Panzhihua, China — QIN CHANGLIN fondly recalls the austerity of two decades ago when settlers of Panzhihua hiked a mile downhill from their huts to the river before dawn to fetch their daily ration of water. The 50,000 frontiersmen, ordered 1,600 miles from the industrial northeast to the remote mountain region by Mao Tse-tung, used the same water to wash their faces at sunrise, their bodies at noon, and their feet before dinner. In the twilight they mixed the murky water with clay to build the mud and straw hilltop huts in which they lived, says Mr. Qin, a steel mill engineer.
Back then, Qin says, the water of the Golden Sand River (Jinsha River) was as pure as the socialist ``Panzhihua spirit'' that sustained the settlers through the hardship of building a steel mill in a mountain wilderness. The hauling and sharing of water symbolized the Maoist ideal of overcoming common adversity by hard work and egalitarianism.
Today, the river is a foamy brown conduit of industrial waste. Motorbikes and bridges have replaced the skiffs that ferried settlers across the river. Many of the 850,000 Panzhihua residents live in high-rise apartments. And in dance halls they betray a mood of self-satisfaction far different from the simple socialist zeal of the past.
To some Chinese, Panzhihua illustrates the hazards of letting the invisible hand of the free market turn a Maoist outpost of egalitarianism into a one-company town of haves and have-nots.
Like other small cities in China, Panzhihua boasts the material benefits of the market reforms launched by Deng Xiaoping.
Enjoying comparative autonomy from economic planners in Peking, the directors of the Panzhihua Iron and Steel Company have transformed their enterprise from a perennial recipient of state aid to a source of $56 million in state revenues last year. The turnaround of the company, which employs 1 out of every 4 of Panzhihua's 202,000 workers, has helped improve the livelihood of most residents of the Sichuan Province city.
The salaries of steelworkers have swelled with company profits since the beginning of industrial reform in 1984 and now double the $404 annual earnings of other Panzhihua workers, according to city statistics. The steelworkers also enjoy better health care, education, and housing than people who work elsewhere.
``With economic reform, the high price of durable luxuries or consumer goods is now within the reach of the families of steelworkers,'' said Hong Jibi, vice-general manager of the steel company.
``In the past you seldom saw a black and white TV in the workers' homes, but now about 90 percent have color TVs; 88 percent of the families have refrigerators; 72 percent have washing machines; and many families also have cassette recorders and electric fans,'' he said. He could not provide comparable figures for the 150,000 Panzhihua laborers outside the company.
He Dongping, selling chickens in the city market for an annual income of $290, said, ``Of course I would like to be a worker in the steelworks - there you get many benefits and more security than in other jobs.''
The first settlers of Panzhihua were both defenders and exemplars of the principle of strict economic equality that Mao promoted with the phrase ``Everyone eats from the same big pot.'' The late chairman in 1965 ordered the city built as part of his disastrous program to construct industrial settlements in China's inaccessible heartland as a ``third line'' of defense against a Soviet or United States invasion.
Company executives and city leaders expressed little concern for the disparity of income that has emerged as Peking repudiated the principle of economic equality, granting more power to industrial managers and peasants and unleashing small-scale entrepreneurs and service workers.
``It's true the wage for workers in the iron and steel corporation is higher than those of the workers in other places, but the purpose of this difference is to attract skilled workers from more developed areas of the country,'' said Mr. Hong, the steelworks executive.
Panzhihua Mayor Li Lawang bluntly stated the official line: ``We are not in favor of egalitarianism.''
The central government, however, has sought to justify the gaps in wealth accompanying looser economic controls, rebuffing the concerns of conservative Marxist ideologues that reform has created tension between rich and poor.
According to the official New China News Agency, a senior State Council official last month acknowledged that the living standards of Chinese vary greatly, ``with some quite well off, some having enough to eat and wear, and some still in poverty.''
The average annual income of peasant families in 200 counties, or one-tenth of China's total, falls below $54, the news agency reported. This is less than half the $115 earned by the average Chinese peasant family, according to government statistics.
However, ``such a situation cannot be changed within a short period of time and it is counterproductive to be impatient for success,'' said Zhang Pan, deputy director of the research center of the council, China's most powerful governing body.
In a recent article entitled ``Socialism is not Egalitarianism,'' economist Liu Guoguang said that the policy of equalizing incomes contradicts the basic tenets of Marxism.
``The slogan of equality attracted thousands upon thousands of people to the struggle for socialism as equal distribution of income and confused socialism with egalitarianism,'' he said.
Mr. Liu, vice-president of the government-run Chinese Academy of Social Sciences, echoed the claim of the recent 13th Communist Party Congress that China is merely in the ``first stage of socialism'' and must strengthen its economy before advancing further toward a communist utopia.
Upholding a notion similar to the ``trickle down'' economic policy widely applied in the West, Liu notes in the official magazine Peking Review that during reform Peking has allowed ``some people to become wealthy first as part of the goal of common prosperity.''
He says that China could develop more swiftly if enterprises dropped equalized wages and paid laborers according to the quality of their work. Also, China should tolerate aspects of capitalism ``so long as they benefit the growth of the socialist forces of production and do not impinge on the primacy of public ownership.''
Qin, the steelworks engineer, said that although his counterparts in other factories may envy his wealth, ``they think first about the profits of their factories, and if their factories make a profit they benefit from it.''
But with a daughter studying the violin, a five-room apartment that is palatial compared with the crowded homes in the east, and long-sought membership in the Communist Party, Qin acknowledged that ``both the `Panzhihua spirit' and reform have been good for my family.''