A peek into China's future

In the last two years, Chongqing, a bustling port city in the middle of Communist China, has begun to take on a decidedly noncommunist appearance. Hong Kong fashions, motorbikes, linens, and other popular products fill the city's stores. Retail turnover has jumped 11.5 percent in the past year; profits have increased by twice that amount.

Wages are rising as new bonus systems give each worker an 80 percent share in any profit increase. Free markets, restaurants, and private business are flourishing under official encouragement.

Words and concepts like ''egalitarianism'' are being replaced with slogans such as ''Time is money.'' And the ''psychology of the customer'' is suddenly paramount to the ''wishes of the the broad masses.''

Straddling the upper reaches of the Yangtze in Sichuan Province, Chongqing for the last two years has been host to the Communist leadership's first tentative experiments with urban reforms.

Last week the Communist leadership let it be known that the reforms that have transformed Chongqing are to be applied to the rest of the nation as the first step in dismantling China's centrally planned economy.

This decision is to be formally ratified in a major meeting of the Communist Party's Central Committee this week.

And so it is to the Chongqing region of 14 million that all eyes - Chinese and Western - have turned for some indication of what lies ahead for the world's largest communist nation if it sheds the very tenet of communist ideology.

The news is good and bad.

So far Chongqing's economy, which was expanded to include eight neighboring counties for the experiment, have experienced a boom. Industrial and agriculture output last year jumped by 11 percent to $5.5 billion.

The slow and inefficient supply of goods through state channels has been circumvented with the establishment of trade centers where anyone, including private traders, can buy any amount of goods at negotiated prices reflecting the market.

Some 750 state enterprises and collectives have been rationalized into 70 specialized corporations that practice complete autonomy in management and pay a tax to the state, instead of the old wholesale delivery of profits.

Skilled workers and graduates are being channeled through talent exchanges to postions where their skills are most wanted and best suited.

For private enterprises, the government bank is providing loans at floating interest rates, depending on the project and the market - something rarely seen before.

Responsibility for foreign trade and the power to negotiate contracts of up to $10 million in value has resulted in a jump in two-way trade to more than $70 million - a sixfold increase over the total trade for the previous four years.

For China's die-hard conservatives, committed to Marxism and highly suspicious of the Deng Xiaoping regime, the introduction of these reforms nationwide confirms their long-held fears of a leap into the capitalist pit. But if Chongqing is any indication, the decision to make such sweeping changes will only intensify the opposition to them. Since their introduction in 1982, even the most common-sense and innocuous reforms have been plagued by lack of cooperation and outright obstruction by party members struggling to hold onto their power.

''Although the economic reforms are good for the economy, we haven't really been able to bring them into full play,'' says Yang Yongun, an official of Chongqing's economic reform committee.

Mr. Yang has been responsible for overseeing the introduction of the reforms to enterprises throughout the region, instructing managers in the new autonomy and wage systems - as well as encountering the strong opposition to the changes.

In one construction company, when a contract system was adopted for employees , the move was opposed by financial officials who wanted to retain the power to determine bonus levels. In an effort to prove the new system wasn't working, they published false statistics.

Some workers are also opposed to using the contract ''responsibility system'' in enterprises, in which a worker's productivity is linked to his income. Accustomed to a guaranteed job and wage regardless of their efforts, they complain that all the benefits of socialism are disappearing and accuse their new bosses of being tyrants.

''Sometimes it was the worker who awarded his own work points. Under the new system this can't happen any more,'' says Yang.

When the first trade center was established, it faced united opposition from state commerical wholesalers who felt the new center had taken their customers. Goods were withheld from the center and a blockade on information about commerce was placed on the center, which was relying on market information to negotiate its prices.

The center's profits had dropped from $1.7 million in April to $810,000 in May before the government finally resolved the issue by merging the trade center with the rebellious state wholesalers.

Apart from intentional obstacles, Yang says the new reforms have also suffered from the inexperience of those implementing them, who are used to one method of operating since 1949.

''In the trade centers, some of the managers haven't been able to decide the right price. They don't understand the psychology of the customers and not all of them are willing to learn,'' he says.

The potential for opposition to the reforms has already influenced the leadership's choice of which reforms to introduce.

The reluctance to move too far too fast has a seen a compromise affecting the area that probably most needs reform - state pricing.

Most Western economists believe that it is China's state pricing system and its inefficient allocation of resources that poses the greatest obstacle to the country's successful modernization.

But because of the initial inflation that pricing by supply and demand would cause, the leadership has opted to introduce trade centers like Chongqing's but - for this year at least - to maintain artificial prices for products of ''national significance.''

These include coal, oil, and basic foodstuffs, which have been held at artificially low prices through massive subsidies.

This is a big compromise and will hamper the beneficial effects of the reforms that do go ahead, simply delaying and increasing the inflation that must come when price reforms are finally introduced.

But for Chinese leader Deng Xiaoping - who is risking not just his own political standing but the future of his proteges, Premier Zhao Ziyang and Party Secretary Hu Yaobang - the reforms, even with these limitations, are bolder than those of any other Chinese leader.

As one Sichuan Communist Party official informed his flock recently: ''We cannot select good old boys when selecting cadres.... We must select people who dare to destroy the old and create the new.''

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