Whether stock markets or jobs, Chinese see only cash, cash, cash New adage puts money ahead of hoe


SHANGHAI -- Call it capitalism with Chinese characteristics.

* A middle-aged Chinese factory manager returning here from a business trip to Beijing settles into his airplane seat. The glint from his fat gold ring parallels his political views. "The government still preaches socialism," he says. "But I don't care what ism they preach. I just worry about making money."

* In this city and in the special economic zone of Shenzhen to the south, tens of thousands regularly joust with one another in long lines to buy a chance to purchase new issues on China's two fledgling but red-hot stock exchanges. Authorities were forced to suspend trading on the Shenzhen market Tuesday after a wild riot ensued among frustrated investors protesting that corrupt officials had cornered opportunities to get in on the action.

* The son of Communist Party elder Bo Yibo quits his government job as head of Beijing's tourism bureau to go into business for himself. He is rumored to have certain political problems, but he uses this telling excuse: "I want to lead the way in showing cadres how to earn their own living."

* A state newspaper recounts an old parable about whether a hoe or money is a better possession. The age-old answer is that a hoe is preferred because it can be used to grow food. This article concludes with a new twist: "Money is better because it can be used to buy many hoes."

Such examples of the single-minded pursuit of cash are far from new in China. What is new here these days is the startling speed with which making money is being enshrined as the national political ethos from the highest levels of the government on down.

Chinese leaders still insist they are building "socialism with Chinese characteristics." But more and more this summer, this rhetoric is being employed to open the once centrally planned economy to free markets and to methods and values associated with capitalism.

"The Communist Party is destroying socialism to save it -- or rather to save its own power," says a Western diplomat in Beijing.

This rush toward accelerating economic reforms began with Chinese patriarch Deng Xiaoping's trip at the beginning of this year to the booming cities of southern China, a region lately boasting the world's fastest-growing economy.

Mr. Deng's continuing political campaign -- aimed at controlling a critical Communist Party congress this fall -- appears to have virtually silenced for now his hard-line leftist opponents. It also has been breaking new ground almost daily in legitimizing any means of getting rich as quickly as possible.

In particular, Mr. Deng's conclusion that free markets are inherently neither capitalist nor socialist -- a line counter to years of dogma here -- has led the Chinese press to call for its citizens to undergo no less than a "brain change."

Long expected to kowtow to the natural superiority of state controls over capitalism's chaos, many average Chinese have been left with their heads spinning. "It's like they changed the theme of a picture halfway through painting it," says an engineer in his mid-30s.

Adds his more certain wife: "Socialism with Chinese characteristics is basically capitalism under the leadership of the Communist Party."

Significantly, this new ideological line has been backed in recent weeks by a rapid series of major reforms.

Key among them are new rules granting the large state-owned industries a nearly free hand in operating without government control. These 10,000 enterprises account for half of the nation's industrial output, but two-thirds of them have been losing money at an unsustainable rate.

Dismantling four decades of central planning, the regulations largely allow state firms to decide their own production, prices, marketing, hiring, wages and foreign trade. Party cadres have been warned publicly that they face criminal penalties if they interfere.

In a growing number of cases, this effort to salvage failing state companies involves essentially privatizing them through share-holding schemes. Some are being allowed to go bankrupt, an unthinkable notion until recently. Two ailing state firms even have been sold to foreigners, another first.

Also among the new measures are rules allowing foreign investors to penetrate for the first time China's long-protected domestic markets in retail, insurance, finance, transportation, aviation and real estate.

Japanese and Hong Kong department stores already are setting up shop in major Chinese cities. Foreign firms even have begun to investheavily in basic infrastructure projects here, such as toll roads.

Across China, a land rush is on. Long-term land-use rights, once kept tightly under state control, are being leased to private developers, both domestic and foreign. Nothing is sacred: In the coastal city of Qingdao recently, the party moved its local headquarters to make way for foreign developers.

The new gold rush comes on top of a continuing effort by authorities to abandon the most basic benefits that socialism has always provided most urban Chinese: guaranteed jobs and heavily subsidized housing, food, medical care and education.

Workers increasingly are being told they must fend for themselves in the labor market, prompting insecurities expressed in the rise of illegal strikes. Apartment rents, once as low as $1 a month, are spiraling. Grain ration coupons likewise are receding into history.

Perhaps too optimistically, some foresee all this leading to the party's ultimate downfall. "Capitalism and socialism can't be combined without capitalism very quickly crushing socialism," predicts Wang Ruowang, the longtime dissident writer recently allowed to leave Shanghai for the United States.

But the East European diplomat makes a key distinction between economics and power: "The question is not whether communism will fall here, but only when. Of course, that does not mean that there won't be a highly authoritarian system here for a long time."

Indeed, in the rush toward economic reforms, political reforms have been virtually ignored, though even some Chinese officials now admit that free markets cannot fully bloom here without a freer flow of information and other political reforms.

But a high-ranking press official says that meaningful political reform here "is still too sensitive to be tackled. It's going to have to wait at least another five years."

Moreover, even the future of the new economic reforms still largely rests for now on the health of one man, the 88-year-old Mr. Deng, a reality underscoring that China remains an essentially feudal society.

With Mr. Deng's having ousted two capable reformists whom he previously had anointed as his successor, no Chinese leader waiting in the wings has the personal power to absolutely insure his legacy.

That Mr. Deng had to emerge from seclusion to personally wage a high-profile campaign for accelerating his reforms shows that his hard-line opponents have not folded their tents but are only lying low for now.

The leftists likely are waiting for the rising unemployment, inflation, corruption and general social chaos -- such as the stock market riot in Shenzhen -- that have attended previous reform thrusts to prompt a popular backlash.

Whether Mr. Deng can set up a way to prevent this from happening after his death may be more clearly known with the top-level personnel changes that may emerge from the party congress this fall.

Party leaders are now meeting in the seaside resort of Beidaihe to develop the script for that congress. While it seems virtually certain that free markets will be the meeting's main theme, unclear is whether a new leadership lineup will rise to carry it out over the long term.

Multiple scenarios abound, with many analysts predicting that younger technocrats -- such as former Shanghai Mayor Zhu Rongji -- will receive greater powers at the expense of Premier Li Peng, the leftists' favored front man despite his recent efforts to look like an economic reformer.

None of the likely scenarios appear to resolve what may prove to be Mr. Deng's final legacy: his failure to insure the orderly ascent of a successor as essentially China's emperor. And none of them appears to lessen the growing dissonance here between greater economic freedom and tight political control.

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