Contemplating life beyond the compound

PEKING DAYS; Big profits mean the Chinese are willing to bend the housing rules

Living in the capital of the world's fastest-growing economy, one can become a trifle blase about the changing skyline. Entire blocks of flats regularly disappear in a matter of days as developers move in. The occasional clear, unpolluted dawn usually reveals a forest of new skyscrapers. But, throughout this breakneck property revolution, Qijiayuan Diplomatic Compound has remained a haven of peace and tranquillity. Alas, no longer.

I have just returned to Peking after a month's holiday and things are not what they were at Qijiayuan. Travelling from the Independent's modest flat at one end of the compound to the office on the opposite corner used to be a pleasant five-minute walk. Now the way is blocked by an 8ft barrier of large red water pipes. The middle section of Qijiayuan - once a garden and garages - is now a construction site.

All this, according to the Notice to Tenants, is "to improve the general environment" in Qijiayuan. In reality it marks a marriage between market forces and Communist monopolies.

In an era of Chinese reform and opening up, the opening up has never extended to living and working accommodation for diplomats and foreign journalists. Under the regulations, we potential spies have to live and work in the four so-called Diplomatic Compounds in Peking. This is convenient for the Chinese government, it being that much easier to centralise the telephone tapping system, install bugs in the apartments and follow foreigners leaving on suspicious assignations.

The system worked in the Eighties. And in the dark period after the June 1989 crackdown, businessmen with good connections also started renting within the compounds. The problems started three years ago when China's booming economy shrugged off memories of Tiananmen Square and the number of diplomats, journalists and business people wanting to live in Peking suddenly soared. There are now more than 370 diplomatic and journalistic families on the waiting list for the compounds. Regardless of regulations, the Foreign Ministry has been forced to tell some arriving journalists that they must find their own housing.

It is a glorious new freedom - albeit an expensive one. Such is the pressure that rents on ex-pat apartment developments have risen to pounds 3,850 a month. For those who cannot afford such sums, irritating restrictions remain in place over what properties can be rented to foreigners. Given the potential profits, however, an increasing number of Chinese are willing to bend the rules and the system is breaking down.

For the Foreign Ministry's Diplomatic Service Bureau (DSB), which administers the compounds, there have been only limited opportunities to cash in on the bonanza. Many of the flats are still let out on old contracts at far below market rates. But the DSB has had very few flats available at any price recently, and has grimaced as rich clients disappeared into the private sector.

Hence the construction site that greeted me on my return. This is where the DSB is building an underground car park and a huge apartment building including ''ambassadorial level'' dwellings. That is not all. Buildings Nos 1 to 6 (including my office) will be demolished to make way for further high-rise blocks. The total project will take three years. But before then, several other developments already under construction will be on the market and many diplomats and journalists will doubtless have grown accustomed to living outside the compounds.