Reform With a Life of Its Own

Unable to arrest the trend toward a market-oriented economy and provincial autonomy, Beijing's communist leaders now face a pattern of wealth and development that increasingly shuts out the center. CHINA'S ECONOMY

Beijing's hard-line leaders have failed to reverse China's momentum toward regional autonomy and a market-oriented economy, despite stifling demands for political liberalization since 1989.

The Communist Party approved a sweeping plan to strengthen many aspects of China's command economy in late 1989 in a significant retreat from the economic reforms of the 1980s. It attempted to recentralize economic powers in Beijing, shrink the scope of the marketplace, and reduce a widening gap between the prosperous coast and poor hinterland.

But the campaign to roll back reforms was stymied by Chinese leaders, provincial officials, and millions of individuals who have profited from the reforms. While virtually no new reforms have been implemented, this broad-based resistance has kept all major existing reforms intact. The center and the provinces

China's provinces maintain a high degree of financial autonomy from the central government. Beijing's central planners failed in 1990 to scrap the contract system for sharing revenue between the provinces and the central government. The state's share of national revenue, which had dropped steadily since 1978, remains stable.

Provincial officials, especially in wealthy southern and coastal provinces, continue to treat Beijing's efforts to usurp their prerogatives with feigned compliance and real defiance. Their attitude is summed up by the popular saying: ``You have policies, we have countermeasures.''

Hard-line efforts to restrain the market-oriented economy while rejuvenating the state-owned sector also have made little headway. China's dynamic rural firms and private businesses were hard hit in 1989 by a recession and austerity policies engineered by central planners. But when fears of labor unrest led Beijing to ease the retrenchment in 1990, these vibrant firms quickly responded with rapid growth. Meanwhile, state factories sank deeper into debt. Regional disparities

The economic disparity between China's coast and inland regions has not been reduced. In the 1980s, coastal areas enjoyed far faster growth and more prosperity than the hinterland thanks to their access to foreign trade and investment, nonstate industries, and in some cases preferential policies from Beijing.

After 1989, with the exception of Shanghai's giant Pudong development zone, central authorities withheld new preferential treatment for the coast. In response, officials in wealthy coastal areas like Guangdong Province have implied that their regions are so advanced that they no longer rely on special policies from Beijing.

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