DESPITE some recent efforts to control credit, investment, and financial markets, there are indications that Chinese leaders lack the means and even the will to regulate the world's fastest growing economy.
Reeling from boom and bust cycles in recent years, Chinese officials have seemed unable to clamp down on inflation in the cities. Anger over high prices fed the political discontent of 1989 that culminated in the brutal crackdown in Tiananmen Square.
After growing 12.8 percent in 1992, China's economy once again expanded at a rate of 13 percent in the first three months of this year. That marks the fastest quarterly increase since market-style reforms were launched 15 years ago, and contrasts sharply with the stern official target of 8 percent growth for 1993.
Officials in Beijing have taken several recent steps to control the economy:
* Authorities have ordered a tightening of unsanctioned foreign exchange trading and an end to currency futures speculation. Futures brokerage houses, many of which were making a market on their own, were required to register again with the central government.
* A new securities bill, the first since the Chinese communist victory in 1949, was introduced to end chaos on securities exchanges in Shanghai and Shenzhen and reassure foreign investors. The measure was triggered by foreign hesitancy to invest in China's new equity markets and by riots over corruption in Shenzhen last summer.
* Wen Wei Po, a Hong Kong newspaper closely linked to Beijing, revealed that government officials are ready to impose limits on the credit available to deficit-ridden state-owned companies to control rampant spending.
* Government officials are trying to tighten up credit after inflation in March slashed individual savings kept in banks.
Nonetheless, officials here continue to shrug off warnings by Western and Chinese economists that the threat of inflation and instability is growing. Urged on by supreme leader Deng Xiaoping's order for faster economic development, Beijing officially overlooks the national annual inflation rate of 8.6 percent and a 15.7 percent hike in urban retail prices, Western analysts say.
The Chinese press has reported that a glut in commercial real estate is building up in some cities, and the yuan has plummeted against the dollar. Currency in circulation has risen dramatically and imports have jumped, eroding China's traditionally hefty trade surplus.
Contending that China may soon be locked into "an inexorable process leading to violence and economic disruption," a Western diplomat wonders, "Is this government able to implement the measures that would prevent this process?"
China lacks interest rates and other monetary tools by which other countries control investment and currency growth.
The economic unease comes amid political uncertainty and government paralysis in dealing with its biggest economic dilemma, streamlining China's huge, inefficient state enterprises.
This is a country where cradle-to-grave jobs and social benefits have been political gospel, and its leaders are now sidestepping the daunting task of reforming these enterprises and cutting the army of government workers, Chinese economists say.
The government announced in March that it would slash the central bureaucracy by 25 percent and cut seven ministries, but it immediately set up six smaller ones. In effect, though, employees in central ministries and departments are being shunted into sideline enterprises in what Chinese economists say is a move to hamper streamlining.
In a socialist economy, government ministries, departments, and bureaus plan economic activity and oversee the network of state-run firms. In this instance, under the guise of reform, powerful bureaucrats are able to keep and even add workers to the state payroll and force healthy state enterprises to absorb other loss-ridden state firms and their workforces.
State industry accounts for more than half of industrial production. When workers are fired, they also lose free housing, medical care, education, and cheap utilities.
"The impact [of cutbacks] is very negative and very serious," says Zhou Linru, a government economist and specialist in enterprise reform for the state-run Development Research Center.
Ms. Zhou contends that the trend is hurting efforts to "change enterprises into individual producers, reduce government functions, and encourage fair competition. Because many depart- ments are using their power to monopolize the market, it is also a hotbed of corruption."
This week authorities also unveiled new measures covering the placement of laid-off workers in state enterprises and benefits for the unemployed. In effect, though, these measures put the burden back on state firms; they must find new jobs for the workers they lay off.
Analysts say China is in a dilemma, caught between a state sector refusing to change and the pell-mell rush of many parts of the country toward capitalism. "This [streamlining] is going to be a long process," says Zhou, the economist. "But the market economy requires that the changes be quick."