Peking reaps a harvest of chaos: As Russia stumbles to its feet, the 'Chinese model' is collapsing, says Mary Dejevsky

WHEN THE Soviet Union broke up at the end of 1991, wiseacres in Russia and abroad blamed Mikhail Gorbachev for emphasising political reform and democracy at the expense of economic reform. If only, they said, he had followed the Chinese example, freeing the economy while keeping an iron grip on the political structures and ideology, he might have held his empire together and brought his people prosperity.

This thesis, that releasing a country from the tyranny of central planning could be easier and less painful if economic reform preceded political reform, gained widespread currency among nostalgic Kremlinologists and starry-eyed western Sinophiles alike. A good number of Russians, some of them in Boris Yeltsin's entourage, were also seduced by the theory, and the Chinese, of course, had no cause to question it.

The result was a prevailing view in the West that post-Soviet Russia was a political and economic basket-case, while China had accomplished an economic miracle several times over. Now, at last, this view is being overturned by the least contestable evidence of all: real life.

The good news on the economy these days comes from Russia. After being in free fall, the rouble has now been stable against the dollar for a month. The country's economic supremo, Boris Fedorov, said this week that Russia had successfully moved away from the brink of hyper-inflation. It is not obligatory to believe him, but the figures appear to support him, as does the daily experience of ordinary Russians.

Russia's privatisation of state industry is proceeding apace, and the share certificates treated last autumn as so much confetti are changing hands at prices several times their face value. Town and countryside are peaceful and the forecasts are for a record grain harvest. Plans for a new constitution are on schedule and President Yeltsin has been able to take a holiday without the opposition taking advantage of his absence to foment revolt.

Reports from China could not be more different. More than 170 instances of rural unrest - the variety Peking fears most - have been reported across 12 separate provinces since the start of the year. These protests, against higher taxes, unannounced local levies and unpaid accounts, are all a product of economic change. 'Should the state neglect to find solutions to these problems,' the official news agency warned, 'conditions will go from bad to worse, with the peasants turning against the state and letting agriculture slide into chaos.'

The economic situation in this land of the Orient's economic miracle, is officially described as 'grim' and 'going from bad to worse'. While the term 'overheating' has been banned from the official vocabulary, it is conceded that 'the high-speed economic growth rate, if unchecked, could push the yearly deficit far beyond the planned levels'. Water and fuel supplies cannot keep up, and there are shortages of both in a majority of Chinese cities. The recent replacement of the head of the Bank of China was described as necessary 'to rectify order in the monetary sector'.

Further reports, also official, tell of the centre losing political and economic control of the provinces: 'a critical problem is the weakening capability of the central financial authorities in macro-economic regulation and control'. The authority of the Communist party is widely flouted. The central leaders, moreover, already competing for power in a world after Deng Xiaoping, are at odds over what to do. Calls for more and faster economic reform jostle for airtime with calls for order to be restored. 'A wind of dissent shakes the Peking tree of unity,' said a Chinese- language newspaper in Hong Kong. The trends have been there for all to see for several months. Similarly with the upturn in Russia's economic fortunes. So why has the so-called Chinese model not been discredited sooner?

Certainly, China's reforms brought a rapid initial improvement in living standards, but the starting point was low and the costs in personal freedom - especially after the killings in Tiananmen Square - were scandalously underestimated by outsiders. To be sure, China's growth rate, currently running at an annual 14 per cent, seemed impressive, especially to Europeans deep in recession and reluctant to regard China as a less-developed country, but it should not have blinded us to what one sceptical China- watcher has described as the country's 'looming economic catastrophe'.

How Russian officials came to deceive themselves was more understandable. To people with empty shops and a visibly declining empire, used to thinking of its neighbour as overcrowded and impoverished, the sudden appearance of urban plenty in China was a cause of envy. If China could provide for its people without reforming or annihilating its political system, surely Soviet Russia could do the same? This simple premise, however, was untenable from the start, and not only because conditions in the two countries were, and are, too different.

It was untenable chiefly because the Chinese model had actually been tried by the Soviet Union and found wanting. When Gorbachev first came to power, he pressed for the reform of agriculture and commissioned studies for different sectors of industry. But he lacked the control to force through the changes, and had to acknowledge that politics and ideology had to change, too. When this was set in motion, however, the system collapsed.

China's leaders today find themselves in a position no stronger than that of Gorbachev in the late Eighties, and considerably worse than that of the Russian government now. Statement after official statement from Peking calls urgently for new laws and regulations to control what is going on. China, however, unlike Russia, has never made its National People's Congress a representative body or given its state institutions a popular mandate.

But without such a mandate, the legislation it passes will have no more effect than Communist party and government pronouncements, which are widely ignored. There are signs, meanwhile, that the authorities are panicking and thinking of reviving the other half of the Chinese model - the use of force. The armed police force has recently been brought back under army control for the first time since Tiananmen Square.

Earlier this month the chairman of China's National People's Congress, Qiao Shi, admitted, in terms very similar to those used by Gorbachev at the beginning of his leadership, that he had no ready solutions. 'As yet,' he said, 'there has been no successful experience in the world which can provide a precedent for the smooth transition from a planned to a market economy. We will have to explore it ourselves.' If China is starting to recognise the shortcomings of its own model, that, at least, is progress.

The original question of whether economic or political reform should take precedence remains unanswered. The contrasting experience of Russia and China suggests only that whichever is embarked on first will be held to have brought down the Communist system. And will the Chinese model be seen to have had any merit? After all these years of 'reform', which of these two vast countries is closer to chaos today? I do not think that it is Russia.

(Photograph omitted)