Here’s the story.  After the wave of persecutions during the latter half of the T’ang dynasty in the 9th century, Buddhism in China declined as a state protected religion demonstrating the ruler’s greatness.  Until then, some Chinese emperors had even claimed to be the Buddha incarnate.
Buddhism became a religion of the common people.  Among the monks who traveled the land, carrying all their worldly possessions in hemp bags, was an eccentric monk who lived more than a thousand years ago and who went by the name of Ho Tai.  Because of this monk’s benevolent nature, Hotei went around taking the sadness from people and became known as the Laughing Buddha.
The Laughing Buddha has become a deity of contentment and abundance and is considered the patron saint of restauranteurs, fortune tellers and bartenders, as well as the weak, the poor and children.  His name means “The Merciful.”    
The fan in his hand is seen as the ultimate symbol of happiness and joy.  The gourd that this Buddha carries on his staff is said to be filled with an elixir for eternal youth while the staff he carries over his shoulder supports a bag of infinite wealth. The cloth or sack (which never empties) is filled with many precious items including rice plants (indicating wealth), candy for children and food for the needy of the world. 
The begging bowl, often seen with him, represents his Buddhist nature but he is not Gautama Buddha, the historical founder of Buddhism.  However, he is identified as a “future” Buddha and a Boddhisatva.
 The term Bodhisattva was used by the Buddha referring to himself both in his previous lives and as a young man in his current life, prior to his enlightenment, in the period during which he was working towards his own liberation from the cycle of birth and death.  When, during his discourses, he recounts his experiences as a young aspirant, he regularly uses the phrase "When I was an unenlightened Bodhisatta...". The term therefore connotes a being who is 'bound for enlightenment', in other words, a person whose destiny it is to become fully enlightened.
In Chinese Buddhist temples, Ho Tai’s statue is traditionally placed in the front part of the entrance hall.  He is depicted in the familiar likeness of the Laughing Buddha – a stout, smiling or laughing shaved man in robes with a largely exposed pot belly stomach symbolic for happiness, good luck and plenitude.  The stomach is also considered the seat of the soul in Chinese mythology and so the large stomach can be taken as an allegory for Ho Tai’s open heartedness.
One belief surrounding the figure of Ho Tai in popular folklore is that if a person is to rub his belly, it brings forth wealth, good luck and prosperity.  This belief does not form part of any Buddhist doctrine, but it is certainly a very popular practice in China and even in the West.

This info excerpted from the Center for New Age Newsletter.First_Om_Wear_Collection.html
 
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