BEIJING — HUDDLED in a dark courtyard, off an alley of shops dealing in delicate porcelain and yellowed scrolls, would-be millionaires are reeling from one of China's harshest crackdowns on private trading in years."The market is destroyed; everyone has lost money," says an erstwhile speculator. "All we can do now is wait for the government to ease up," he says, casting down his eyes to his sheaves of depressed issues. The object of investor distress is neither rare artwork nor securities but the lowly postage stamp. In sorties timed to within five minutes of each other, police crushed several makeshift stamp markets nationwide in November. They arrested leading speculators and barred all trading in what had been China's most lucrative and popular overt racket, say stamp collectors at the Liulichang Market in Beijing. As prices fell by half, thousands of traders saw the buying power of their stamps turn to mere postal power, the collectors say. The crackdown underscores how Beijing remains virulently intolerant of the idea of free financial markets despite the much-publicized opening of securities trading. The aversion of the government to capital markets hobbles economic growth and hinders common Chinese from pulling themselves out of penury, say foreign economists. In the past year China's leadership has allowed the cities of Shanghai and Shenzhen to launch formal stock markets. In November it permitted Shanghai to sell stock to foreigners and Shenzhen has announced a similar plan. But the markets are tiny and orthodox socialist leaders keep a tight grip on trading. For instance, the government has indefinitely postponed the issuing of two new stocks in Shanghai because of fear that even a lottery system would not prevent the public from clamoring for the shares, the official newspaper China Daily reports. Instead of opening a large, unfettered securities market, Beijing goads Chinese into buying government bonds and depositing their money in state banks. The government shovels much of the investment into laggard, wasteful state enterprises, some 40 percent of which are in the red. Vigorous enterprises worthy of investment must wheedle scarce credit from state banks. The stakes of investment are high, since Chinese saved about $150 billion during the 1980s, the booming decade of economic reform. Yields on bonds and savings accounts are far smaller than the rate of inflation. Most Chinese helplessly watch their real wealth slowly evaporate. A minority invest in tangible assets like stamps. "The attitude that 'saving money is not as good as buying stamps' is becoming more and more common," the China Youth Daily reported before the crackdown. WEALTHY "daoye," or speculators, fueled the "stamp collecting heat" in the past several months by directing agents across the country to corner a stamp issue, according to the Nov. 23 issue of the Communist Party newspaper People's Daily. Some big-time speculators used telephone beepers and directed their agents in simultaneous trading at the country's four "exchanges" in Beijing, Shanghai, Chengdu, and Guangzhou. The speculators talked up the price of stamps they had cornered, sold out, and pocketed enormous profits. Some hauled in $1,900 a month, about 12 times the average wage in cities, collectors say. In the capital, the traders gathered at a park in a grove of pine trees. Speculators at the other major markets turned similar impromptu settings into "trading floors." Smaller markets sprang up in other cities as well, say the collectors. The prospect of quick riches and the near certainty that the value of stamps would outpace inflation made speculation irresistible to many people, say the Liulichang collectors. All a trader needed to begin was wits and a little capital. "There's no requirement for a trading license and no taxes; it was the easiest way going to make big money," says one former speculator at Liulichang. The police push has forced stamp trading underground or into the supervised stamp market at Liulichang, where collectors may not deviate far from state-sanctioned prices. But the government has yet to knock down the zeal and ambitions of furtive speculators. None of the traders say they agree with the People's Daily that philately should return to its pure form: a genteel, contemplative pastime done in the quiet of an idle afternoon with tweezers and magnifying glass. Even under the eye of officialdom, L iulichang traders still shout and gesticulate in a riotous haggle over prices.