particularly as the Communist Party of China is preparing for a leadership transition in 2012.
Chinese state-run media and official government websites have run several high-profile reports about Zhou, which should be seen as a move to refute the rumors.

The PBOC website published two articles on its homepage reporting on Zhou’s meeting with visiting Japanese Financial Services Minister Shozaburo Jimi during the third China-Japan high-level economic dialogue as well as a meeting with an Italian delegation.

Xinhua news agency reported that Zhou told the PBOC Party Committee Enlargement Meeting on Aug. 30 it should “continue to implement justice, and strengthen legislative work in financial system.”

Prior to this news, Zhou appeared at the 2nd annual conference of the heads of the Chinese, Japanese and Korean central banks held on Aug. 3, and his most recent public appearance was Aug. 10 for China’s Financial System Anti-corruption Construction Exhibition.
Zhou is known to have lofty political ambitions and is believed to be a close ally to former Chinese President Jiang Zemin, as well as a core figure for Jiang’s “Shanghai Gang.”

There has been no shortage of rumors about Zhou’s possible dismissal in the past five years, as he is believed to be associated with several high-level financial scandals.

For example, Zhou was rumored to be under “shuanggui,” a form of house arrest administered by the Communist Party, during the massive crackdown of Shanghai Party Secretary Chen Liangyu in 2006, which was perceived in the country as a crackdown of the Shanghai Gang and part of Hu’s effort to consolidate power ahead of the 2007 power transition.

There was also a rumor that he might have been detained following the investigation and arrest of Wang Yi, the vice governor of the China Development Bank, along with several other officials in the financial circle.

Currently, several financial scandals are still under investigation, and it is likely that Zhou, as PBOC governor and one of the most powerful economic players in the country, could be associated with some cases.

Therefore, whether or not the rumor is true at this time, the leaking of this news is very likely to be associated with a power struggle within the Communist Party’s economic hierarchy.

Time to put China in its place

The pinpricks that China had been giving India do not befit the dignity normally associated with ancient cultural values.
By B.S. Raghavan

China's is an ancient civilisation.

It can legitimately pride itself on the quintessential wisdom of thinkers and philosophers who have left their impact on every aspect of life.

Indeed, the Chinese polity has its moorings in the comprehensive value system handed down by them that is meant to govern the daily conduct of the people as also those in positions of authority and power.

But the needling of neighbours on the slightest pretext by the present-day Chinese rulers makes one wonder whether the compulsive itch to play realpolitik is throwing overboard the heritage of noble tenets and traditions honed for over 5,000 years.
For instance, Confucius is China's patron saint by whom even the Communist ideologues swear, at least outwardly.

It is from his famous aphorisms that Mao borrowed “Let a hundred flowers bloom, let hundred thoughts contend”, only to be subsequently trampled underfoot.
One of the imperative dicta of Confucius is that China's relations with other peoples and countries should be founded on the sacred principle of harmony and the golden law of reciprocity, defined as putting oneself in the other's place, whatever one does.

One need not go as far back as Confucius.

Speaking to the US Army War College some time ago, General Li Jijun, then Vice-President of the Academy of Military Science of the Chinese People's Liberation Army (PLA), referred to an ancient Chinese motto that admonished people, “Never do to others what you do not like others to do to you” (ji suo bu yu, wu shi yu ren), and added: “China's history and the way the Chinese people understand their own civilisation militate against any desire for aggression. Over thousands of years the pursuit of peace has been thoroughly absorbed into the Chinese national psyche…”

Sardonic smile
He also paid glowing tribute to the ancient Chinese military thinker, Mo Zi, who lived five centuries before Christ, and was the father of the concept of “non-offence” ( feigong), that advocated ‘accommodating' rather than provocative actions.
The people of India, for many of whom the memory of 1962 is still fresh, should be pardoned if they react to this recital with a sardonic smile.

The behaviour of the market socialist Chinese regime towards India in recent years has not only been at odds with the teachings of Confucius and claims of the PLA General but can fairly be described as immature, even childish.
It is always possible for two national Governments, particularly of adjacent countries, not to see eye to eye on some issues.

In such a situation, it is expected of mature Governments to seek to deal with them at the policy level and set up mechanisms that will take such issues towards resolution in the spirit of the ancient Chinese motto mentioned by the PLA General, and not to unilaterally go about indulging in irritating displays of carping pettifoggery.

The pinpricks that China had been giving to India in the past in the form of border incursions, questioning the status of Arunachal Pradesh, raising frivolous objections to the visits of the Prime Minister, Dr Manmohan Singh, and the Dalai Lama to that State, refusing visas to the IAS trainees belonging to that State, and resorting to issue of stapled visas to residents of Jammu and Kashmir are certainly not befitting the dignity and sobriety normally associated with ancient cultural values.
Now comes the refusal of China to ‘host' General B. S. Jaswal, the General Officer Commanding-in-Chief of India's Northern Command, who was to lead the team for the fourth defence dialogue, to be held in Beijing.
The reason mentioned (that he came from the “sensitive location of Jammu and Kashmir” and “people from this part of the world come with a different kind of visa”) is of a piece with China's past record of insensitivity and arrogance.

Hegemonistic ambitions
What is the justification for China viewing Jammu and Kashmir as a ‘sensitive location'?

Is it insinuating that it does not regard the State as an integral part of India?

Or is it that the location has become ‘sensitive' because China is preparing the ground to lay claim to some part of the territory?

Worse still, has China decided to gang up with Pakistan to ‘bleed' India in whatever manner possible?
Whatever it is, it takes the cake for impudence beyond belief, raising the question how and why China, with all the advantage of ancient wisdom, has failed to realise that this is no way to “clarify concerns, deepen mutual trust and coordinate stances” which was the stated purpose of the defence dialogue.
What is most baffling is China being oblivious to the greatest harm it is doing to itself as a result of the cumulative effect of these annoying incidents.
It is providing vindication to those who have been venting their suspicion of its hegemonistic ambitions and is fast alienating a constituency in India which, however small, had been braving public opprobrium and advocating an early settlement of the border dispute in a spirit of give-and-take to usher in an era of peace and friendship with China.
Apparently, winning friends and influencing people is not China's forte.

Given China's deliberate policy of keeping India on tenterhooks by manufacturing a series of untenable pretexts, reminiscent of the famous fable of the wolf and the lamb, it should not be surprising if the significance of India's mild but pained response to the blackballing of Gen Jaswal is totally lost on the powers-that-be in Beijing.
New Delhi must understand that mere half measures will not do.

The defence dialogue has never been much to speak of from its initiation in 2008.

At best, it was exploratory at the periphery of India-China relations and never went in depth into any substantive issues relating to defence and security collaboration, the implications of China's maritime pretensions or the China-Pakistan axis spiting India an every count.
China has handed on a platter an opportunity for Indian policy-makers to scrap altogether the wholly fruitless and wasteful make-believe of a dialogue and deal with emerging issues as they arise.
In any case, the strategic imperatives and the composition and configuration of forces of both countries are so far apart that a common defence dialogue is an illusory luxury.

In Toledo, the 'Glass City,' New Label: Made in China

By JAMES T. AREDDY

The Toledo Museum of Art's $30 million Glass Pavilion is a symbol of America's "Glass City," and reflects the legacy of its local glassmakers.
A smudge on the image: The pavilion glass was imported from China, the new global powerhouse of the glass industry.
No one in the U.S. had the capability to satisfy cutting-edge architectural specifications for the curving pavilion, even though the 2006 job involved techniques advanced decades ago by Toledo inventors: bending and laminating glass.

The pavilion features 360 thick glass panels, each up to 13.5 feet tall, eight feet wide and weighing over 1,300 pounds.
For years, the West focused on the threat from China's low-tech exporters like clothing and furniture makers.

Glass represents how an even more potent challenge has arrived: sophisticated, capital-intensive businesses that boast high-tech expertise.
In industries where global demand has shifted to China, the pattern is repeated, from steel to locomotives and turbines to specialized glassworks.

Chinese companies that have gorged on growth in the domestic market have managed in just a few years to close the gap on decades of technological innovation in the industrialized West.
Bottles in their early form on a glass factory's production line

Shenzhen, China-based Avic Sanxin Co. got the Toledo Glass Pavilion job because of its willingness to invest in technology necessary for complex glass, including a $500,000 piece of equipment, says deputy general manager Bruce Tsin, who wears jeans and reads architectural magazines in English.

U.S. companies, he says, are too cautious, preferring standardized processes and "easy money."
But China also has secured important technology from foreign glassmakers eager for a foothold in the world's biggest market.

Foreign companies often play a balancing act in China, trying to protect selected manufacturing secrets and products.
Owens-Illinois Inc., an Ohio bottle-maker, intends to pump possibly hundreds of millions of dollars into Chinese acquisitions and joint ventures in the coming years.

"It's the biggest glass market in the world and we feel underrepresented," says L. Richard Crawford, president of global glass operations.

"What we bring the market is know-how."
Yet each deal will require approvals from Chinese authorities who have a reputation for pressuring foreign investors to introduce their latest proprietary technology, but a weak track record for protecting it.
Owens-Illinois says it will hold back key trade secrets locked in its suburban Toledo labs, like how to make jet black glass and 30% lighter wine bottles.

Mr. Crawford says his company can succeed in China by introducing "the basic stuff."
Japan's Nippon Sheet Glass Co. this month said it would issue over $570 million in new shares in part to fund $53 million in planned spending on production lines that make energy-saving glass in the northern city Tianjin.

Apple Inc.'s first Shanghai store opened in July featuring a tubular dome of glass panels 41 feet tall, all of it China made.
Northwest Ohio was aggressive about luring the glass industry in its early days, too.

In the late 1880s, the area convinced East Coast glassmakers like Edward Drummond Libbey to relocate with cheap natural gas, cheap land and cheap labor—including workers as young as eight years old.

Washington blocked European glass with tariffs.

By 1900, the Toledo area had around 100 glassmakers. Mr. Libbey, who died in 1925, endowed the Toledo Museum of Art.
"China is the America of the 1880s, 1890s," says Quentin R. Skrabec Jr., an industrial historian at Ohio's University of Findlay.

"Pittsburgh was the steel; Akron was the rubber; Toledo was the glass city."
Ohio companies like Owens-Illinois, Libbey-Owens-Ford Co., Owens Corning and Libbey Inc. automated production of light bulbs, bottles and flat glass, supplied the Empire State Building with windows and commercialized fiberglass.
For decades, a major focus of Toledo was supplying glass to the rapidly expanding car industry of nearby Detroit.

In the 1920s, the predecessor company to Libbey-Owens-Ford helped perfect the process of lamination to make windshields that didn't shatter into pieces.

As the U.S. auto makers lost share in the 1980s to Japanese car makers, Toledo's glassmakers felt the pain.
Most of the world's flat glass comes from float lines, a tricky energy-intensive process in which molten glass flattens above a bed of hot tin and then is conveyed hundreds of feet in an unbroken ribbon while it cools.

Float plants typically run 24 hours a day for years at a time.
There are 33 float lines in the U.S., according to Glass Magazine. Toledo has two of them, run by Nippon Sheet's Pilkington unit.
China has at least 150 float lines today.

As recently as the early 1970s, the country was a tiny player in the glass industry. But the rapid growth in the Chinese construction and automotive industries since then has created surging demand for local glass.
The basic ingredients in glass, including silica sand and soda ash, are found almost everywhere. Because glass is heavy and difficult to transport, it is typically produced close to where it is used. China makes 45% of the world's glass, but it consumes virtually all of that amount. Every 15 minutes, its production is enough to clad a 100-story skyscraper.
Crowding a single Chinese city, Shahe, are 44 float lines. The Hebei Province city, 265 miles southwest of Beijing, makes around a fifth of the nation's flat glass.
In Shahe, Liu Jujun, owner of Hebei DaGuangMing Industry Group Co., recently inaugurated an 820-foot-long float glass line—adjacent to an identical one he opened last July.
"Whenever I go to other parts of the country, I see new buildings being built," says Mr. Liu, who is also a Shahe government adviser.

"The more glass here, the more easily we can sell glass."
China's "Glass City" features a skyline of concrete cooling towers characteristic of nuclear power plants, not the expensive equipment Western glassmakers use to reduce pollutants like nitrogen oxide.

Mr. Liu says 10% of his capital expenditure goes into pollution controls, that he meets all national standards and is switching to cleaner natural gas.
But Mr. Liu's plant features construction that looks slapdash by Western standards.

It is run by engineers seated on wooden benches.

A nearby silica sand producer spits mucky water onto the parched land. And trucks ply Shahe roads loaded with bags of synthetic soda ash, the product of a chemical process environmentalists forced out of the U.S. in 1985.
Most of China's glass output is such low quality, it has no market other than China.

And much of the Chinese glass now hitting U.S. shores is chiseling into market extremities where profit margins are thinnest: the cheapest salt shakers, table tops and replacement windshields.
But China also is beginning to supply more sophisticated glass.

Blast-resistant lower-floor windows for New York's One World Trade Center building under construction will come from northeast China's Shandong Jin Jing Technology Co.

The U.S. company that is fabricating glass for the upper floors says it didn't have ability to make the large windows, which are nearly an inch thick and have V-shaped ridges in them.
"We try to hit the sweet spots in terms of volumes," explains Don McCann, architectural design manager at Viracon Inc. in Owatonna, Minn.

"Our business model is geared toward the common sizes."
It was a similar story for the Toledo Museum of Art.

Only a Chinese company and Spanish and Italian companies could produce the oversize curving panels needed for the futuristic design of its Glass Pavilion.

Sanxin says it was paid under $1 million; people involved in the project said it would have cost up to 50% more in Europe.
"We did get some grief about the fabrication until we explained we didn't have a choice," says Carol Bintz, an officer of the Toledo Museum of Art who led the project.

"We couldn't find anyone in the United States that could do both the size and make the curvature."
To win prestige work, Sanxin spends money.

For the Toledo museum, it put $500,000 into the world's largest "autoclave," a giant blue cylinder that works like a pressure cooker to stick, or laminate, glass plates together.
"We were also quite proud to supply glass to a project like this," said Mr. Tsin, the general manager.

"We believed after this project we had a chance to do similar things [elsewhere]."
Not everything went smoothly for Sanxin in Toledo. At least one piece of glass arrived broken, and replacement glass had to be air-freighted to Toledo at high cost.

Still, the Toledo museum job helped win Sanxin recognition as one of the few companies anywhere able to take on certain highly specialized jobs involving curving or manipulating glass. It has worked on glass for a Paris airport, an Austrian subway, Tokyo storefronts and is supplying a museum in Anchorage, Alaska.
It has purchased equipment in hopes of fabricating glass for Apple's China expansion, but concedes it hasn't yet met the client's quality specifications.
Sanxin was founded as a private company in the 1990s and was listed on the Shenzen Stock Exchange.

Its biggest shareholder is Aviation Industry Corp. of China, a government-owned company that is a leading plane maker and military contractor.

Among its biggest contracts in recent years have been Beijing and Shanghai airports.
Mr. Tsin rejects the notion that Sanxin has an unfair advantage because of its government links. Instead, he says Sanxin has developed a niche business in architectural glass because the world's established glassmakers want stable, high-volume production, not the risks of one-off jobs like the Toledo Museum of Art.
The Toledo Museum of Art's $30 million Glass Pavilion was made with sophisticated, curving glass panels imported from China.

Toledo glass fabricators, machinists, artisans and retailers understand that China is reordering the glass industry.

"It hasn't really been felt yet except in isolated instances," says Paul Pellioni, vice president of Toledo Mirror & Glass Co., a major installer who worked on the museum.

"It would be naive to say it's not a factor. It's going to be a factor."
But Toledo's main problem remains the big drop in Big Three auto sales.

Toledo's glass industry currently employs just 2,500 workers. That is down from nearly 10,000 workers in 1973, according to Moody's Economy.com.
No one at the Source, a crowded Toledo job bank and training center, sees the glass industry as an elixir for 11%-plus joblessness.

"Manufacturing is fizzling out here," says Ken Nutter, a laid-off 54-year-old who worked as a glass cutter in the 1970s but not since.
When President Barack Obama last September bowed to union demands to levy tariffs on China-made tires, and later on steel pipe, he stirred hope in the U.S. glass industry, and its labor unions, that their sector might also get relief.

It hasn't happened so far.
Last October, eight Democratic U.S. senators wrote to the Obama Administration asking it to challenge "Chinese subsidization" of its glass sector.

Separately, lawyers say a movement is building for a World Trade Organization case that would challenge Beijing to prove that production surges in sectors including glassmaking are commercially oriented, not government policy.
China's Ministry of Commerce warns any action to restrict its glass industry would backfire.

Any U.S. glass industry woes, the ministry said in a statement, reflect weak domestic economic conditions.
For U.S. glass companies willing to deploy technology, the ministry added, China is "a rare opportunity and wide market to explore."
Near the Pilkington plant on Dixie Highway outside Toledo, patrons at "Moe's Place" refer to "Glass City" in the past tense.

"We used to be a glass capital," they say, pointing to boarded-up houses. The plant, which makes windshields for farm equipment and big-rig trucks, now employs 300.
Next door to the plant, bulldozers are readying Toledo's post-glass gambit: "Hollywood Casino." Designed with an Art Deco facade of concrete on a spot where glass was first made in 1898, it promises 3,200 construction and casino jobs, or 260 more than the glassmaking plant had in 1970.