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BEIJING, China (AP) -- The number of people in China who can't read has shot up to 116 million, wiping out years of hard-won gains against illiteracy as rural poor leave the farm and school for work in the city, state media said Monday.
Over the last five years, China's illiterate population grew by 30 million, the China Daily newspaper reported. According to census data, 87 million adults in China were illiterate in 2000.
Literacy in China is defined as someone who can read and write 1,500 Chinese characters -- a fraction of the 7,000 to 10,000 characters required for college graduates.
Most Chinese were illiterate at the beginning of the 20th century, but the simplification of Chinese characters and education campaigns launched by the Communists helped steadily raise literacy levels among adults, hitting about 90 percent in 2000, according to the United Nations.
The paper quoted an education ministry official as saying the main reason for the backsliding was that many young rural poor were dropping out of school in order to find work in the cities.
Migrant workers in China's urban centers do not have access to public education, health care and other basic social services.
"The situation is worrying," the paper quoted Gao Xuegui, a Ministry of Education official who focuses on illiteracy, as saying. "Illiteracy is not only a matter of education, but also has a great social impact."
Gao said another reason for the backsliding was a lack of adequate funding, and the fact that earlier successes in fighting illiteracy lead some local governments to abandon their literacy programs.
The paper said China's illiterate population in 2000 accounted for 11.3 percent of the world's total, but reached 15.01 percent in 2005.

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TAIPEI, Taiwan (AP) -- Taiwanese presidential front runner Ma Ying-jeou pleaded not guilty Tuesday at his corruption trial in Taipei, saying that his use of a special municipal fund was in keeping with government standards.

Ma, of the main opposition Nationalists, remains the favorite to take over from President Chen Shui-bian of the ruling Democratic Progressive Party in the March 2008 presidential poll -- despite the charges against him.

Before entering his plea, the handsome, 56-year-old Harvard-educated lawyer told the court he had done nothing wrong in diverting 11 million New Taiwan dollars ($333,000) of public money into his private account while serving as mayor of Taipei between 1998 and 2006.

He said the practice of using discretionary municipal funds without providing detailed accounting had been approved by government auditors for more than 20 years.

If convicted on the charges, Ma could face up to seven years in prison.

Ma has professed his innocence since February, when his indictment was first announced. His backers say diverting money from municipal funds is an accepted practice throughout Taiwan.

They say common uses for diverted funds include providing holiday bonuses for municipal workers and underwriting special municipal events.

On Sunday Ma said his campaign would still go forward even if he is convicted in Taipei District Court.

"If they seek to use the case to cause me trouble or even knock me down, they won't reach their goal," he told reporters.

Ma's trial opened in the shadow of an announcement by Nationalist kingpin Wang Jin-pyng that Wang would not contest the party's presidential primary because of alleged bias in the process.
"The primary would never be a fair competition as the rules of the game were specially made for a particular candidate from the outset," Wang said Monday, echoing the spirit of earlier comments in which he had cast doubts on the fitness of an indicted figure to lead the party's presidential ticket.

The angry tone of Wang's comments suggested he may be open to mounting an independent bid for the presidency -- a development that would play into the hands of the DPP by splitting the Nationalist vote.

Both the Nationalists and the DPP are expected to announce their presidential candidates in May.

The DPP incumbent Chen is in the third year of his second four-year term, and is constitutionally barred from succeeding himself.

Four DPP candidates -- party chairman Yu Shyi-kun, Premier Su Tseng-chang, Vice President Annette Lu and former Premier Frank Hsieh -- are vying for the DPP presidential nomination.

阿走

http://news.bbc.co.uk/2/hi/asia-pacific/6520317.stm
Demolition ends China house row
Wu Ping's house destroyed

House demolition
The home of a Chinese family who defied property developers in a high-profile campaign has finally been demolished.

The family of Wu Ping gave up defending their Chongqing house after reportedly reaching a deal with the authorities.

The "nail house" - so called because it refused to be hammered down - had been isolated in a huge construction pit after other households agreed to move.

The dispute became a cause celebre for ordinary Chinese people who have tried to fight property developers.

But the struggle came to an end on Tuesday, when a few dozen people looked on as the two-storey brick building was broken up by an earth mover.

A night watchman at the building site told AFP news agency: "The stubborn nail has been removed."

Mrs Wu, when told the house had been demolished, reportedly said: "Oh well."

New law

Her husband, Yang Wu, stayed in the house until the demolition, hanging out banners reading: "The legal private property of citizens cannot be violated."

The house was the last standing on a huge construction site

Enlarge Image

The family had insisted on staying in their home, because they were not satisfied with the compensation the authorities were offering.

Mrs Wu said earlier that she had been offered an apartment in a planned new complex, or a cash settlement, but she turned both down.

According to state news agency Xinhua, the couple have now agreed to move into another apartment elsewhere in Chongqing.

Accusations of illegal land grabs and corruption have dogged China's fast-paced building expansion, and the family's resistance has been portrayed as heroic by state media.

China's parliament last week passed a landmark law to boost protection of property rights for individuals.

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BEIJING, China (Reuters) -- China will build 12 highways by 2010 linking its remote northwest to Central Asia, state media reported, targeting a key source for energy and commodities to fuel its rapid economic growth.

The longest will stretch 1,680 km (1.045 miles) from Urumqi, capital of Xinjiang region, to Istanbul, Xinhua news agency reported late on Thursday quoting the local transport administration.

The planned highways would connect China with Russia, Kazakhstan, Tajikistan and Pakistan.

The report did not say where the funding would come from. And it was not clear if this was part of a rail and highway plan discussed in a ministerial meeting in October.

Xinjiang shares a border with eight countries to the north and west of China.

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RONDONÓPOLIS, Brazil — For more than 2,000 years, the Chinese have turned soybeans into tofu, a staple of the country’s diet.

But as its economy grows, so does China’s appetite for pork, poultry and beef, which require higher volumes of soybeans as animal feed. Plagued by scarce water supplies, China is turning to a new trading partner 15,000 miles away — Brazil — to supply more protein-packed beans essential to a richer diet.

China’s global scramble for natural resources is leading to a transformation of agricultural trading around the world. In China, vanishing cropland and diminishing water supplies are hampering the country’s ability to feed itself, and the increasing use of farmland in the United States to produce biofuels is pushing China to seek more of its staples from South America, where land is still cheap and plentiful.

“China is out there beating the bushes,” said Robert L. Thompson, a professor at the University of Illinois who is a former director of agricultural and rural development at the World Bank. The goal, he said, is “to ensure they have access to long-term contracts for minerals and energy and food.”

Once, the biggest bilateral food trade flowed between the United States, the world’s largest food exporter, and Japan. But countries with vast arable land available for expansion, particularly Brazil, are now racing to meet demand in China, whose population of 1.3 billion is 10 times that of Japan’s.

Farmers in the United States have started planting far more corn for ethanol at the expense of other crops, including soybeans. But after the United States grain embargo by President Richard M. Nixon in the early 1970s helped spawn Brazil’s soybean industry, American farmers are not giving up their leading role in the grain trade easily.

With a far superior system for transporting crops to global markets, American farmers still enjoy many advantages over their new competitors from Brazil and elsewhere in the developing world. Infrastructure and financing constraints in Brazil will keep the competition to feed China in flux for years to come.

But the longer-term trends are apparent. At the heart of the shift is the global competition for land to grow crops. Brazil, which farms about 175 million acres, has room to double its available cropland to equal the scale of the United States, analysts say, even without clearing any more of the Amazon rainforest.

“All of a sudden you have a global market for land, a competition between several different products for the same amount of land,” said Sergio Barroso, president for the Brazil operations of Cargill, the biggest grain trader in the world. Brazil’s soybean industry is losing acres to sugar cane for ethanol production in some areas, he said, and is competing with corn, cotton and cattle.

“If you put it all together between feed and food,” Mr. Barroso said, “it is going to be a tremendous challenge.”

Expectations ran high three years ago when Hu Jintao, the president of China, visited South America and toasted a strategic partnership with his Brazilian counterpart, Luiz Inácio Lula da Silva, predicting trade between the countries would double to $20 billion. China pledged $10 billion in investments.

To some extent, Brazilians have been disappointed in the follow-up. The Chinese have struggled with red tape in Brazil and hesitated while waiting for Brazilian rules to activate public-private investments. “Very little has happened,” said Pedro de Camargo Neto, a former official in the agriculture ministry in Brazil who is now an agribusiness consultant.

But China has continued its buying spree in Brazil. The soybean trade between the countries has exploded. Last year Brazil sent nearly 11 million tons of beans to China, a 50 percent increase from the previous year and nearly double the amount shipped in 2004. Early indications are that Brazil has produced yet another record crop, and analysts expect that China will devour most of it.

While the United States remains the largest producer of soybeans, last year Brazil became the biggest exporter. This year the United States will regain the crown, but its soybean exports are expected to fall by 23 percent by 2009-10, according to the Agriculture Department.

For all the gains here, though, the surge in exports to China has created unease among many in Brazilian agriculture, who worry the tightening relationship will accelerate a development model in which Brazil is too reliant on sales of raw natural resources rather than higher-value products. And after enjoying a trade surplus with China, Brazil slipped into a deficit in the most recent quarter as the Chinese stepped up shipments of manufactured goods.

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The challenge of supplying China is already showing signs of strain. A soybean boom has turned to a bust in the last two years for many farmers here in Mato Grosso, a state in western Brazil the size of Texas and Kansas that produces more than a third of the country’s beans.

Near Rondonópolis, Rogerio Salles watched recently as a handful of combines harvested the last soybeans on his 17,500-acre farm ringed by eucalyptus and rubber trees. “Just because we’re producing a lot of beans here doesn’t mean we’re making money,” he said.

The strong Brazilian currency and a transportation bottleneck are conspiring against many Mato Grosso farmers. Most of the beans are trucked south more than a thousand miles along highways riddled with potholes. At the ports, some ships wait at anchor up to a month before finding a dock to load the beans.

“If major investments are not made in transport infrastructure, China cannot count on this region being a stable supplier to its market,” Mr. Salles said. “There’s a lot riding on this.”

Moving soybeans from Mato Grosso to ports in Brazil costs more than four times what American farmers spend to get beans from the Midwest to New Orleans and the Pacific Northwest. As a result, Brazilian farms realize far less for their crops than their American counterparts.

Brazil’s agricultural sector has been dominated by large investors who bought huge tracts at cheap prices, and by multinational grain traders — like Minneapolis-based Cargill and Archer Daniels Midland, based in Decatur, Ill. — that have built storage, provided financing and lined up the overseas buyers.

Through his Maggi Group, Blairo Maggi, the governor of Mato Grosso, is the largest soybean grower in the world, and a major financier, with 400,000 acres of his own under production.

”It has been all about a land grab in Brazil,” said Daniel W. Basse, president of AgResource, an agricultural research consultancy.

For the farmers in Mato Grosso, prosperity has been elusive lately. Growers in the state amassed $14.5 billion in debt in the last two years. Farmers say they can no longer afford storage space, forcing them to sell their crops as soon as harvested, rather than wait for higher prices.

“You do all the work, you plant the right crops,” Mr. Salles, the local farmer, said. “But even when you do everything right, you still lose.”

The growers’ desperation has allowed the major grain traders to tighten their grip. Brazilian farmers say they are paying up to 25 percent more for supplies like fertilizers provided by the traders, who are paid back with the crop. “We are becoming slaves of the big trading companies,” said Ricardo Tomczyk, another farmer in Rondonópolis.

José Luiz Glaser, the general manager for grains and oilseeds at Cargill Brazil, said that Cargill stopped financing several farmers in Mato Grosso last year after they failed to pay their bills.

Such orphaned farmers could soon find new Chinese benefactors, who are looking to make inroads in the clubby world of Brazilian agriculture, said Charles Tang, president of the Brazil-China Chamber of Commerce. Brazilian farmers say they would welcome Chinese money. But they worry about China’s growing clout as a soybean buyer. Memories are still fresh of the 2004 “red beans” incident, when China rejected shipments of Brazilian soybeans after claiming they were contaminated.

To try to counter Chinese influence, Brazilian producers are working with American growers to diversify their buyers. American soybean producers organized a joint trade mission with Mato Grosso farmers in December to India, another huge potential growth market.

The Chinese want to connect directly with Brazilian farmers, bypassing the multinational grain merchants. While they have yet to make a major purchase of cropland in Brazil, they are looking to invest in improved facilities and upgrade the antiquated rail system.

China began looking overseas for more soybean supplies in the mid-1990s, when the scope of its land and water problems became clearer. Beijing has also chosen to use more of its arable farmland to grow fruits and vegetables, crops that make better use of China’s cheap labor and scarcer water supplies to generate higher returns on the export market.

In northern China, where soybeans traditionally have been grown, water tables are dropping at a rate of 3 to 10 feet a year, according to Wu Aimin, a researcher with the China Groundwater Information Center in Beijing.
“It takes a thousand tons of water to produce one ton of grain,” said Lester R. Brown, president of the Earth Policy Institute, an environmental research and advocacy group. “So the most efficient way to import water is in the form of grain.”

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SHANGHAI, China (AP) -- Wen Jiabao flies to Japan this week on the first visit by a Chinese premier in almost seven years, evidence that ties are on the mend after nearly collapsing over long-festering disputes tied to the legacy of Japan's World War II aggression.
Expectations for the visit are mixed, yet the mere fact that Wen is going reflects a stark turnaround in ties that began with an icebreaking visit to Beijing by Japanese Prime Minister Shinzo Abe last September.

"I feel strongly that my trip has a real mission," Wen told Japanese reporters in Beijing ahead of the three-day visit starting Wednesday. "Sino-Japanese relations are at a critical stage, and both countries should make an effort to push forward ties."

Wen plans to address lawmakers and issue a joint statement with Abe expressing their "aspirations to build a strategic and mutually beneficial relationship." Military cooperation, economic dialogue, and collaboration on energy conservation, environmental protection and finance are also on the agenda.

"Both sides, but particularly China, want to put a 'floor' beneath relations," said David Shambaugh, director of the China Policy Program at George Washington University in Washington D.C.

Since Abe's visit last autumn, the two sides have tried to set aside rancorous issues dating back to World War II that erupted into sometimes violent anti-Japanese protests in 2005, including a brief siege of the Japanese consulate in Shanghai by a mob of thousands.

China has long accused Japan of trying to whitewash history, both in comments by politicians and in school history textbooks.

Visits by Abe's predecessor, Junichiro Koizumi, to Tokyo's Yasukuni Shrine that honors dead soldiers -- including executed war criminals -- were the direct cause behind the break in contacts, which extended even to one-on-one meetings at multinational forums.
Territorial disputes and conflicting claims to gas deposits in the East China Sea added to the friction, threatening to disrupt thriving economic ties and unnerving neighbors, who urged the two to resolve the impasse.

As Koizumi left office, Beijing and Tokyo moved swiftly to get relations back on track. Abe visited just two weeks after taking up his post.
Hardened relationship"Both sides felt the relationship had hardened too much," said Dali Yang, chair of the political science department at the University of Chicago.

Chinese leaders and the state-controlled media have toned down their anti-Japanese rhetoric, responding only mildly to Abe's push to reform Japan's pacifist constitution to give the military a bigger profile. Provocative moves such as Abe's comments downplaying Japan's responsibility for consigning sex slaves to military brothels have drawn an unusually calm response.

Abe, whose popularity at home has slumped, has also stayed away from Yasukuni, although he hasn't said whether he would forgo such visits altogether.

Abe is "trying not to act churlish and looking at the long term," Yang said.

Yet, given the serious ane nearly intractable conflicts between Beijing and Tokyo, mere goodwill may have little impact. Wen's mission is more about managing the disagreements than putting them to rest.

Recent efforts by Chinese and Japanese historians to forge a consensus on sensitive wartime events broke down. There is no sign of progress on conflicts over offshore gas drilling and Japan's bid for a permanent seat on the U.N. Security Council -- a key grievance in 2005, remains a nonstarter for China, which holds veto-power as one of five permanent members.

Yet, backsliding into antagonism would suit neither.

"Abe wants to boost domestic support by handling of China relations well. China wants stability through improving ties," said Guo Dingping, a Japan scholar at Shanghai's Fudan University.

Wen's visit, which will follow a stop in South Korea, will emphasize the positive aspects of relations, including shared interests in trying to resolve tensions over North Korea's nuclear program.

Economic ties will also feature highly: Japan is China's third biggest trading partner and second largest source of foreign investment, with bilateral trade hitting $207.4 billion last year.

Balancing the need for pragmatism while upholding nationalist sentiments will be a key test of Wen's leadership, said Yu Maochun, a history professor at the U.S. Naval Academy in Annapolis, Maryland.

"In all of China's dealings with its neighbors, Japan remains the toughest nut to crack," Yu said.

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BEIJING, China (AP) -- More than 12 million Chinese are short of drinking water because of a widespread and long drought over many parts of the country, state media reported.

Xinhua News Agency said the drought had hit the north, northwest and southwest of China, and had also affected 14 million hectares of arable land.

It quoted the State Flood Control and Drought Relief Headquarters as saying late Thursday that the three-month long drought had affected crop plantings in the southwestern city of Chongqing and in Sichuan, Guizhou and Yunnan provinces.

Tian Yitang, deputy chief of the office, said the situation would get worse in China's northern areas as little rain is forecast and temperatures are rising.
He said 11 million head of livestock were also suffering from drinking water shortages.

The drought comes after one last summer in the southwest that was the worst in 50 years. It caused more than $1.1 billion in economic losses, according to state media, leaving 18 million people without adequate drinking water in Chongqing and neighboring Sichuan province.

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KYOTO, Japan (Reuters) -- Chinese Premier Wen Jiabao's visit to narrow rifts with Japan shifted away from summitry and pomp Friday, as he arrived in Japan's ancient capital for a tea ceremony, chats with students and baseball.

The trip to Kyoto came a day after Wen -- the first Chinese leader to visit Japan since 2000 -- addressed Japan's parliament with a message of friendship, tempered with a warning not to forget the wartime history that has long dogged bilateral ties.

A spokesman for China's Foreign Ministry said he did not know whether Wen would pitch or bat in his cameo baseball performance, but he said there was a larger purpose to the spectacle -- to court Japan's public.

"Baseball is a very popular sport among Japanese people, especially young people," spokesman Liu Jianchao told reporters late on Thursday. "I hope that if he's batting, it's a home run."

In a sign that tensions remain, members of Japanese right-wing groups, in dozens of trucks with loudspeakers blaring anti-Chinese slogans, cruised the streets near the former Imperial Palace where Wen was to arrive for a welcoming ceremony.

"China is stealing Japan's resources," shouted one, referring to a dispute over oil and gas reserves in the East China Sea.

The combination of summitry and common touch is intended by both sides to build on a fragile detente that began with Japanese Prime Minister Shinzo Abe's October trip to Beijing.

Japanese media welcomed Wen's trip, which has been marked more by symbolism than concrete breakthroughs, although caution over the future remained.

"Visiting Chinese Premier Wen Jiabao's speech to Parliament shows the Chinese stance toward Japan is undergoing a transformation," said the conservative Yomiuri newspaper.

Japanese media also applauded the fact that Wen acknowledged Tokyo's past apologies for its wartime acts and expressed gratitude for massive foreign aid Tokyo has given China.
Improving ties 'irreversible'China's official media were cautiously optimistic.

"The two sides have drafted concrete actions to take to improve ties, and this demonstrates that the efforts are not hollow talk," said a commentary in the overseas edition of the People's Daily.

The paper said pressure on Abe from "rightist forces" in Japan was still a worry, but added: "Although it takes more than one day to melt the thick ice, the trend of improving bilateral ties is irreversible."

Wen has sought to use his human touch as a diplomatic tool -- chatting with Tokyo residents during a morning jog and telling guests at a reception that his mother had praised his speech to the Japanese parliament when they chatted by phone.

Between smiles and handshakes, however, Wen has made pointed reminders that China remains wary of Japan's handling of the legacies from its bloody occupation of much of Asia, including China, up to 1945.

"The Chinese people suffered calamity during the war of invasion launched by Japan," Wen told the parliament, noting apologies offered in past years by Japan's leaders.

"We sincerely hope that Japan will manifest this stance and promise in practical actions."

Wen's speech was the first by a Chinese leader to Japan's parliament in 22 years, another milestone in the diplomatic thaw between the two Asian giants, whose economies are deeply linked.

Tokyo and Beijing fell out during the five-year term of Abe's predecessor, Junichiro Koizumi, who paid his respects each year to Tokyo's Yasukuni war shrine, seen across much of the region as a symbol of past militarism.

Wen did not explicitly mention the shrine in his speech, but in an interview before his visit he pressed Abe not to go. Abe has paid his respects before at Yasukuni, but has declined to say if he will do so as prime minister.

Wen also had tough words about Taiwan, the former Japanese colony that has been divided since 1949 from mainland China, which says the island must accept eventual reunification.

China has criticized Japan for being too sympathetic to forces favoring Taiwan's full independence from Beijing.

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Chen Jing was one of the lucky ones. The 56-year-old retiree, who lives in Shanghai, dabbles a bit in local stocks, exchanging investment tips with what she calls her "mah-jongg friends," a group that gets together each week to play and chat. Just before the Chinese New Year holiday last month, one of her friends spoke ominously of rumors that China's government was planning a crackdown on stock speculation, including a possible tax on capital gains. Over the past 18 months, Chen's small portfolio had almost doubled in value as the Shanghai market shot straight up. So she decided to pull the plug, suddenly afraid it would all go sour. "I sold everything just before the holiday," she says, and was blithely unaware that the Shanghai stock index plunged 8.8% on Feb. 27, its biggest one-day drop in a decade. Roller-coaster rides are not unusual for China's stock markets, which sometimes resemble a casino in Macau. What happened next, however, was decidedly unusual. Investors in New York's equity markets woke up, saw that Shanghai had tanked, and had a collective heart attack: they sent the Dow Jones industrial average down more than 400 points, its biggest single-day drop since Sept. 17, 2001—the first trading session after the terrorist attacks of 9/11. The drop in New York, in turn, fueled fear in markets across Asia the following day, and suddenly investors were seized by visions of a rerun of 1997's "Asian contagion," when a financial crisis in Thailand triggered stock crashes from Jakarta to Moscow to New York. On Feb. 28, as this new outbreak of investor gloom spread, India's main stock index tumbled 4%, Singapore's dropped 3.7%, Japan's fell 2.9%, South Korea's lost 2.6%, and Hong Kong's slipped 2.5%. This chain reaction plainly demonstrated the increasingly prominent place China now occupies in the minds of global investors. Its extraordinary economic rise has been a key reason for soaring demand for everything from copper to oil to cars, much to the benefit of multinational and Chinese companies alike. But while investors are right about China's economic importance to the world, they're clearly still confused about how to interpret a decline in Chinese stocks. There's little question that the reaction to China's market swoon was overwrought, and that this is not a replay of 1997. Rarely, if ever, has the global economy been stronger than it is now—one reason why so many stock markets have been so healthy for so long. If anything, what the Shanghai shock provided was a reason for investors—finally—to get real: relentlessly rising stock prices virtually everywhere had dulled their sense of risk to the point where "anything—somebody sneezing—could have triggered this," says Sean Darby, head of regional strategy at Nomura International in Hong Kong. "We've ignored risk globally for a long time." Indeed, before this sudden attack of fear, China's market had risen 11% in just six trading sessions, having already soared an astonishing 130% last year. It was about time for a sharp reminder that what goes up occasionally comes down. That said, many China bulls were soon back in the game: on Feb. 28, much to the doomsayers' surprise, Shanghai's main stock index jumped nearly 4%. In any case, given a day or two of reflection, global investors should begin to realize that what happens to China's stock markets actually has little bearing on the nation's white-hot economy, let alone on other countries' economies. In China, "the stock market is really, really small compared to the overall economy," says Michael Pettis, a professor of finance at Peking University and an expert on China's markets. "Participation is limited. You're not going to see a wealth effect"—a decline in consumption because people feel poorer when stocks fall—"and companies don't use the market as a major tool of financing." Investors who thus savaged the stock of, say, Caterpillar Inc., a heavy-equipment maker in Peoria, Illinois, because they feared the company's booming China business was suddenly going to fall off the cliff should probably rethink that a bit. As Jun Ma, the chief economist for greater China at Deutsche Bank in Hong Kong, says, "We do not see any significant impact of this market correction on China's real economy. We remain bullish on the fundamentals of the economy," which is still steaming ahead this year at a growth rate of nearly 10%. A more sensible explanation for the panicked reaction in other markets to the tailspin in Shanghai is that it was simply an excuse to take some money off the table. The Dow Jones industrial average, for example, had recently hit all-time highs, having gone up for five straight years as American corporate profits soared. There hadn't been a single day in nearly four years in which U.S. stocks had fallen even 2%, an unusually long absence of volatility. Likewise, global markets from India to Singapore to Russia had been on a historic tear. Against this backdrop, China's sudden return to earth was a reminder that risk still exists and that widespread euphoria may have led investors to lose sight of economic reality. It was certainly no coincidence that this week's outbreak of market jitters came on the heels of some disquieting economic data. On the same day that Shanghai stumbled, the U.S. Commerce Department reported that orders of durable goods in America—a key indicator of economic health—had fallen sharply in January. That followed an unnerving speech by someone many consider the great economic forecaster of our era, former Federal Reserve Chairman Alan Greenspan. On Feb. 26, he warned in a speech that investors couldn't rule out the possibility of a U.S. recession in 2007, noting that corporate profit margins "have begun to stabilize, which is an early sign we are in the later stages of a cycle." Most economists had figured the U.S. was downshifting from a growth rate of 3.5% to about 2%, but few had predicted a recession. Greenspan's warning was particularly chilling because the truth is, the health of the massive U.S. economy—not the performance of Chinese stocks—is the single most critical variable that global equity investors confront. That helps to explain why, for example, Japan's stock index took such a hit on Feb. 28 after approaching a seven-year high earlier in the week. Toyota, Sony et al would surely feel it if a slowdown in the U.S. proves sharper than expected. But will it? On the same day that the dismal durable-goods number came out, a monthly survey of U.S. consumer confidence rose unexpectedly, and so did the latest figures for existing U.S. home sales. In other words, a painful U.S. slowdown is not, by any means, a given. And for those who are suddenly taking their cues from China, there is also this heartening thought: the Chinese have just welcomed in the Year of the Pig on the lunar calendar, which means investors in the U.S., at least, should be delighted. According to an investing website called the Kirk Report, in all but one Year of the Pig since 1935, both the Dow Jones industrial average and the S&P 500 have gone up—usually sharply. Of course, it's true that the past doesn't necessarily predict the future; then again, neither does the Shanghai stock market.