From the Red Book to the mobile phone

When students began gathering in Tiananmen Square in 1989 to demand political reforms, it seemed to be all of a piece with the collapse of Communism around the world that year. But there was one thing that confused Western television viewers: why were the protesters so well dressed?

Deng Xiaoping had already proclaimed the end of traditional Communist economic policy with his statement that "it is glorious to get rich". But his reforms began in the countryside, with the loosening of controls on collective agriculture in the late 1970s. Peasants might suddenly have been able to build their own houses and start rural businesses, but their way of life remained alien to most people in the industrialised world. It is only since Tiananmen that the transformation of China has become impossible to ignore.

Once the dominant image of China was of hysterical, Mao-suited masses waving the Red Book. That has been overlaid by the gleaming towers of Shenzhen, Guangzhou, Shanghai and Peking, populated by mobile phone-wielding business predators. In Mao's day, China was feared because its ambition was world revolution; now the fear is that the economic success of China and east Asia as a whole will force the West to change its values in the effort to keep up.

Instead of being swept up, like Eastern Europe, in the wave of political reform produced by economic bankruptcy, China went its own way. Rising living standards in general, and runaway prosperity for many, has enabled a leadership virtually bereft of ideology to stay in control. The economy has grown so fast that some forecast it could be the world's largest early in the next century.

There are no straight lines in economics, however, any more than there are in nature. Apart from the political uncertainties that attend the succession to Deng, the economy remains half-reformed, and in many ways the explosive growth has made the country harder to control.

"Planned" is now the last word anyone would apply to the economy. While the coastal provinces grow faster than any other region in the world, stoking up inflationary pressures, the government cannot impose too much austerity without endangering the hugely inefficient state industries. These employ nearly three-quarters of the urban workforce, and the government fears social unrest if it lays them off. After the first burst of growth, rural incomes are also under pressure, a problem that gets worse the farther one travels from the cities. The government's ability to deal with these concerns is hampered by the increasing autonomy of the coastal regions, which are resisting demands to hand over more of the tax revenues generated by their growth.

Even under Deng, China's most successful provinces have become impatient with the fact that their economic gains have paid for widespread waste and inefficiency elsewhere. Whoever succeeds him will find this impatience much harder to contain.

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