The Legacy of Tiananmen: China in Disarray.

Kenneth Lieberthal's book, though published two years ago, remains one of the best guides to the way in which China is governed. Or perhaps more precisely, the way in which China is run, since government is only part of the picture. The question is important, and not just because of Deng Xiaoping's death or America's difficult relations with the People's Republic, but because, as the author points out, when a country with 22 percent of the earth's population posts economic growth rates of 12 percent a year, the world sits up and takes notice.

After a rapid traversal of Chinese history since the late nineteenth century, Lieberthal examines the legacy of Maoism which Deng Xiaoping and his colleagues inherited on the Great Helmsman's death in 1976, and the ways in which they have modified - not to say buried - much of what he had done. Mao, always fond of seeing contradiction (maodun) as one of the primary motors of history, left a China riven by contradictions: the creation of massive institutional structures - government, party, army - whose legitimacy and integrity he undermined; a cadre of devoted and experienced revolutionaries (Deng Xiaoping among them) whom he set against one another; and the beginnings of a modern educational system which he undercut in his attacks on and persecution of intellectuals.

As many have pointed out, Deng's primary goal since the late seventies was to restore the legitimacy of party and government, shattered as they were by Mao's Cultural Revolution, and by the ways in which rapid ideological changes (the heroes of yesterday becoming today's villains only to emerge as heroes again tomorrow) strained the belief of even the most credulous. So Deng made a deal with his countrymen: The party would find ways for them to improve their lives, and they, in turn, would raise no awkward questions about the party's monopoly of political and ideological authority. And it was a deal that worked - at least up to a point. Since the late seventies, China has posted a growth rate averaging 9 percent a year, and tens, if not hundreds, of millions of people have been lifted out of conditions of poverty and mere survival into a life of hope.

These are enormous accomplishments - and if the price has been the destruction of communism, so much the worse for communism. For no one today, except the truest of Old Believers, would maintain that China is any longer a Communist state. Lieberthal does not put the matter quite so bluntly. But he does a superb job of examining the complicated interplay among society, government, party, economics, and ideology, always conscious of the way in which the heavy hand of the past (pre-Maoist as well as Maoist) can sometimes stymie the best efforts of the reformers.

Thus he digs under the organizational charts to examine the complexities of relationships, both institutional and personal, that define the way China is run. At the top, despite its masses of institutions and organizations, the government remains a tiny and highly personalized power elite of no more than some twenty-five to thirty-five people. Grouped around a core leader (Jiang Zemin at the moment), they define the real rules of the game and are constrained by no body or law or set of rules, but only by one another. Groupings of bureaucracies - the xitong - deal with the tasks set by the top leadership in fields such as finance, foreign affairs, party affairs, and so on, and yet are almost invisible on the charts. The military is one of the most important, for though there is a Ministry of Defense and a state Military Affairs Commission, they have little power, and the army is answerable only to the Military Affairs Commission of the party.

As Deng had to deal with Mao's legacy, so Deng's successors, whoever they may be in the long run, will have to deal with his. Of that legacy, perhaps nothing is more important than the still unresolved contradiction between rapid economic development and the social and cultural change it inevitably brings. Even the most cursory reading of Marx insists on this relationship, and one of the ironies of China today is that those who profess to be Marxists ignore this most central of the old man's doctrines.

James Miles was the BBC's man in Beijing from 1986 to 1994, and much of his book examines the ramifications of Marx's observation. The Legacy of Tianan-men, as its title suggests, takes a bleaker view of China's future prospects than one would gather from simply reading economic statistics or the optimistic assessments of foreign businesses looking to the China market. "China is now facing the most uncertain period of its political life since the Communists came to power," Miles writes. If conventional wisdom holds that China has put the memories of June 4,1989, behind it, and is simply following Deng's echo of Guizot - enrichissez-vous - Miles believes that the Beijing massacre remains the country's most divisive political issue. He predicts that it may be less easy to cover it up after Deng's death, and that sooner or later, for its own psychic health, China will have to account for it. Will it lead to what the Chinese call a "reversal of the verdict," so that those still condemned by Beijing as a "small handful of counterrevolutionary troublemakers" will in fact emerge as tomorrow's democratic heroes?

Probably not for a while, anyway - though this February the Chinese general slated to command the garrison in Hong Kong hinted some change might be coming. While Miles is by no means a prophet of doom, he remains highly conscious of the country's weaknesses. June 4 was only part of the problem; the collapse of communism abroad, and - two years later - of the Soviet Union were severe blows to the prestige of a party which, however it acted in fact, always publicly maintained the theory of international proletarian solidarity. Like Lieberthal, Miles is wary of the ability of a Leninist political system to deal with questions of succession, noting the fall of two of Deng's earlier handpicked successors - Hu Yaobang (in 1987) and Zhao Ziyang (in 1989). Will Jiang Zemin fare better?

The suppression of dissent in 1989 also brought a severe slowdown in China's economy, in part to control the skyrocketing inflation that had been one of the causes of the earlier unrest. Miles's description of the way Deng managed, in his "southern tour" of February 1992, to reignite economic growth against the wishes of the more conservative members of his party, is particularly well done. But the whole episode does leave one with the question of whether Deng's successors - who for a number of reasons lack his legitimacy - will be able to deal with such questions.

That autumn, in an apparent victory for Deng's views of reform, the party came out clearly for "market socialism" (whatever that odd term might mean). And though economic growth and inflation both quickly rose into double digits, according to figures released in January 1997, inflation in 1996 dropped from over 17 percent to just over 8 percent, while economic growth fell to just under 10 percent. This "soft landing" is a considerable accomplishment. But have the real problems - some man-made, some the legacy of Mother Nature - been solved? The drag exerted on the economy by the many huge state-owned and money-losing enterprises grew even worse in 1996, and while every year China's leaders promise to deal with these issues, they are as unwilling to grasp the nettle as America's leaders are to reform campaign financing. Tens of millions of workers would find themselves without jobs, and the cities, already crowded with refugees from the countryside, would face even greater threats of instability than now exist. Much easier to continue to pay the subsidies these failing industries demand, and hope that somehow the problem will go away.

Like Lieberthal, Miles worries about corruption, its possibilities enormous in what is still only a semi-reformed economy. Unlike Bill Clinton, neither author is sanguine about China's evolution toward democracy (following the pattern set by, say, Taiwan or South Korea). And while neither predicts China's collapse (at least as long as the army stays unified), an increasing regionalism and provincialism may further weaken the power of the center (much as it did, it might be added, during the late nineteenth century as the Qing dynasty was falling apart).

Finally, both writers are concerned by the recrudescence of nationalism, dredged up and dusted off in the last several years to take the place of a moribund socialism. And it is here, perhaps, that the outside world, in dealing with China, will face its greatest challenges - particularly, I think, in the case of Taiwan which, after Hong Kong and Macau return to the motherland in 1997 and 1999, will be the only remaining part of Chinese territory not yet brought under Beijing's control.

In January 1997, the Wall Street Journal quoted several observers who deplored the negative picture of China given by Western journalists. Though the image of China is one of a tightly run, brutal dictatorship, said Lieberthal, "the reality is that Chinese society is extraordinarily dynamic and there's just a huge amount going on in terms of social change." And, according to Anthony Saich of the Ford Foundation, though the dominant view is that the human-fights situation has never been worse, in fact it has never been better.

Beijing, of course, is much exercised over its image, and has castigated foreign reporters for their unhappy picture of China, calling on them instead to emulate Edgar Snow - the old "friend of China" of sixty years ago. But, asks Jonathan Mirsky of The Times (London), which Edgar Snow do they mean? The Snow whose Red Star over China (1938) helped to undermine the despotic yet legitimate government of the Chiang Kaishek and the Nationalists? Or the Snow who, out of deference to his Maoist hosts in the early 1960s, chose to look the other way and ignore the evidence of what was the greatest famine in human history?

"There are few more important issues facing the West than managing China's emergence as a great power," wrote the Economist in May 1996. It took Warren Christopher eighteen months after his appointment to make his first trip to Beijing; it took Madeleine Albright a matter of days. Perhaps that's a sign that, after years of drift under both Bush and Clinton, Washington is at last trying to forge a real China policy.

Nicholas Clifford is the author of House of Memory (1994).