China Grants Free-Market Autonomy to Guangdong

IN a concrete victory for China's reformers, the central government has agreed to relinquish key economic controls over the vibrant, market-driven province of Guangdong, top provincial officials say.

Beijing's decision to grant Guangdong greater economic autonomy is one of the first signs that senior leader Deng Xiaoping's two-month-old public campaign to accelerate capitalistic reforms is bearing tangible results. It indicates that Mr. Deng is reversing the efforts of his conservative opponents since August 1988 to recentralize China's booming economy.

Under a set of 10 new "preferential policies," Guangdong will gain greater leeway to authorize large investment projects such as power plants, to set wage bills, and to issue loans, stocks, and bonds, as well as other powers, provincial officials revealed.

The State Council, China's Cabinet, originally approved the policies for Guangdong in February 1988, but conservatives blocked their implementation in the course of a sweeping economic retrenchment launched that September, the officials say.

"Now that the rectification has ended, we will regain these 10 measures and perhaps some of them will be expanded," says Lei Yu, executive vice mayor of Guangzhou, Guangdong's capital.

"If [Beijing] can give us a bigger front line, I am confident that our economy will perform better," says Mr. Lei, one of the most energetic reformers in China's fastest-growing province.

The State Council will dispatch a leading official to the southern province in mid-April to discuss the details of delegating the as yet unpublicized powers, says Zeng Guangcan, vice director of the Guangdong Province Commission on Systems Reform.

The decision to delegate broader powers to Guangdong illustrates how Deng and reformist leaders in China's prospering coastal areas are successfully allying against Marxist ideologues and conservative central planners, Chinese officials say.

For Deng, Guangdong and other coastal provinces offer vivid proof of the success of his market-oriented policies since 1979.

When Deng took his bold call for economic pragmatism directly to the people this week, he did so by way of Guangdong. The national media on Tuesday carried television footage, photographs, and a long article describing Deng's January tour of Guangdong.

In turn, coastal regions like Guangdong stand to gain tremendously from the reforms. They are demanding new economic freedoms to sustain their role as the nation's showcase for market experiments.

"Deng Xiaoping says Guangdong can catch up with Asia's 'four dragons' in 20 years, but it's not so simple," says Mr. Zeng. "Beijing must give us [favorable] policies."

To bolster their position, Guangdong's maverick leaders have joined Deng and his prots in defying bureaucratic and ideological barriers to reform and in pushing ahead free-market experiments.

"There are some [reforms] that no one has attempted before, and no one has talked about, but we need them," Lei says. "So we will go ahead, while reporting [to Beijing] at the same time."

Guangdong plans to gradually decontrol prices for all but a few strategic commodities, grant state enterprises more autonomy, open a stock market in Guangzhou, and expand by sixfold the Shenzhen economic zone bordering Hong Kong, Lei says.

Guangdong's style won praise last week from Vice Premier Zhu Rongji, who called on other localities to forge ahead with innovative reforms "instead of merely waiting for documents from the central government."

Also last week, Vice Premier Zou Jiahua criticized as "simplistic" the conservative view that Guangdong's 27 percent industrial growth rate last year was too fast.

Signaling a possible purge of recalcitrant cadres, Guangdong has echoed Deng's recent calls for eradicating "leftist" ideas and ousting officials who obstruct market-oriented change.

"Whoever does not support reform ... must step down," says Lei.