Neighbors Test China's New Tough-Guy Image

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Back in 1948, Mao Zedong pooh-poohed U.S. military power as a "paper tiger"; half a century later the gibe may be rebounding. A week of furious saber rattling — including the announcement of neutron-bomb capability and reports that the Chinese army was on full alert — failed to deter Taiwan’s President Lee Teng-hui on Tuesday from reiterating his policy shift away from the "One China" concept toward "state-to-state" relations with Beijing. And as if Taiwan's thumbing its nose at Asia’s mightiest military power weren’t humiliation enough for Beijing, the Philippine navy on Tuesday sank a Chinese fishing vessel in the waters off the Spratly Islands, which are claimed by both countries. "Beijing wants to assert itself as a regional superpower, but it’s a feeble one because China lacks the infrastructure to handle its internal problems, much less to project its power," says TIME U.N. correspondent William Dowell. "For one thing, it lacks the ability to provide air cover for any naval operations around the Spratlys. Even threatening Taiwan is dangerous, because if the threat becomes too serious, that would force the U.S. to intervene, and that could be even more humiliating for Beijing."

Independence-minded Tibetans may have taken heart from signs of a credibility gap in China’s military threats, but on Tuesday they received news that could set back their struggle for decades: China announced that it had found the world’s highest oil field, 15,000 feet above sea level in the disputed territory. "China would be even less likely to consider relaxing its grip on a Tibet with oil fields," says Dowell. "This is not good news for the Dalai Lama." For most nations, striking oil is counted as a blessing; for Tibetans it may be a curse.