A Chinese flag hovers in front of the Potala palace, the imposing hilltop landmark which once housed Tibet's exiled spiritual leader, the Dalai Lama.

A monument - supposedly to China's peaceful liberation of Tibet in 1951 - is also clearly visible from the Potala, an ever-present reminder of China's political dominance.

But Tibet is also being altered by China's economic drive, and Lhasa is a city on the make.

The streets, bustling with brand-name stores, speak of new prosperity.

Most are run by Han Chinese migrants, like Fan Zhengjiu, who travelled almost 2,000 km (1,250 miles) from the south-western city of Chongqing to open a mobile phone shop in Tibet.

"Business is better here where the market isn't as well developed," he said.

Mr Fan is the visible face of China's economic juggernaut, and sees himself as performing a public service.

"Everybody is coming here to build Tibet. Today's Tibet is richer than it used to be, and there's no question of us stealing jobs from Tibetans," he said.

Chinese influx

But at the site of the new railway which will connect Tibet to the outside world, there are few Tibetan faces.

This is China's prestige project, and is due to cost $3.2bn by the time it opens in 2007.

Beijing says it will bring economic development and progress to Tibet. But critics say it will open Tibet up to an ever larger flood of Chinese migrants.


Many people work on a new Tibetan rail link, but almost all are Chinese
"We've come from all corners of the land to work here," said Li Fuyuan, a construction worker at one of the railway's new bridges. "There aren't any Tibetans on this construction site, as they don't have the right skills."

That is also the official justification used for the influx of Chinese workers.

Yu Heping, Deputy Director of the Development and Reform Commission of Tibet, said Han Chinese talent was necessary in order to push forward Tibet's development.

"The Tibetan Autonomous Region lacks the skilled workers for its modernisation drive. So in its economic construction, it is only normal that we have some technicians and skilled workers coming here to help us with the construction," he said.

It seems Tibetans are playing little part in building their own future. Anne Callaghan from the Free Tibet Campaign said there was a pattern of discrimination at work.

"Chinese settlers in Tibet are given preferential tax treatment, and are given the best jobs because the Chinese language is becoming increasingly dominant in Tibetan society as a result of the control of the Communist party.

"So Tibetans are still discriminated against in terms of education, in terms of employment and in terms of life opportunities," she said.

Chinese workers get paid almost double what we get

Zhaxi, construction worker
Off the busy tourist route, it is not hard to find signs of discontent.

Young Tibetans lounge around, unable to find steady work, or unhappy with the treatment meted out by their Chinese bosses.

"The Chinese workers get paid almost double what we get, " said one construction worker, Zhaxi.

"They always get more. And even when we do a good job, the Chinese always scold us and say we're not working hard enough."

Signs of prosperity

But the Chinese government wants to promote a very different face of Tibet.

On a recent tour, foreign journalists were taken to Gongzhong village, the first in Tibet to have telephones installed.

The income there, earned mainly from tourism and transporting goods, is 4,300 Yuan (US $519) a year, almost three times the average in the Tibetan countryside.


Many Tibetans feel they are not benefiting from modernisation
Officials told us it was representative of the future, and introduced us to the village chief, Tsedan Dorje.

His house is a solid stone building, and strings of yak cheese hang from the ceiling. The walls are adorned with pictures of the Communist Party leadership.

Tsedan Dorje said he joined the party "not just to become rich, but to help the local people here become rich together.

"I can get a better life with the help of the party policy, but with Buddhism I couldn't do this," he said.

This crude propaganda exercise is a useful summary of China's blueprint for Tibet - that rising living standards will blunt religious and political aspirations.

And it is true that some locals are also cashing in on the money flow, like Phurbu Zhaxi.

The alcohol flows at his club, the hottest nightspot on the roof of the world.

Staffed by Tibetans, it is where the new local middle class rubs elbows with the Chinese settlers.

But even Phurbu Zhaxi admits locals are being marginalised.

"Most of my employees come from the countryside. They come here to find work, but can't find any so we give them a job here," he said.

The biggest attraction at his club is the nightly floorshow, during which Tibetans in traditional costumes twirl and sway, gyrating around two men dressed up as a yak.

For now, Phurbu Zhaxi is making money repackaging Tibet's heritage for the modern age.

But China's political and economic influence threatens to undermine local culture, just as Tibetans risk being left behind by the modernisation taking place around them.

http://news.bbc.co.uk/2/hi/asia-pacific/3625588.stm