China's modern model village falls from grace: From TERESA POOLE and agencies

IT STARTED with a village murder, the sort of crime that might have passed off without a stir - except that the victim had been killed in China's richest village, Daqiuzhuang, where former peasants now live in luxurious semi-detached villas and factory managers drive Mercedes cars.

Then, earlier this year, came stories of a stand-off lasting several days as armed villagers held off squads of local police who had come from the nearby city of Tianjin to investigate the crime. By the time the officers were allowed into the village, they found, not surprisingly, that at least two of the murder suspects had fled.

By this stage, the daily stream of visitors, who would turn up in their hundreds to marvel at and learn from Daqiuzhuang's astonishing success at implementing socialism 'with Chinese characteristics', had disappeared. Glowing references to Daqiuzhuang's soaring industrial output were no longer being carried by the state newspapers.

And when the village headman, Yu Zuomin, one of China's most lauded entrepreneurs and the architect of Daqiuzhuang's economic miracle, was arrested for allegedly 'shielding and hiding the criminals and standing in the way of police in their duty', China's modern 'model' village - the national symbol of all that should be possible under Deng Xiaoping's economic reforms - had toppled spectacularly from its pedestal.

Daqiuzhuang, to the south-east of Peking, with a population of about 4,500, had until this month more than lived up to Mr Deng's edict that 'to get rich is glorious'. Official figures claim that its total output in 1992 was worth 4.55bn yuan (dollars 798m), and the profits per villager were 124,000 yuan (dollars 21,754). The richest man earned about 1.5m yuan. More than 280 industrial enterprises had been set up and, according to the official China Daily, foreign investment had reached dollars 34m.

But China's 'model' villages have a tendency to fall from grace. During the Cultural Revolution, the whole country was exhorted to 'learn from Dazhai', the agricultural master-commune where the honest toil of ideologically correct peasants had supposedly overcome the arid earth of Shanxi province to achieve astonishing grain production figures.

Then, in 1980, it was officially revealed that Dazhai's output figures had been fake and that even the construction of its irrigation systems had depended on imported labour teams of People's Liberation Army soldiers.

So far, no one is suggesting Daqiuzhuang's economic success is not what it seems. But there are official murmurings of concern about China's new 'economic dukedoms' and 'little kingdoms', where the modern feudal barons are running their private economic fiefdoms.

One pro-Peking Hong Kong weekly commented that the police's eventual decision to act in Daqiuzhuang's case 'serves as a reminder to certain local authorities which are tempted to disregard the overall interests of the country in their single-minded pursuit of material gains'.

The facts of the case are still vague but it seems that, on 13 December last year, Wi Fuhe, a worker in Daqiuzhuang, was beaten to death by four men after being suspected of embezzling from one of the factories. Some versions say Yu Zuomin's son was involved in the beating.

After some delay, the police were informed of the death and a group of Tianjin officers turned up in February to investigate, only to be held hostage for 13 hours by the village militia. A larger group - some reports say 1,000 - returned at a later date to find the village entrances barred by armed men and the stand-off began. Earlier this month, before Mr Yu's arrest, the minister of public security announced that two of the suspected murderers had been arrested but two had escaped.

Yu Zuomin's arrest is a huge embarrassment for China's pro-reform leaders. Last year, the 63-year-old, chain-smoking Mr Yu was constantly on television and in the newspapers as the epitome of the modern Chinese entrepreneur. Last month, he was a delegate to the National People's Congress. Now, for the first time in a long while, he is refusing to give interviews.