Deng Tour Sends Mixed Signals on Reform

CHINA'S rulers traditionally stay in Beijing and receive tribute, but paramount leader Deng Xiaoping is on the road rendering lavish praise to the country's richest, most forward-looking province.

Mr. Deng has ventured to thriving Special Economic Zones (SEZs) in Guangdong Province in an effort to rekindle the political fervor for his market-oriented reforms, diplomats say.

The pilgrimage to the mecca of China's free-market reform underscores the political interdependence between Beijing and the special areas, but it also shows that China's reformers are not yet able to fully support the political and economic ambitions of the SEZs.

In the past several weeks Deng's prots have pledged broadly to renew rapid reform but have left officials in Guangdong looking for more specific promises. The fuzzy statements from these comparatively open-minded leaders could imply continued resistance from conservative rivals in Beijing.

As part of a tacit arrangement, Beijing has provided the thriving coastal areas with financing and legitimized their get-rich-quick credo, disparities in wealth, and other traits inimical to Marxism.

In return, the coastal economic zones offer Deng the model for growth and prosperity that he says must be widely copied throughout China in order to forestall the stagnation that could undermine Communist Party rule.

Zhuhai and nearby Shenzhen have more than fulfilled the terms of the deal with Beijing. The areas have lured millions of dollars in foreign investment and built two of the world's fastest-growing economies. In Zhuhai, where residents have gone from Mao suits to mobile phones in a decade, industrial output last year rose 66 percent.

The city has hauled away low, rolling hills and left behind industrial parks. Much of Zhuhai is made up of either gleaming white factories or vast, red dusty lots dotted with electricity towers. Fuzzy support

While in Zhuhai, Deng affirmed the support of the central government for market-induced growth in the SEZs.

Deng said the Pearl River Delta must become Asia's "fifth dragon" in world trade, with the SEZs acting as head of the dragon, according to Zhuhai officials.

"Comrade Deng confirmed that the central government has decided to further open to the outside world and carry out reform in all of China," says Liang Yaoming, Zhuhai's deputy mayor. "Comrade Deng has always given us a lot of good advice and encouragement."

Deng also said Beijing will promote reformist leaders, according to unconfirmed reports in Hong Kong's Chinese and English newspapers. He called on opponents of market-oriented reforms to step down.

China should adopt useful facets of capitalism and not fear the ideological and economic challenge from capitalist countries, Deng said.

"Without reform, there will only be a dead-end road," Deng said, according to Ta Kung Pao, a pro-Beijing newspaper published in Hong Kong.

The party's progressive bloc since August 1988 has compromised over economic policy with conservative central planners. It has backed away from an earlier commitment to price decontrol and shareholding, reforms foreign economists say are vital for streamlining the economy.

Meanwhile, as Deng toured the delta, Premier Li Peng endorsed a go-slow approach to economic change.

Mr. Li, the chief acolyte for Deng's conservative opponents, recited a list of planned administrative tinkering for the economy in a speech to business leaders at the World Economic Forum in Davos, Switzerland.

Still, Zhuhai officials are troubled less by a lack of political support than by scant funding and Beijing's reluctance to grant Guangdong more autonomy.

Deng withheld a broad endorsement for the Western District, a $9 billion development project that Zhuhai officials say is essential to economic growth in southern China.

As project vice director, Chen Binghua hopes to develop the largely uninhabited coves, marshes, beaches, and rocky promontories of the coastline near Zhuhai into a massive port for trade and industry.

"In principle the leadership clearly supports reform and opening," Mr. Chen says, sitting in the bamboo and pine-bark project headquarters. "But that doesn't necessarily mean they support specific projects that would help reform." Upstart economic zones

The Western District would feature one of the world's largest ports, a steelworks, petrochemical factory, waterworks, railway, freeway, airport, power plant, tourist resort, and a city.

Beijing apparently stalled the project to prevent an overheating of the economy.

It is also determined to recover power from China's "warlord economies": thriving, upstart regions like Guangdong that have lunged beyond central economic controls.

The State Planning Commission told Zhuhai officials it denied approval for the project because Zhuhai failed to follow standard procedure when it filed for Beijing's endorsement.

Without such approval, Zhuhai will find it difficult to secure overseas investment and loans. But even if Beijing offers complete support to the Western District, it will probably lack the money to make a dominant contribution.

Central government funding for large-scale projects is limited by the party's commitment to inefficient state enterprises and the many other costly sectors of the socialist economy.

Consequently, Zhuhai plans to launch the project with its own money and complete it piece-by-piece, Chen says.

The city plans to earn 40 percent of the cost for the project by selling long-term leases on 12 square miles of coastland filled in and leveled into industrial parks. Such transactions should earn $164 million this year, Chen says.

Zhuhai will lure businesses with the construction of two berths able to handle ships of up to 20,000 metric tons each. The docks would be the initial facilities of a port that eventually will handle 100 million metric tons of cargo each year.