China One Year Later

By SANDRA BURTON BEIJING

Beijing is increasingly a city of false facades. Each day picturesque walls made of stucco and tile are erected around deteriorating residential neighborhoods to hide them from visitors who will attend the 1990 Asian Games in the Chinese capital this September. No less deceptive is the charade that is performed each night at major intersections throughout the city. Disguised as policemen, combat-ready army officers man security checkpoints that were allegedly dismantled when martial law was lifted in January. Says a dissident intellectual: "Stability is only an illusion."

One year after the bloody crackdown that silenced China's nascent democracy movement, a divided Communist Party leadership is attempting to stifle dissent while it tries to put the best face on an unpopular regime. Recent decisions to relax the government's two-year-old economic austerity program, lift martial law in Beijing and the Tibetan capital of Lhasa and tone down the ideological decibel level represent a modest victory for the pragmatic approach of retired patriarch Deng Xiaoping over a clutch of veteran hard- liners. Yet Deng, 85, remains locked in a paralyzing succession struggle that precludes any but the most cosmetic policy changes in the near future. "What we are seeing is the classic politics of the end of an era," says a senior Asian diplomat in Beijing. "Since the Emperor never retires, we must wait until he dies." Until then the kingdom and its subjects can do little but wait and wonder what will follow.

Last week President George Bush removed most of what leverage Washington still enjoyed over Beijing by approving a one-year extension of China's most favored nation trading status. Bush's move drew angry criticism from many members of Congress, including Republicans, but Capitol Hill is unlikely to muster the two-thirds vote of both chambers that would be needed to block the measure. Bush argued his case on economic grounds, claiming that to deprive Beijing of its MFN classification would harm the Chinese people, cost capitalist Hong Kong 20,000 jobs and $8.5 billion in exports of Chinese-made goods processed in Hong Kong, and add 40% to the prices American consumers must pay for Chinese imports. But he also defended his action as the best way, ultimately, to ensure a more democratic China. "The people of China who trade with us are the engine of reform," Bush contended. "Our responsibility to them is best met not by isolating those forces . . . but by keeping open the channels of commerce."

Though both the U.S. and Hong Kong would have suffered greater financial losses than China if MFN status had not been renewed, Beijing can ill afford the estimated $3 billion or more that revocation would have cost mainland enterprises. Despite the success of a stringent austerity program in cooling the overheated economy and cutting inflation from 18% last year to less than 5% today, there have been debilitating side effects. The suspension or reduction in production in as many as one-third of Chinese factories and the ( cancellation of hundreds of construction projects have contributed to a "floating population" of unemployed job seekers that totals 50 million. In the wake of the Beijing massacre, tourism revenue has fallen nearly $1 billion. To Beijing's dismay, the U.S., Japan and the European Community have stood firm for a year in blocking all but humanitarian loans by the World Bank. Thus commercial banks remain wary of lending money to China.

Beijing's kinder, gentler line appears to be directed as much toward its own increasingly alienated people as its foreign creditors. "If the ruling party cuts itself off from the masses," warned an extraordinarily candid commentary in the Communist theoretical magazine Qiushi (Seeking Truth) last month, "it will invite calamity or will even be forced to step down." In the absence of ambitious goals like the economic and political liberalization policies set by fallen party chief Zhao Ziyang, says a Western diplomat in Beijing, "politics becomes a question of how you achieve stability best." At the moment, two approaches are vying for approval:

-- Rule with an iron hand. Hard-line ideologues argue that visible force and revolutionary spirit are essential to maintain order. They favor reviving old- fashioned sloganeering and mass-action campaigns, like the recent one urging people to "Learn from Lei Feng," a mawkishly selfless soldier who was virtually canonized by Chairman Mao. If stronger medicine is needed to awaken top party and local leaders to the dangers of internal divisions, hard-liners are offering a one-hour video titled Eastern Europe in Turmoil. According to one viewer, the tape is designed "to make local Communist officials realize that if in a crisis they fail to hitch a line to the Communist boat, they will all sink together -- like Ceausescu."

-- Give the people a greater voice. Liberal reformists contend that stability is built on economic prosperity and greater citizen participation. "How can you do your work if people run away as soon as they see you?" asked Li Ruihuan, a member of the Politburo Standing Committee, in an interview with the People's Daily. "We should talk about something that the people are interested in and that can help them do away with their worries." None of the would-be successors to Deng can spin such sentiments into a platform of action, however, as long as the so-called gang of elders is watching their every move. "It's too dangerous for one to raise his head above the crowd for fear of having it chopped off," observes a diplomat.

What will happen after Deng dies is a matter of constant debate among China watchers; most agree that his passing will be traumatic. "When Deng dies, all hell will break loose once again," says an Asian ambassador based in Beijing. Few believe, however, that change will ultimately come from the streets in protests like those mounted last spring, although a better-educated people will inevitably demand more freedom of expression. Nor do they foresee the imminent collapse of the Communist Party, as happened in Eastern Europe. Whereas the regimes in Eastern Europe were imposed by the Soviet Union, rule by the Chinese Communist Party was the product of a nationalist revolution. Moreover, China is still a poor, developing country whose huge, largely peasant population has had little exposure to the concept of democracy. The average Chinese tends to be more protective of his recently acquired right to grow cash crops than of the human rights for which students demonstrated last spring.

Robert Scalapino, director of the Institute of East Asian Studies at the University of California, Berkeley, suspects that a deep-seated need for stability on the part of most Chinese will induce the next generation of leaders to opt for a system of political authoritarianism but social and economic pluralism. Says he: "Even the intellectuals remember the chaos of the Cultural Revolution and the warlord period, and they don't want to go back to it."

The party and the army, in fact, are the only two viable institutions in China, and the army is in the service of the party. That leaves only one channel for positive change: a new, more enlightened Emperor who will reform the system from the top down. Such a leader can come forward, of course, only after Deng has died. But even if a Chinese version of Mikhail Gorbachev does take office, he will have to tread carefully. As the students camped out in Tiananmen Square discovered that fateful night last June, any attempt to change China too quickly is an invitation to tragedy.

With reporting by David Aikman/Washington and Jaime A. FlorCruz/Beijing