China. (Country Profile).

ON a small hill beside a lake in central China, an illegal firecrackers factory has just been set up. Village women work in small rooms assembling fuses and filling coils by hand: they are paid two yuan (26 cents) an hour. Most of their husbands are migrant workers far away: farming does not earn enough to pay the heavy taxes imposed by corrupt officials.

A month later, news comes from the village of an explosion. 'It was only a small one--just three or four women seriously injured,' says the message. The factory has been closed down (the officials could no longer turn a blind eye to it); the local capitalist has lost his quarter of a million yuan (S32,500) investment--and the village women have lost their small earnings.

In Shanghai, where some of the luckier migrants are working (here the hourly wage is four yuan an hour) a new nightclub has opened down the road. It occupies a building in the jingan Park, formerly a foreign cemetery. The nightclub is called IL Duomo--Italian for 'cathedral'. There are stained-glass windows and the receptionist is dressed as a nun with a crucifix hanging from her neck. Young professionals spend 40-70 yuan a time on drinks (it is one of the cheaper nightclubs) and say it is 'good fun'. None of them have ever visited a real village in the countryside, though quite a few have been to rural theme parks and famous beauty spots like the Three Gorges.

China's economic reforms in the post-Mao era started in the countryside where the peasants were allowed to farm their own strips of land, then spread to the towns where private enterprise was--cautiously at first--encouraged. In November 2002 the 16th Communist Party Congress endorsed a new policy which will bring capitalism even nearer. Private entrepreneurs can now join the Party; state and private businesses will compete on equal terms. Though there are urban poor as well (especially among laid-off workers in the state sector) the towns are booming. A new urban middle class is emerging which buys its own housing, changes jobs more readily, and often goes on holiday--sometimes even abroad.

Rural China has lagged far behind except in the rich coastal provinces. Health and education, virtually free in the Maoist age, have to be funded locally. Beijing is becoming more aware of the problem: the poorest areas are subsidized and efforts are made to cut local taxes. There are new schemes to clamp down on polluting industries and replant denuded land.-Yet critics say there will be no real improvement till there is political as well as economic reform. Local government is often dominated by Party cliques, sometimes in league with criminal gangs, who may manipulate the results of village elections (the only free voting allowed in China). Financial institutions bankroll failing enterprises which have been asset-stripped while ordinary peasants cannot obtain loans. Official corruption has been targeted since the early 1980s but seems ineradicable.

The ideology proclaimed by Jiang Zemin--Communist Party boss till last year and still influential--is that the Party is entitled to rule but should do more to represent the entire nation and bring material rewards to the vast majority. It hopes to achieve this by maintaining an annual GDP growth rate which exceeds seven per cent, thanks to massive investment from abroad, large markets for Chinese goods overseas, and huge infrastructural investments in the backward western provinces. Enterprise and innovation will be encouraged, whether public or private. Serious political dissent is punished severely but there is limited space now for nongovernment pressure groups.

The formula has worked so far, at the price of widening inequalities, but can it be maintained indefinitely?

RELATED ARTICLE: AT A GLANCE

Leader: Hu Jintao replaced Jiang Zemin as Communist Party chief in November, though Jiang retains control of the army and will remain state President until March 2003.

Economy: Gross national income (GNI) per capita $640 (India $460, Japan $34,210).

Monetary unit Yuan.

Main exports: Manufactures (especially clothing/textiles) dominate. Economic growth continues at more than seven-per-cent a year. China was formally admitted to the World Trade Organization in 2001 and may be forced to privatize or close many of its tens of thousands of state-owned enterprises, thereby increasing unemployment.

People: 1,294 million, around a quarter of total world population. People per square kilometre: 139 (Britain 238).

Health: Infant mortality 32 per 1,000 live births (India 69, Japan 4). 75% of people can access safe water. Late start confronting HIV/AIDS.

Environment: The biggest issue is the construction of the huge Three Gorges dam on the Yangtze, the environmental impact of which is potentially catastrophic.

Culture: The Han people dominate, with 92% of the population but there are 56 official recognized nationalities, including Chuang (1.4%), Uighur (0.64%) and Tibetan (0.41 %).

Religion: The Confucian moral code, combined with mystical elements from Taoism and Buddhism, is most important, though officially 59% are considered to have no religion. Some 6% are Buddhist and 2% Muslim.

Language: Official Chinese is a modernized version of northern Mandarin. There are many variants, the biggest being Cantonese in the south. There are 205 registered minority languages.

Sources: World Guide 2003/2004; State of the World's Children 2002.

Last profiled November 1991

STAR RATINGS

INCOME DISTRIBUTION * *

Average urban income (500 million people): $329.

Average rural income (800 million people): $266; 20% of the population own 80% of the wealth. 1991 * * *

SELF-RELIANCE * * *

China's currency is still not freely convertible--which saved it from the 1997-98 Asian financial crisis. Agriculture will be increasingly hit by post-WTO entry competition. China was self-sufficient in oil but now relies on imports. 1991 * * *

POSITION OF WOMEN * * *

Urban women have more freedom then before; some marry late or not at all. The position of rural women has regressed since the age of socialism. Only four per cent of the Party's new ruling Central Committee are women. 1991 ***

LITERACY ***

The adult literacy rate is 65%. Net primary-school enrolment/attendance stands at 99% 1991 ***

FREEDOM *

The Communist Party insists on its right to rule: elections are limited to local village level. Democracy advocates are jailed after closed trials. Pro-independence activists are also jailed in Tibet--Hu Jintao was a hardline ruler there between 1988 and 1992--but there are some signs of relaxation. Unofficial churches and the Falun Gong sect are persecuted. 1991 *

LIFE EXPECTANCY * * * *

71 years (Japan 81, India 63). 1991 * * * * *

POLITICS

NI ASSESSMENT * *

The 2002 Party Congress paved the way for greater economic freedoms but gave little hope on political reform. Experts say China must wait another live years while the new leadership settles down. Laid-off workers have lost faith in the Party. Many Chinese complain privately about one-party rule but no-one wants political upheaval.

NI/STAR RATING

EXCELLENT *****

GOOD ****

FAIR ***

POOR **

APPALLING *