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Agricultural economists sometimes have a choice of using either unit values or community prices when analysing food price policy. Unit values (ratios of household expenditure on a food to the quantity purchased), and community prices, which are enumerated from vendors in local markets, are both proxies for market prices. While it is believed that biases may result from the use of unit values, due especially to measurement error and quality effects, evidence on this issue is lacking. Even less is known about community prices. This paper provides empirical evidence that suggests that economists should exercise caution when using unit values as proxies for market prices. Community prices in our two case studies have a number of properties that make them more reliable in our two case study countries: Vietnam and Papua New Guinea. Price elasticities calculated from unit values provide poor approximations to those calculated with community prices. If the unit value-based (or community price-based) elasticities are biased, they may distort food policy analysis. In our study, the use of unit values (if wrong) could lead policy makers to decide to liberalize rice exports which could generate unexpected adverse nutritional consequences because price elasticities were understated.

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Donald K. Emmerson
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It is tempting to dismiss President Bush's travel through Southeast Asia as aimless floating by a doubly lame duck. Getting things done will be harder without either the right to run for a third term in 2008 or the support of a legislative majority between now and then. But if that means having to work with others, at home and abroad, these new limits could be a virtuous necessity -- an opportunity to shed his administration's my-way-or-the-highway image and reverse the squandering of American legitimacy and leverage around the world.

Asia is a good place to begin rebalancing U.S. foreign policy because it is huge, it is dynamic -- and it is not Iraq. The Asia Pacific Economic Cooperation summit that the president is attending in Vietnam this weekend includes leaders from 21 economies that jointly account for 56, 48, and 40 percent, respectively, of global GDP, trade and population. Since 1989, the forum's economies have grown 26 percent compared with 8 percent for the rest of the world. The Middle East looks trivial by comparison.

The Middle East also lacks a tradition of successful multilateral cooperation. But if the Arab League has accomplished little, Southeast Asia is an exemplar of regional harmony. Cynical observers may deride as mere "talk shops" the many overlapping frameworks that span or involve Southeast Asia. On its calendar of events in 2005 the Association of Southeast Asian Nations listed 612 meetings. But talking is better than fighting, and no two ASEAN members have made war on each other since the group was formed nearly 40 years ago.

Northeast Asia is another matter. There is no ANEAN -- no Association of Northeast Asian Nations. Mistrust among China, Japan and South Korea is still too deep. But North Korea's decision to rejoin the Six-Party Talks (among China, Japan, Russia, the two Koreas, and the United States) has revived the prospect that these conversations could evolve into a framework for broader security in Northeast Asia. Of the six, all but North Korea will attend the economic summit this weekend in Hanoi. On the sidelines of that event, President Bush and his delegation should discuss with these five counterparts a possible shared strategy on North Korea when the talks reconvene, probably in China later this year.

Another key goal for the president on this trip should be helping to revitalize APEC. The "Doha round" of global trade liberalization has run aground. Without a last-minute push, APEC's goals of "free trade" among advanced economies by 2010 and among developing ones by 2020 will not be met. Meanwhile, bilateral trade agreements among APEC members have proliferated. The result is a "noodle bowl" of inconsistent arrangements that may, on balance, divert as much trade as they create. There is, for example, no consistent definition of the "rules of origin" that determine which items benefit from lowered barriers and which do not. Without lowering the quality of all these many bilaterals to their lowest common denominator -- i.e., the least liberal arrangement any signatory will accept -- an effort should be made to link and standardize them so that trade flows are enlarged and not merely redirected.

This may seem like a non-starter. On Monday, the House of Representatives failed to approve permanent normal trade relations with Vietnam. And that was even before the newly elected and arguably more protectionist Democratic majority is seated in January. But progress can still be made in Vietnam.

An advantage of the Asia Pacific Economic Cooperation summit for the United States is that it includes both China and Taiwan, and excludes the repressive regime in Burma. But APEC's uniquely trans-Pacific character is a more important political reason for strengthening the grouping. While APEC has lagged, East Asian regionalism has boomed. That has been good for East Asia. But U.S. and East Asian interests alike could be hurt if the Pacific Ocean ends up being split between rival Chinese and American spheres of influence.

The risk of gridlocked government should not keep the United States from seeking to deepen Asia-Pacific economic and political cooperation. The Bush administration may be a lame duck. But even a healthy duck needs a tranquil pond.

Donald K. Emmerson heads the Southeast Asia Forum in the Shorenstein Asia Pacific Research Center at Stanford University. He wrote this article for the Mercury News which was printed on Sunday, November 19, 2006. Reprinted with permission from the San Jose Mercury News.

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"Pan-Asian regionalism remains a long-term aspiration rather than a short-term prospect, but that having been said, that was true of Europe fifty years ago." - Michael Armacost, Shorenstein Distinguished Fellow

On November 2 Stanford University's Shorenstein Asia-Pacific Research Center, in association with University of California at Berkeley's Asia-Pacific Economic Cooperation Study Center, convened regional and economic experts to discuss the role of the Asia-Pacific Economic Cooperation (APEC) group and its relationship to the future of regionalism and regional integration in East Asia.

The meeting was timely, as APEC's annual week of high-level meetings begins on November 12th in Hanoi, Vietnam. It will culminate in a summit of heads of state (and a representative from Taiwan) on November 18-19 -- a key opportunity for President Bush to talk with regional leaders about a range of issues, including North Korea. In examining APEC's agenda and its potential institutional challengers, scholars focused on how the US might get more out of the forum and how the US could alter its approach to Asian regionalism to ensure continued relevance and influence in the region.

According to Dr. Donald Emmerson, director of the Southeast Asia Forum and senior fellow at Stanford's Freeman Spogli Institute for International Studies (FSI), "Asian regionalism is at a crossroads, and it may be at a crossroads for sometime." Recent events have demonstrated that countries in the region face a crucial choice: Will they move in the direction of an East Asian identity that actively excludes the US, or more toward trans-Pacific networks such as APEC that include the US? Or both?

As Asian countries consider the merits of APEC and American inclusion, US policy on Asian regionalism has been "curiously passive," especially when juxtaposed with the positive role the US played in supporting development of the European Union, according to Ambassador Michael Armacost, who was US ambassador to Japan and the Philippines and held senior policy positions on the staff of the National Security Council and in the Departments of State and Defense.

Dr. Vinod Aggarwal, a professor of political science and director of the Berkeley Asia Pacific Economic Cooperation Study Center, pointed to the example of the European Union (of which the US is not a member), urging that the US seek compatibility among regional and trans-Pacific institutions. Armacost agreed and maintained that the US should not fear exclusion from regional forums, such as the East Asia Summit (EAS), an outgrowth of the annual dialogue between the Association of Southeast Asian Nations (ASEAN) and other powers, which held its first meeting in Malaysia last year.

North Korea has said it will rejoin the six-party talks, but a meeting will not take place until after the APEC meeting. Here is an illustration of the utility of APEC that has nothing to do with economics. There could be an informal meeting of the five parties (without North Korea) in Hanoi. And that could be quite helpful in terms of coordinating strategy, especially with China. - Donald Emmerson, director, Southeast Asia Forum, Shorenstein APARC

Armacost underlined that American participation needs to correspond with American interests. In this sense, the US should put more effort into the Asian organizations of which it is already a member, including APEC. Armacost also suggested looking to Northeast Asia --"where the interests of the great powers intersect most directly" and there is no ASEAN counterpart -- according special attention to the six-party talks convened to denuclearize North Korea. He told the group that "fortuitously in the six-power talks, one has a negotiation which could be in embryonic form a regional security institution, in which American participation is not an issue -- it's self-evident. The US should put effort into the six-power talks succeeding, not only because of the substance of those talks, but because if they do succeed, then that format can provide a basis for a sub-regional institution of great importance to us, one that will give us a continuing role in the larger institutions that may emerge in Asia."

Emmerson said that there are essentially two views in Washington on US participation in Asian regional institutions: "one is to say that if these meetings are merely 'talk shops,' then our absence doesn't matter, and the other is to say that we are being, as the phrase goes, 'absent at the creation' of regional architecture, which we will regret not having been able to influence from the beginning, the longer we stay out." He urged greater US involvement in regional organizations and more creative approaches to tackling obstacles to involvement, such as finding a way to compromise on accession to the ASEAN Treaty of Amity and Cooperation, a key criterion for membership in the EAS. Attending that summit, in Emmerson's view, "would send a clear signal to East Asians that the US does want to be involved on the ground floor in the creation of an emerging regional architecture in Asia for the 21st century."

As the panelists encouraged the US to devote greater effort to the project of Asian regionalism, they also acknowledged that President Bush and other US delegates to this year's APEC meetings would not be in a position to embark on any bold initiatives, including the talked-of Free Trade Area of the Asia-Pacific, or FTAAP. According to Aggarwal, "in the current climate, the FTAAP is a political non-starter." Preoccupied by US midterm elections and the Iraq issue, "the administration is unlikely to put a lot of political capital into pushing for something like an FTAAP," not least because of the upcoming expiration of President Bush's Trade Promotion Authority. Aggarwal said, "I just can not imagine that any congressmen or senators will advocate free trade with countries with which we have our largest trade deficits. These massive trade deficits make the issue a political hot potato and no one will touch it." Instead, he recommended a less direct approach for trade liberalization. (A spokesman for the US Trade Representative's office has said that while they are still in the process of preparing their APEC agenda, they would consider discussing the FTAAP with their regional trading partners.)

But if you're ever going to pump new life into [APEC] you've got to find some practical projects around which people can rally. I would have thought the one economic issue that seems to be very timely, although some of the timeliness is being lost as prices sink, is energy. Virtually everybody in Asia is an importer of energy, and there are a lot of consumer interests that would benefit from the kind of collaboration that you could organize at a meeting like this. I would try to get subjects like that on the agenda, maybe more than trade liberalization. - Michael Armacost, Shorenstein Distinguished Fellow

Founded in 1989, APEC has 21 member economies on both sides of the Pacific. As a trans-Pacific, network, APEC connects the US, Chile, Mexico, and Canada on one side of the Pacific with a diverse group of Asian economies including China, Japan, South Korea, Taiwan, Indonesia, Vietnam, Malaysia, Australia, and New Zealand. Aggarwal described the body as more of a "discussion forum" than an organization, as it explicitly rejects the deeply institutionalized approach taken by the European Union in Brussels - something he said should be reconsidered if it is to become more effective.

Panelists raised the paradox that APEC's agenda seems overly ambitious, yet at the same time the forum is under-utilized, in terms of addressing some pressing issues in the region, including as energy, avian flu, and maritime security.

Aggarwal acknowledged that APEC has been host to a wide range of activities, including security, environment, women's rights, finance, and technology policy. "What's striking is that these activities have been discussed in the European Union, for example, but really only in any significant way after 25 years of economic integration." In the mid-1990s, APEC set deadlines for trade liberalization -- 2010 for developed countries and 2020 for other countries. These goals will be hard to meet.

Security in the Asia-Pacific means lots of things. If we always focus on the latest American security issue, then that becomes the driving factor in Asians saying because the Americans have their own agenda, we want to have our own organization. So, yes, I think we should revitalize some of [APEC's] trade goals, we should try to work toward that, but we should be willing to address broader issues, other than only counterterrorism or only North Korea. - Vinod Aggarwal, director of the Berkeley Asia Pacific Economic Cooperation Study Center (BASC) at UC - Berkeley

Armacost compared APEC to the European Union, asserting that the EU succeeded in large part because it "started small, built gradually and focused on depth rather than breadth at outset." In addition, the European body, considered the gold standard of regional integration, concentrated on very practical projects that yielded tangible benefits and generated political support for further endeavors.

In this vein, Armacost recommended two practical purposes for the group. "Virtually everybody in Asia is an importer of energy, and there are a lot of consumer interests that would benefit from the kind of collaboration that you could organize at a meeting like this." Also, returning to one of the organization's fundamental purposes, Armacost contended that in large part, "APEC is only useful insofar as the US uses it as a place to rally support for making one last ditch effort in trying to stimulate the Doha Round."

"I don't think that these bilateral trade agreements are particularly good for American business, or in general for trade negotiations at the Doha Round." - Vinod Aggarwal, director of the Berkeley Asia Pacific Economic Cooperation Study Center (BASC) at UC - Berkeley

"If APEC members really wanted to get the Doha Round back on track, they should agree to a moratorium on preferential trade agreements for a period of one year and challenge the Europeans and other non-APEC members to match them in this moratorium on preferential trade agreements," urged Aggarwal.

Overall, the group agreed that despite inherent problems in APEC, overall participation in this trans-Pacific institution should be considered important to the United States. Armacost made the practical point that "APEC happily provides the major occasion in which the President goes out to the region. Basically, it's an opportunity to cultivate your allies, find out what your adversaries in the region may be up to, and to have a point in your schedule where you've got that agenda of Asian concerns that you are forced to wrestle with. For that reason alone it's worth keeping APEC alive."

All the panelists acknowledged Asian countries' criticisms that the US had too much control over APEC's agenda, and that Washington utilizes the forum to discuss its "issue of the day." Emmerson called on the US to remember that "from the standpoint of a number of developing Asian economies, the American emphasis on trade liberalization has been somewhat distorting. These are low-income countries; they're interested in economic cooperation that can somehow help them raise their populations above poverty levels. There's a whole agenda there that we really haven't discussed, and in a way it has been slighted in APEC by this overriding emphasis on trade liberalization. If trade liberalization turns out to be unrealistic at least in the short run, development goals are an alternative agenda that has some utility, and is worth exploring."

Similarly, Armacost stated that APEC would be a "more valuable institution to us, if we stopped talking for a while and listened a bit." Reflecting on US policy more broadly, he said he "personally regrets that in recent years the institution building instinct, or reflex, in the US has been directed at remaking other people's institutions internally. The international institution focus has been on relieving ourselves of the burdens of institutions which cramp our style or impose limits on diplomatic maneuverability."

I do believe we're not paying enough attention to a region whose importance to us will be greater than any other region ten to fifteen years from now. We should devote more attentiveness to Asia. - Michael Armacost, Shorenstein Distinguished Fellow, Shorenstein APARC

Shorenstein APARC's associate director for research Daniel Sneider moderated the panel. This seminar was an outgrowth of the center's work on the role of regionalism in East Asia. The research center will publish a book on this subject next spring, in conjunction with the Brookings Institution.

About the Panelists:

Vinod Aggarwal is professor in the Department of Political Science, affiliated professor of Business and Public Policy in the Haas School of Business, and director of the Berkeley Asia Pacific Economic Cooperation Study Center (BASC) at the University of California at Berkeley.

Michael H. Armacost has been the Shorenstein Distinguished Fellow since 2002. From 1995 to 2002, Armacost served as president of the Brookings Institution. Previously, during his twenty-four year government career, Armacost served, among other positions, as undersecretary of state for political affairs and as ambassador to Japan and the Philippines.

Donald K. Emmerson is director of the Southeast Asia Forum at Shorenstein APARC and a senior fellow at FSI. He also teaches courses on Southeast Asia in International Relations and International Policy Studies.

Daniel C. Sneider is the associate director for research at Shorenstein APARC. He was a 2005-06 Pantech Fellow at the center, and the former foreign affairs columnist of the San Jose Mercury News.

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Shorenstein APARC's Daniel Sneider takes the occasion of South Korean President Roh's visit to the United States to remind policy makers in both Washington and Seoul that they should keep in mind that the current challenges to the alliance are no more difficult than those faced and survived in the past.

The U.S. visit this week by South Korean President Roh Moo Hyun offers yet another opportunity to bemoan the crisis of confidence in our alliance. Anti-American views, particularly among the young, remain widespread in South Korea. On an official level, there are strains over the role of U.S. troops based in Korea and a stark divergence in approaches toward North Korea.

This portrait of a troubled alliance is often contrasted with a supposed golden age in U.S.-Korean relations during the Cold War. But that view obscures a history of sharp disagreement between the two allies. It is a mythical past that stands in the way of repairing our alliance today. In reality, Korean nationalism and American strategic policy goals have often clashed. Differences over North Korea have arisen repeatedly. And anti-Americanism has been a feature of Korean life for decades.

This was true from the earliest postwar days, in a relationship born out of a fateful and poorly considered decision to divide Korea, after decades of Japanese colonial rule, into American and Soviet zones of occupation. Syngman Rhee, South Korea's first leader, was often at odds with his American backers. Washington feared Rhee would provoke a war with the communist North, even after the end of the Korean War.

Relations with Park Chung Hee, who came to power in a military coup in 1961, were even thornier. Park was a fierce Korean nationalist and, according to a close former aide, uncomfortable with Americans. The two countries collided over North Korea policy, economic goals, human rights and democracy.

In the 1970s, South Koreans developed deep doubts about the durability of the alliance, an uneasiness fed by the Vietnam debacle and the withdrawal of U.S. troops from Korea. Park defied U.S. pressure in declaring martial law in 1972, junking the constitution and jailing leading opposition figures. He launched a secret campaign of influence-peddling and bribery of American congressmen to counter U.S. criticism of his policies.

While Park feared abandonment by the United States, North Korea's Kim Il Sung worried that China, after developing ties to Washington, might sell him out. Thus Park, even though he had been the victim of two assassination attempts by North Korea, reached out to Pyongyang. During high-level talks in 1972, there was a remarkable shared belief that the major powers were the obstacle to Korean reunification.

The most alarming sign of an alliance in crisis was Park's dangerous decision to develop nuclear weapons, made in secret in 1971 after Richard Nixon's withdrawal of one of the two American infantry divisions. According to my research, American officials became alarmed over the seriousness of this effort when a young CIA agent provided evidence of a crude design for a nuclear warhead.

In the spring of 1975, my father, the late ambassador Richard Sneider, sent a top-secret cable to Washington calling for an urgent review of the U.S.-South Korean alliance. Korea was "no longer a client state," he wrote, but was "well on its way to middle power status with ambitions for full self-reliance including its own nuclear potential."

Sneider recommended creation of a new partnership, one more akin to our alliances with NATO or Japan. He also pushed for quiet but tough diplomacy to dissuade Park from heading down the nuclear road. That campaign succeeded finally, but not before my father warned Park that the entire security alliance was jeopardized.

Park was assassinated in 1979 by his own intelligence chief, who claimed to have acted at American instigation. The charge was false, but it remains widely believed in Korea. The perilous state of our alliance reached a peak with the Kwangju uprising against military rule the following year, when hundreds of Koreans were killed by troops deployed with the alleged acquiescence of the United States.

Dispelling the myth of the previous golden era in U.S.-Korean relations does not mean that our relations lacked a foundation of shared interest or that the difficulties we face today are not serious. The gap over how to handle the threat from the North is certainly wider and more evident than in the past. And the democratization of South Korea makes our differences visible and harder to manage.

As policymakers from both countries meet this week, they need to take a deep breath and remember that our alliance survived tremendous stresses in the past. The task before us is not to focus on our divergence but to pick up the challenge left unmet 30 years ago -- to define the basis for a long-term relationship that is durable and reciprocal and that finally sheds the shackles of dependency.

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Ambassador Ton-Nu-Thi Ninh is a member of Viet Nam's law-making body, the National Assembly, representing the southern coastal province of Ba Ria Vung Tau. In her position as Vice-Chair of the National Assembly Foreign Affairs Committee, her mission has been to develop and enhance Viet Nam's relations with the countries of North America (particularly, the United States) and Western Europe. She travels frequently to the United States and Europe and regularly interacts with senior government and business leaders both abroad and in Viet Nam. She has also represented Viet Nam in international conferences among world leaders to discuss issues with global implications. She is widely recognized as an effective spokesperson for Viet Nam.

Prior to holding her current position, Mme Ninh served, for over two decades, as a diplomat in Viet Nam's Ministry of Foreign Affairs, specializing in multilateral institutions (the United Nations, the Non-Aligned Movement, Francophonie, The Association of South East Asian Nations) and global issues (international peace and security, development, environment, governance, human rights, etc.) As advisor to Viet Nam's Minister of Foreign Affairs, she was responsible for key international efforts on behalf of Viet Nam, such as the holding of the Summit of French-Speaking Countries in 1997 in Ha Noi. From 2000 to 2003, she was Viet Nam's Ambassador to Belgium, Luxembourg and Head of the Mission to the European Union in Brussels.

Mme Ninh grew up in France, was educated at Sorbonne University and Cambridge University and started her career as an academic. She taught English and English literature at Paris University in the late 1960s and later at Saigon University until 1975.

Born in Hue, Central Viet Nam, into a traditional family, she developed her political commitment to the National Liberation Front for South Viet Nam early on during her student days in Paris. Since then, she has been consistently active in social issues, with a special interest on gender. She served a term on the Central Executive on the Viet Nam Women's Union.

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When the first President Bush swiftly crushed Saddam Hussein's invasion of Kuwait, he stated that America had "kicked the Vietnam syndrome." The strategic and regional context of the second President Bush's invasion and occupation of Iraq appeared so far removed from the Cold War era and the specifics of the Vietnam War that there seemed to be little point in harking back to that decades-old conflict. Yet starting with the growth of the insurgency in Iraq and the resultant revival of concern with "counter insurgency," the focus on "Iraqification" (with echoes of "Vietnamization"), and even a possible revival of the Kissingerian concept of a "decent interval" before disengaging from Iraq, the parallels between Iraq and Vietnam have reemerged in public discussion. Can we derive any benefit from invoking these parallels, either in better understanding the Vietnam War or in clarifying contemporary challenges in Iraq? Or is the real "lesson of Vietnam" the idea that "lessons" themselves are dangerous and misleading?

David Elliott spent seven years in Vietnam, from 1963 to 1973, in the US Army and with the Rand Corporation. The experience ultimately led to his best-known work: a two-volume, 1500-page book, The Vietnamese War: Revolution and Social Change in the Mekong Delta (2002). The New York Review of Books called it "the most comprehensive and enlightening book on that war since June 1971, when The New York Times published the Pentagon Papers." An abridged paperback edition will be published this year. Elliott's PhD is from Cornell, his BA from Yale. His current research is on Vietnam's adaptation to the post-Cold War world.

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Despite chatter about "the Chinese threat" during Chinese President Hu Jintao's recent visit to Washington, neither China nor the United States seeks to confront the issues plaguing their complex relationship. Pantech fellow and San Jose Mercury News foreign affairs columnist Daniel Sneider considers the muscular side of "China's peaceful rise."

The visit of China's President Hu Jintao to the United States this week is yet another opportunity for chatter about the "Chinese threat.'' In the lead-up to his arrival, we have heard rising voices from Congress and from the administration on everything from China's currency manipulation and piracy of intellectual property to its military buildup.

Do not be deceived. There is no real appetite in either Washington or Beijing for confrontation over any of these issues, much less a serious exploration of the challenge that China presents to American global leadership.

Neither government can afford an escalation of tensions. Economically, we are too intertwined. Strip away the packaging on the $200 billion trade deficit with China and you will find American companies running global assembly lines that begin in Ohio, pass through Malaysia, and end up in southern China.

Strategically, the United States is painfully dependent on China to try to cope with the greatest security challenge in northeast Asia: North Korea's nuclear program.

Beijing is wedded to its doctrine of "China's peaceful rise.'' First formulated three years ago, it aims to keep things calm with the United States and most of its neighbors, buying time to manage the tightrope act of continuing high growth while preserving domestic stability.

In any case, Washington is too bogged down in the Middle East to do more than bark now and then about China.

"At the strategic level, the United States is really focused like a laser on the Middle East,'' and the Chinese like it that way, said Asian security expert Kurt Campbell. "They appreciate the fact that with the U.S. attention focused elsewhere, it allows China to play a larger role in Asia as a whole,'' he told a gathering last week at the Center for Strategic and International Studies in Washington.

Typically, while Washington is focused on Hu's visit, the Chinese defense minister is in the midst of an unprecedented Asian tour that will take him to North and South Korea and to Singapore, Malaysia and Vietnam. China's prime minister has just finished a swing through Australia, New Zealand, Fiji and Cambodia.

In my own travels through Asia recently, from South Korea and Japan in the northeast down to Singapore, Vietnam and Hong Kong in Southeast Asia, I found a stunning growth in China's influence. The question of how to deal with China's rise is high on every agenda.

Everywhere people are looking over their shoulder, worried about China's burgeoning strength and presence. They are equally fearful that the United States is abandoning the field to China. But they also don't want to choose between these two powers.

That is even true in Japan, where the popular media and politicians are full of talk about the Chinese threat. But look a little closer and you will also find a growing counter-movement, particularly in elite policy circles, warning against becoming separated from the rest of Asia. The battle for succession to Prime Minister Junichiro Koizumi, who is stepping down in the fall, is now being shaped around this issue.

The China-Japan rivalry tends to reveal the more muscular side of China's "peaceful rise,'' one that Americans rarely glimpse. In Vietnam, senior foreign policy officials recounted what happened when the Japanese came courting to gain Vietnam's backing for a resolution to give them permanent membership in the U.N. Security Council, a key goal of Japan's foreign policy. Japan is Vietnam's largest aid donor and a major source of foreign investment.

China and Vietnam have a long and stormy history as neighbors, including wars that go back centuries and -- more recently -- a brief invasion in 1979 that ended in defeat for the Chinese. Relations these days are relatively good, however, fed by growing trade, heavily in China's favor.

Hu, in his role as leader of the Chinese Communist Party, sent a special envoy to talk to the leadership of the ruling Vietnamese Communist Party. Sometimes, a Vietnamese official told me, the Chinese can be very indirect. Not this time. The message was simple: "Don't do it!'' The ``or else'' was left unspoken.

The Vietnamese compromised, supporting Japan's membership but refusing to co-sponsor the resolution. China was not pleased, but apparently accepted it.

For the Vietnamese, a senior official explained, they must engage in a "lot of fine balancing.'' Vietnam "can't stop engaging China'' but wants to make sure China becomes a "predictable'' power.

In Washington, when the cloud of rhetoric clears, that formula pretty much sums up the reality of U.S.-China relations, too.

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