Asian shares capped by China PMI slip, U.S. budget worry

TOKYO (Reuters) - Asian shares were capped on Friday, with sentiment dented by lackluster manufacturing data from China and worries over the economic fallout from Italy's political confusion as well as possible U.S. spending cuts.

European markets are seen narrowly mixed, with financial spreadbetters predicting London's FTSE 100 <.ftse>, Paris's CAC-40 <.fchi> and Frankfurt's DAX <.gdaxi> would open between a 0.1 percent rise and a 0.2 percent fall. Italy's main FTSE MIB <.ftmib> stock market index is expected to open down 0.2 percent. <.l><.eu/>

A 0.1 percent drop in U.S. stock futures also hinted at a weak Wall Street start. <.n/>

But losses were limited by renewed confidence that major central banks will keep taking stimulative steps to support their economies.

China's factory growth cooled in February to multi-month lows after domestic demand dipped to weigh on firms already hit by slack foreign sales, two surveys showed on Friday, underlining the country's patchy economic recovery. But it does not signal China's economy is slipping into another slowdown, analysts said.

China's February official purchasing managers' index (PMI) came in at 50.1, slightly below a 50.2 Reuters poll consensus and the 50.4 posted in January. A private survey showed the final HSBC PMI fell to 50.4 after seasonal adjustments from January's two-year high of 52.3, in line with a flash reading.

"While comfort can be sought from the fact that the Chinese economy remains in expansion territory, the dip from prior PMI readings does illustrate that the recovery is far from linear and that there are still a few bumps in the road," said Tim Waterer, senior trader at Sydney-based CMC Markets.

The MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> was down 0.1 percent, after ending February up 0.5 percent, showing muted reaction to Chinese data.

Australian shares <.axjo> slipped 0.4 percent, pulling back from 4-1/2-year highs touched in the previous session, as big miners lost ground on lower metal prices. South Korean markets were closed on Friday for a public holiday.

The Australian dollar, which is sensitive to data from China, Australia's largest trading partner, was up 0.2 percent to $1.0230.

Japan's Nikkei stock average <.n225> erased earlier losses to rise 0.5 percent, lifted by expectations for strong reflationary measures from the Bank of Japan in coming months. <.t/>

Stocks in Indonesia edged higher to a fresh record. Data showed Indonesia's trade deficit narrowed slightly in January from the previous month as exports posted their smallest fall in nearly a year, reflecting recovering global demand and providing early hope that the nation's external balances may improve in 2013.

From Japan, Friday's data showed Japanese companies cut spending on plant and equipment in October-December by 8.7 percent from the same period last year, down for the first time in five quarters amid a slump in exports, showing the world's third-largest economy was still struggling to find a solid footing.

In contrast, a drop in new U.S. claims for jobless benefits last week and a sharp rise in factory activity in the Midwest in February suggested the U.S. economy is improving.

The relative outperformance of the world's leading economy over Japan's may soon turn the Japan-based yen selling into U.S.-led dollar buying, giving a fresh push higher in the dollar/yen, traders say.

The dollar inched up 0.1 percent to 92.65 against the yen.

One factor that could cloud such a positive outlook is the uncertainty over the possible extent of economic damage from the $85 billion in automatic across-the-board "sequestration" spending cuts in the United States set to begin taking effect on Friday.

"Financial markets are eerily calm about the issue. Nobody is talking about the sequestration, and I worry about the seeming lack of interest when market sentiment is far from stable after sharp swings following the Italian election," said Hiroshi Maeba, head of FX trading Japan at UBS in Tokyo.

He said reaction, if any, will likely come in equities and bonds first and spill over to forex, hitting risk-sensitive currencies which may possibly underpin the dollar.

The International Monetary Fund said on Thursday it would likely cut its 2013 growth forecasts for the United States by at least a 0.5 percentage point if the cuts are fully implemented. The IMF now projects that the U.S. economy will grow 2 percent this year.

"The $85 billion in spending cuts is simply too small to make much of a difference to the economy and although it could cause some problems, it will have no bearing on influencing investor allocations among different asset classes," said Ed Meir, an analyst at INTL FCStone, in a note.

U.S. crude fell 0.1 percent to $91.93 a barrel, after earlier hitting a 2013 low of $91.43. Brent crude fell 0.3 percent to $111.05 after falling to a six-week low of $110.86 earlier. Oil prices were weighed by concerns about the global economy and the strength of demand.

Spot gold inched down 0.1 percent to $1,578.81 an ounce after dropping more than 1 percent on Thursday and ending February with its fifth straight monthly drop, the longest string of monthly declines since 1996.

The euro was up 0.1 percent to $1.3074, but near a seven-week trough of $1.3018 plumbed earlier in the week.

(Additional reporting by Luke Pachymuthu and Rujun Shen in Singapore; Editing by Eric Meijer)

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Why Syria war is everybody's problem

Syrians search for survivors and bodies after the Syrian regime attacked the city of Aleppo with missiles on February 23.

STORY HIGHLIGHTS

• Frida Ghitis: We are standing by as Syria rips itself apart, thinking it's not our problem


• Beyond the tragedy in human terms, she says, the war damages global stability


• Ghitis: Syria getting more and more radical, jeopardizing forces of democracy


• Ghitis: Peace counts on moderates, whom we must back with diplomacy, training arms

Editor's note: Frida Ghitis is a world affairs columnist for The Miami Herald and World Politics Review. A former CNN producer and correspondent, she is the author of "The End of Revolution: A Changing World in the Age of Live Television." Follow her on Twitter: @FridaGColumns

(CNN) -- Last week, a huge explosion rocked the Syrian capital of Damascus, killing more than 50 people and injuring hundreds. The victims of the blast in a busy downtown street were mostly civilians, including schoolchildren. Each side in the Syrian civil war blamed the other.

In the northern city of Aleppo, about 58 people -- 36 of them children -- died in a missile attack last week. Washington condemned the regime of Bashar al-Assad; the world looked at the awful images and moved on.

Syria is ripping itself to pieces. The extent of human suffering is beyond comprehension. That alone should be reason enough to encourage a determined effort to bring this conflict to a quick resolution. But if humanitarian reasons were not enough, the international community -- including the U.S. and its allies -- should weigh the potential implications of allowing this calamity to continue.

Frida Ghitis

We've all heard the argument: It's not our problem. We're not the world's policeman. We would only make it worse.

This is not a plea to send American or European troops to fight in this conflict. Nobody wants that.

But before we allow this mostly hands-off approach to continue, we would do well to consider the potential toll of continuing with a failed policy, one that has focused in vain over the past two years searching for a diplomatic solution.

U. S. Secretary of State John Kerry has just announced that the U.S. will provide an additional $60 million in non-lethal assistance to the opposition. He has hinted that President Obama, after rejecting suggestions from the CIA and previous Secretary of State Hillary Clinton to arm Syrian rebels, might be ready to change course. And not a day too soon.

The war is taking longer than anyone expected. The longer it lasts, the more Syria is radicalized and the region is destabilized.

If you think the Syrian war is the concern of Syrians alone, think about other countries that have torn themselves apart over a long time. Consider Lebanon, Afghanistan or Somalia; each with unique circumstances, but with one thing in common: Their wars created enormous suffering at home, and the destructiveness eventually spilled beyond their borders. All of those wars triggered lengthy, costly refugee crises. They all spawned international terrorism and eventually direct international -- including U.S. -- intervention.

The uprising against al-Assad started two years ago in the spirit of what was then referred to -- without a hint of irony -- as the Arab Spring. Young Syrians marched, chanting for freedom and democracy. The ideals of equality, rule of law and human rights wafted in the air.

Al-Assad responded to peaceful protests with gunfire. Syrians started dying by the hundreds each day. Gradually the nonviolent protesters started fighting back. Members of the Syrian army started defecting.

The opposition's Free Syrian Army came together. Factions within the Syrian opposition took up arms and the political contest became a brutal civil war. The death toll has climbed to as many as 90,000, according to Kerry. About 2 million people have left their homes, and the killing continues with no end in sight.

In fairness to Washington, Europe and the rest of the international community, there were never easy choices in this war. Opposition leaders bickered, and their clashing views scared away would-be supporters. Western nations rejected the idea of arming the opposition, saying Syria already has too many weapons. They were also concerned about who would control the weaponry, including an existing arsenal of chemical and biological weapons, after al-Assad's fall.

These are all legitimate concerns. But inaction is producing the worst possible outcome.

The moderates, whose views most closely align with the West, are losing out to the better-armed Islamists and, especially, to the extremists. Moderates are losing the ideological debate and the battle for the future character of a Syria after al-Assad.

Radical Islamist groups have taken the lead. Young people are losing faith in moderation, lured by disciplined, devout extremists. Reporters on the ground have seen young democracy advocates turn into fervent supporters of dangerous groups such as the Nusra Front, which has scored impressive victories.

The U.S. State Department recently listed the Nusra Front, which has close ties to al Qaeda in Iraq and a strong anti-Western ideology, as a terrorist organization.

Meantime, countries bordering Syria are experiencing repercussions. And these are likely to become more dangerous.

Jordan, an important American ally, is struggling with a flood of refugees, as many as 10,000 each week since the start of the year. The government estimates 380,000 Syrians are in Jordan, a country whose government is under pressure from its own restive population and still dealing with huge refugee populations from other wars.

Turkey is also burdened with hundreds of thousands of refugees and occasional Syrian fire. Israel has warned about chemical weapons transfers from al-Assad to Hezbollah in Lebanon and may have already fired on a Syrian convoy attempting the move.

Lebanon, always perched precariously on the edge of crisis, lives with growing fears that Syria's war will enter its borders. Despite denials, there is evidence that Lebanon's Hezbollah, a close ally of al-Assad and of Iran, has joined the fighting on the side of the Syrian president. The Free Syrian Army has threatened to attack Hezbollah in Lebanon if it doesn't leave Syria.

The possible outcomes in Syria include the emergence of a failed state, stirring unrest throughout the region. If al-Assad wins, Syria will become an even more repressive country.

Al-Assad's survival would fortify Iran and Hezbollah and other anti-Western forces. If the extremists inside the opposition win, Syria could see factional fighting for many years, followed by anti-democratic, anti-Western policies.

The only good outcome is victory for the opposition's moderate forces. They may not be easy to identify with complete certainty. But to the extent that it is possible, these forces need Western support.

They need training, funding, careful arming and strong political and diplomatic backing. The people of Syria should know that support for human rights, democracy and pluralism will lead toward a peaceful, prosperous future.

Democratic nations should not avert their eyes from the killings in Syria which are, after all, a warning to the world.

Follow us on Twitter @CNNOpinion.

Join us on Facebook/CNNOpinion.

The opinions expressed in this commentary are solely those of Frida Ghitis.

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Tax on pack of cigarettes sold in Chicago up $1 to $6.67

On the eve of a $1-per-pack Cook County cigarette tax increase, County Board President Toni Preckwinkle stood in the glow of X-rays showing damaged lungs, surrounded by some of Stroger Hospital's top pulmonary specialists as she discussed how smoking shortens people's lives.

The setting and talking points made clear the message Preckwinkle wanted to convey Thursday: This is a public health problem, one she plans to fight by giving smokers an incentive to quit and teens a reason not to start.

But the county's tax increase is more than just a campaign to protect people from emphysema and lung cancer. Preckwinkle is counting on $25.6 million this year from the move to help balance the budget. The history of cigarette tax increases suggests the county will be lucky to get that much in 2013 and should expect diminishing returns in the years ahead.

Smokes are a financial well that public officials have gone to repeatedly to shore up shaky finances at the local and state level. When the county tax increase takes effect Friday, a pack of cigarettes purchased in Chicago will come with $6.67 tacked on by the city, county and state. That's just behind New York City's nation-leading $6.86 in taxes per pack. It will also push the cost of a pack of cigarettes in Chicago to as much as $11.

Recent cigarette tax increases have had only a short-term benefit to the government bottom line. Some people quit, while others buy cigarettes online or outside the county or state.

When the county last raised the cigarette tax — by $1 per pack in 2006 — collections initially shot up by $46.5 million, hitting $203.7 million, county records show. But by 2009, the county collected $20.4 million less than it had in 2005.

Mayor Richard M. Daley bumped up the city of Chicago's share of the cigarette tax by 32 cents in 2005 and another 20 cents in 2006, to 68 cents per pack. He saw collections rise from $15.6 million in 2004 to $32.9 million in 2006, according to a city report. But city cigarette tax revenue fell to $28.4 million in 2007, and continued dropping to $18.7 million by 2011, records show.

At the state level, Quinn pushed through a $1-a-pack hike in June.

Before that, state lawmakers and Gov. George Ryan agreed on a 40-cent increase in 2002. Cigarette tax proceeds went up by more than $178 million in 2003, to $643.1 million, and rose to $729.2 million in 2004. The revenue then fell steadily to $549 million by 2010 before edging back up to $580 million last year, according to state records.

The county is preparing for the windfall from the $1 increase to be strong this year, then decline. County officials project that after bringing in $25.6 million for the remainder of this budget year, the increase will net about $29 million for 2014, $21 million in 2015, $15 million in 2016 and just $9 million in 2017.

Preckwinkle says that's OK with her.

"My hope would be that over the long run this is no longer a way in which governments look to raise money, because fewer and fewer people are smoking," she said. "So I would hope that we have the effect of reducing our revenue because more people quit."

The county could end up saving money as cigarette tax revenue falls because uninsured people with ailments related to smoking are such a heavy financial burden to the public hospital system, Preckwinkle said.

In the meantime, Preckwinkle pledged to hire more staff this year to crack down on stores selling untaxed packs and large-scale tobacco smuggling from surrounding states. "We anticipate that there may be some noncompliance, as there always is when you institute an increase like this," she said.

Preckwinkle also acknowledged that the higher tax rate will push some smokers into surrounding counties or Indiana to pick up their packs, but she predicted such cross-border runs will not last.

"While people may initially, when the prices rise, go to other states — Indiana, Wisconsin or wherever — over time that trek gets very tiresome and time-consuming, and they return to their former habits of buying their cigarettes nearby," Preckwinkle said.

But David Vite, president of the Illinois Retail Merchants Association, said he thinks the cigarette taxes in Cook County are now so high compared with surrounding areas that smokers will continue to make the longer drive, and Illinois stores near jurisdictions with lower taxes will struggle even more.

"You might see people return to their old patterns if we were talking about a slight disparity, say 25 cents a pack," Vite said. "But now we're talking about a difference of nearly $3 a pack compared to Indiana, almost $30 a carton. You're going to see guys working in factories saying, 'It's my week to make a run,' heading to Indiana and coming back with $1,500 worth of cigarettes for all their co-workers."

jebyrne@tribune.com

Twitter @_johnbyrne

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Risk assets rise on Fed stimulus vow, Italy debt sale

TOKYO (Reuters) - Asian shares, commodity currencies and oil rose on Thursday as sentiment improved after U.S. Federal Reserve Chairman Ben Bernanke reaffirmed his commitment to strong stimulus measures, while a smooth debt sale calmed nerves jangled by Italy's political deadlock.

European markets are seen extending gains for a second day, with financial spreadbetters predicting London's FTSE 100 <.ftse>, Paris's CAC-40 <.fchi> and Frankfurt's DAX <.gdaxi> would open as much as 0.6 percent higher. <.l><.eu/>

A 0.1 percent rise in U.S. stock futures also hinted at a firm Wall Street start. <.n/>

The MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> was up 0.3 percent and was set for a monthly gain of 0.7 percent.

Australian shares <.axjo> soared 1.5 percent, Hong Kong shares <.hsi> added 1.2 percent and Indonesian stocks <.jkse> continued their bull run to hit another historic peak after closing on Wednesday at a record.

Japan's Nikkei stock average <.n225> climbed 1.3 percent as the yen softened. <.t/>

The yen was defensive, with Japanese Prime Minister Shinzo Abe nominating Asian Development Bank President Haruhiko Kuroda as Bank of Japan governor, and academic Kikuo Iwata as one of the two deputy governors. Both are seen by markets to support Abe's call for unconventional reflationary stimulus measures, and that view has underpinned yen selling.

Italy's inconclusive election last weekend raised fears that the euro zone's third-largest economy could abandon its fiscal reforms, but analysts and traders say they expect Rome to pursue a basic austerity path to pare down its huge debt, even if is at a more moderate pace, and that the European Central Bank will stand ready to provide funding support if needed.

The rally in equities and other risk assets showed the dimming appeal of safe-haven investments. A day after slumping nearly 1 percent on Wednesday, spot gold traded little changed around $1,597 an ounce and was headed for its longest run of monthly declines in more than 16 years.

"Gold's sentiment remains fickle, as it lacks a significant catalyst to propel the rally into the 13th year and people are more sensitive to even slightly bearish signs," said Chen Min, an analyst at Jinrui Futures in the southern Chinese city of Shenzhen.

Bernanke, speaking before Congress for a second day, downplayed signs of internal divisions, saying the policy of quantitative easing has the support of a "significant majority" of top central bank policymakers.

Uncertainty over an imminent U.S. fiscal tightening could dampen the positive mood, however, as President Barack Obama and Republican congressional leaders have not reached a deal to avoid the $85-billion in automatic "sequestration" spending cuts, due to start on Friday.

Regional data released on Thursday was mixed.

Australian business investment showed a surprise fall last quarter as firms outside the red-hot mining sector cut back, while estimates of future spending confirmed the long boom in resource investment was likely to end this year.

Japan's industrial output, on the other hand, rose for a second straight month in January, offering some evidence that the export-reliant economy may be emerging from a mild recession, taking strength from a pick-up in global demand and the weaker yen.

ITALY SURVIVES

Italy's borrowing costs rose to a four-month high on Wednesday at the first bond auction since this week's inconclusive election but solid demand from domestic investors eased fears that the political deadlock could destabilize Europe's second-biggest sovereign debt market.

"Indeed there is room for optimism -- if the Italian risks remain contained -- as signals of stabilization continue to emerge," Barclays Capital said in a note.

The euro inched up 0.1 percent to $1.3143, well above a seven-week low of $1.3018 on Tuesday.

Others were more cautious.

"While confidence is high, there are still risks present. Negative political news from Italy may provide headwinds, while the looming 1 March deadline for the U.S. sequester could trigger $85 billion of across-the-board budget cuts," said Miguel Audencial, a sales trader with Sydney-based CMC Markets.

The yen steadied around 92.24 against the dollar. The yen hit its lowest since May 2010 of 94.77 on Monday before the outcome of the Italian vote rattled financial markets and sent the yen soaring to 90.85 yen.

The yen eased 0.1 percent against the euro to 121.19 after jumping to 118.74 on Monday.

U.S. crude rose 0.3 percent to $93.02 a barrel while Brent rose 0.2 percent to $112.07.

(Additional reporting by Luke Pachymuthu and Rujun Shen in Singapore; Editing by Eric Meijer)

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Americans try to reach WBC title game at last

SCOTTSDALE, Ariz. (AP) — Ryan Vogelsong has a little running joke that he is going to plunk San Francisco teammate Pablo Sandoval in the World Baseball Classic to keep the Panda from a three-homer game like the one he produced in Game 1 of the World Series last fall.

Sandoval plans to play nice once he pulls on the Venezuela uniform.

"He's my teammate, I don't want to fight," Sandoval said with a smile.

Both know the team to beat: Two-time WBC winner Japan.

Joe Torre is returning to the top step of the dugout to manage the Americans, who have yet to even reach the championship game of this hugely popular international event.

Team USA has plenty of motivation to make up for two poor showings in this tournament. The Americans didn't get out of the second round in 2009, then lost in the semifinals to Japan three years later. Now, they are making plans to reach the semifinals and final at San Francisco's AT&T Park.

"We'll probably be disappointed if we don't make it to San Francisco," said Vogelsong, slated to be the No. 2 starter in the U.S. rotation. "First and foremost, we're focused on getting there."

The Japanese topped Cuba in the inaugural Classic in 2006, then South Korea three years later. Japan is known for its rigorous spring trainings, which typically begin a couple of weeks before the major league clubs and feature all-day workouts with just a short break to eat.

"It's such a dedicated group of players. I go back to going over to Japan as a member of the Mets back in '74 and just noticing and at that time I didn't think necessarily that the Japanese could play at our level, maybe stature-wise," Torre recalled. "Even though their game was clean and disciplined, it just didn't look like they were as good as we were. That's certainly has changed."

Rockies slugger Carlos Gonzalez will play alongside Sandoval for Venezuela. The World Series champion Giants have had to plan carefully this spring to get through the Cactus League with much of their roster headed to the WBC — Marco Scutaro on Venezuela, Angel Pagan and Andres Torres on Puerto Rico, Vogelsong and reliever Jeremy Affeldt on the U.S. team, closer Sergio Romo pitching for Mexico.

"It's my first time representing and I'm really looking forward to doing it," Pagan said. "The first two Classics I couldn't do it because I was either trying to make a team or I was trying to be the everyday player. It fills my heart to go out there and play in front of my countrymen and in front of my family. I did it when I played in New York and Puerto Rico but it's not the same when you're wearing the P.R. jersey. It's going to be a little different, and I'm ready."

And CarGo sure is confident in Venezuela's chances.

"I don't think we need practice — Venezuela doesn't need practice," he said. "Japan, they train together for a long time and get prepared for that. We don't really get prepared for that, we all focus on our teams. 'OK, you've got to go play for your country.' We're all going to be blind, put the uniform on, let's play."

Many players are torn between playing for their country or playing for the club that signs their paycheck — especially those who might be on the bubble of making the roster or earning a starting job.

Gonzalez said the Venezuelans feel tremendous pressure to take part in the Classic, yet he understands why Seattle ace Felix Hernandez has passed after signing a $175 million, seven-year contract earlier this month that made him the highest-paid pitcher in baseball.

"You have to represent your team," Gonzalez said. "You see all the news about King Felix not playing for Venezuela and the whole country changes, they get upset that you're not going to play for your country. They think it's all about the money but, you know what, we've been working since we were 16 years old and we came from Venezuela to represent. Especially King Felix, he's been playing since he was 16 with Seattle. He's a franchise player who was about to sign the biggest contract. It's crazy how people feel bad about it. He has to think about his future, he has to think about his family. I think made the right choice."

The inaugural 2006 Classic featured a pool-play format, while 2009 was double-elimination — and this one will be a combination of both. The first round will be pool play, with the top two teams advancing. The second round is double-elimination, and the top two teams will reach the semifinals.

The Americans will play their round-robin games at the Arizona Diamondbacks' Chase Field in Phoenix.

"I'm not sure that our players weren't excited," Torre said of the previous two WBC tournaments. "The guys who have played this before were excited to get back to it. I think it's still something to get a little used to. Let's admit it, you play the USA team, MLB, even though there are a number of MLB players obviously playing for other countries, it's like putting on your Sunday best, you know, 'We're excited because we have a chance to beat them at their own game' so to speak."

Semifinals will be played March 17-18, with the championship March 19 in the Giants' waterfront ballpark.

That's where Sandoval cleared the fences three times in a Game 1 World Series win against the Tigers.

The guy known as Kung Fu Panda hopes to find his groove again for his country.

"I'm trying to get the Triple Crown," Sandoval said of the World Series, Venezuelan championship and World Baseball Classic.

Even if it does mean he gets hit by Vogelsong along the way.

___

AP Sports Writer Bob Baum contributed to this story.

WATCH FOR:

—Animated crowds so different than the regular MLB supporters, complete with instruments, patriotic chants, face paint and flags. More than 1.5 million fans have attended games in first two WBC tournaments.

—This year's field went from 16 in previous two events to 28 countries that had a chance to qualify. The top 12 nations from the last WBC were already in, then the other four determined from 28 teams through qualifying. The WBC winner will be named world champion for the first time.

—It's now a six-game, modified double-elimination format. The inaugural 2006 Classic featured a pool-play format, while 2009 was double-elimination — and this one will be a combination of both. The first round will be pool play, with the top two teams advancing. The second round is double-elimination, and the top two teams will reach the semifinals.

—Americans on a mission: Team USA has yet to reach the championship game of the first two Classics.

—Players will be subject to drug testing by the World Anti-Doping Agency.

—San Juan, Puerto Rico, will host games for the third time at Hiram Bithorn Stadium, to be played March 7-10.

—Sparkling new Salt River Fields at Talking Stick, the shared spring venue of the Arizona Diamondbacks and Colorado Rockies, will be on display for the world to see. The ballpark hosts Pool D games between the U.S., Italy, Mexico and qualifier Canada.

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Taiwan ebullient over Ang Lee's Oscar

STORY HIGHLIGHTS

• Ang Lee's name beamed on building in Taiwan after Oscar win


• Lee, born in Taiwan, won award for best director for "Life of Pi"


• Lee's win created excitement in Taiwan and China, both claimed him as their own


• Ryan: "In some ways it feels like 'Linsanity' all over again"

Editor's note: Andrew Ryan is a host and producer at Radio Taiwan International, a government-owned station that broadcasts in several languages and countries. He first came to Taiwan in 1996 as a Fulbright scholar and has spent the last 16 years as a translator and observer of politics and culture.

Taipei (CNN) -- It's not every territory in the world that puts an Oscar-winning director's name up in lights on a towering building. But that's just the sort of thing that happens in Taiwan -- and it did on Monday night after Ang Lee picked up his second "Best Director" Oscar, this time for "Life of Pi."

The moment wasn't just celebrated in grand statements, but in small scenes played out in front of televisions across Taiwan when his name was announced.

I was at a TV station in Taipei that was broadcasting live coverage of the Oscars, working with a team of translators that was creating the subtitles for the rebroadcast. When Lee's name was announced the office erupted in applause. Down the hallway, more cheering could be heard.

READ: Oscar winners: Analysis of who won

I couldn't help but think back to the Athens Games in 2004, when Chen Shih-hsin won Taiwan's first ever Olympic gold medal (under the team name "Chinese Taipei"). Even veteran news anchors shed tears when the young taekwondo star defeated her Cuban rival.

It would be reductive to suggest that these displays of patriotism are simply the response of a small country that just doesn't crank out that many Oscar winners or Olympic golds. It also speaks of a place that has been largely marginalized in the international community.

Today, Taiwan has just 23 official diplomatic allies -- mostly other marginalized nations, in Central America and Africa. That's because China still sees Taiwan as part of its territory more than 60 years after the Chinese Nationalists retreated to the island at the end of a Civil War against the Communists. The Nationalists -- or Kuomintang -- are now the ruling party in a democratic Taiwan, which is officially called the Republic of China (ROC) -- not to be confused with the People's Republic of China on the Mainland.

Having lost its seat at the United Nations to the PRC in 1971, the ROC found itself with a diminished voice in the international community. It turned to manufacturing and technology in the 1980s, spurring on what is now referred to as an "economic miracle." Today, with its economy struggling to move past the global economic downturn, Taiwan has added the arts, sports, and even baking to its repertoire.

READ: Oscars 2013: Hollywood gets political

What's striking about Lee's win is that it's not just people in Taiwan who were quick to claim him as one of their own. In China, the state-run Xinhua news agency referred to him as "Chinese-American." While Taiwanese media latched onto the portion of Lee's acceptance speech when he thanked Taiwan and the central city of Taichung where much of the movie was filmed, Xinhua's main story included Lee's line of thanks to the 3,000 people who worked on the film for "believing this story and sharing this incredible journey with me."

In some ways it feels like "Linsanity" all over again, when Taiwan and China both claimed basketball star Jeremy Lin as their own, leaving the international media struggling to chart the dangerous waters of identity politics to correctly describe him.

VIEW: Photos from the red carpet

A very small voice at the fringe of the discussion wonders why it's important for people to know that Lin's paternal grandmother lives in Taiwan and referred to him as "a real Taiwanese," or that Lee grew up in Tainan and still loves to visit his favorite noodle shop there. Others in Taiwan question why a nation's confidence should be based on its success in the international community.

When Ang Lee's name was announced, the office erupted in applause. Down the hallway, more cheering could be heard.
Andrew Ryan

With China looming to the north, now the world's second biggest economy and wielding an influence that's verging on "superpower" status, the metaphor of Jonah and the whale comes to mind. The Taiwanese electorate is sharply divided on how it feels about the way ties with China have warmed ever since President Ma Ying-jeou first took office in 2008. The benefits are obvious, considering China is Taiwan's largest trade partner, but some worry that it could lead to a loss in autonomy.

INTERACTIVE: Oscars by numbers

The Ma administration has been mindful of the nationalistic rhetoric of the opposition, and although the president was born in Hong Kong, he has referred to himself in the past as "Taiwanese as well as Chinese." Ma was also quick to congratulate Lee following the Oscars, and to urge others to follow in the director's footsteps and "work hard at promoting Taiwan to the world."

Lee is just one name on a growing list of national heroes that both the government and the private sector have celebrated in recent years for putting Taiwan on the map: people like fashion designer Jason Wu, who moved to Canada from Taiwan and has created garments for U.S. First Lady Michelle Obama; master baker Wu Pao-chun, who beat the French patissiers at their own competition -- Les Masters de la Boulangerie in 2010; Yani Tseng, the world's number one female golfer; and even the humble vegetable seller-turned-philanthropist Chen Shu-chu, who was selected by Time Magazine as one of its heroes of 2010.

So what are people saying when they embrace these heroes as Taiwanese? They are saying "Taiwan may be small and diplomatically isolated, but it deserves to have a voice in the international community." While Lee may not speak about politics and no longer creates movies about Taiwan, he does have a voice and people do listen. And that's worth spreading in lights across the world's second-tallest building.

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The opinions expressed in this commentary are solely those of Andrew Ryan.

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Chicago archdiocese to close 5 schools in cost-cutting move

Budget cuts announced Wednesday by the Archdiocese of Chicago signal that the area's Roman Catholics are entering a period of austerity when there will be less money for their parishes and schools.

The cuts, which were officially announced as Cardinal Francis George and other leaders of the church gathered at the Vatican to select a new pope, include closing five schools, eliminating 75 positions at the archdiocese's headquarters and placing a moratorium on loans to parishes from the archdiocese bank for three years. Other changes include creating stricter guidelines for local parishes applying for subsidies and reducing the number of the agencies in the archdiocese.

George, who spoke publicly about the cuts when asked by reporters in Rome, said they are needed to address the archdiocese's chronic financial problems. The archdiocese has run deficits of more than $30 million annually over the last four years, including being $40 million in the red for the fiscal year ending in June 2012.

All told, the measures will save tens of millions of dollars over the next few years, officials said.

“The expenses have gone up, and the income is pretty well flat,” George said after a news conference in Rome about Pope Benedict XVI's last audience Wednesday in St. Peter's Square. “We tried to ride out the recession without making any changes — and we can't do that. We're giving more grants to parishes and schools that need more money. The budget is not balanced. Not just layoffs, but a lot of other things being done, other ways to use the resources we have.”

The archdiocese sold $150 million in bonds in 2012 that helped it get through a cash-flow problem, but ultimately that wasn't enough, George said. He hopes the cuts will enable the archdiocese to balance its budget in two years.

Although the cardinal's announcement made headlines, the archdiocese's financial situation has been no secret to its priests. Several clergymen said they knew the archdiocese had planned to scale back loans to parishes.

“We have already made adjustments,” said the Rev. Dennis Ziomek of St. Barbara Parish in Chicago's Bridgeport neighborhood. “We have to be responsible stewards with the money.”

In a letter posted on the archdiocese website, the cardinal thanked parishioners for their generosity and asked them to pray for the employees now out of a paycheck.

At the archdiocese's Pastoral Center headquarters on Wednesday, people funneled in and out of the building during their lunch breaks but declined comment on the layoffs. Before the announcement, staffers received memos asking them to report to their desks early Wednesday.

Of the 75 positions, 55 were full-time jobs. Sixty people were let go, while the remaining posts had been vacant. Those cuts are expected to save $11 million to $13 million annually by fiscal 2015, George wrote in his letter.

Employees who received pink slips will get job counseling, extended health benefits and generous severance packages.

“We're keeping up counseling for helping people find jobs, looking for places where they might look for jobs,” George said.

Along with the layoffs, the archdiocese will reduce the number of capital loans and grants it gives parishes, while creating “stricter criteria” for them to qualify for the financial assistance.

A Parish Transformation initiative in the works for at least two years will also try to save money by laying out measures to provide more financial stability, though the letter did not give details.

Those cuts are expected to save an additional $13 million to $15 million annually by fiscal 2015, the letter states.

By next year, the archdiocese will reduce its aid to Catholic schools by $10 million. It plans to give scholarships to children affected by the five school closings so they can attend nearby Catholic schools. Officials said low enrollment was a key factor for closing the schools: St. Gregory the Great High, St. Paul-Our Lady of Vilna Elementary and St. Helena of the Cross Elementary in Chicago, plus St. Bernardine in Forest Park and St. Kieran in Chicago Heights.

Now, Catholic schools will start relying on scholarships for student financial aid instead of grants from the archdiocese to make tuition affordable, Superintendent Sister Mary Paul McCaughey said.

She pointed to a new partnership with the Big Shoulders Fund, a charity supporting urban Catholic schools, that will help families pay for school with scholarships.

McCaughey did not expect tuition at other Catholic schools to immediately rise because grants from the archdiocese have been reduced. About two-thirds of schools already have posted their tuition rates for the upcoming school year, she added.

“Although things are challenged, I think (Chicago) is a Catholic community that's always supported its schools,” McCaughey said. “I think the support will be there.”

Outside of St. Bernardine Elementary in west suburban Forest Park, one of the schools that will close this summer, Maria Maxham said she was devastated when she heard last month that she'd have to send her children, one in second grade and the other in fourth grade, to a different school.

Maxham, who lives in Forest Park, said she is not sure the two will attend another local Catholic school because some lack what she thought was St. Bernardine's strength.

“There is so much diversity at St. Bernardine, and that's part of what makes it so fantastic,” Maxham said. “It was a special place and a second family for us.”

The school, which has been open since 1915, has about 100 students currently enrolled in its preschool-through-eighth-grade classrooms.

Administrators, teachers and parents were notified of the closing in January, when McCaughey led a meeting at the school and explained the large amount of money that the archdiocese needed to reduce from the schools budget, Principal Veronica Skelton Cash said.

One family left the school shortly after hearing the news, she added.

Cash, who joined the school in the fall, said there was much frustration among staff members afterward. Many believed they would have at least a few years to turn things around.

“I could see a lot of things changing for the better at this school,” Cash said. “The culture of the community is changing, and we were getting more and more inquiries about the school. There was momentum going forward.”

Current employees were given guidance on severance and benefits by the archdiocese's human resources officials, Cash said. Teachers without jobs will also be placed on a priority list for future employment with the archdiocese, she said.

“I'm incredibly disheartened,” said Daniel Kwarcinski, who hopes to find a job at another private school after teaching art for seven years at St. Bernardine. “There's a need for a school like this where we are at.”

In Rome, George said the decisions to let people go and reduce aid were not easy. But he reiterated that the archdiocese's financial situation drove the decision.

“We have to balance the budget, especially if it's precarious,” he said. “The growth being very slow means we can no longer ignore the kinds of deficit situations that have been imposed on us. We have to take action.”

Tribune reporter Manya A. Brachear reported from Rome, with Tribune reporters Bridget Doyle and Jennifer Delgado in Chicago.

mbrachear@tribune.com

bdoyle@tribune.com

jmdelgado@tribune.com

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