Peking fights for the souls of capitalists: China's Communist Party is struggling to readjust to new economic realities, Teresa Poole writes from Canton

SITTING in his Canton office beneath a 1993 Deng Xiaoping calendar featuring photographs of China's paramount leader, Lao Wenhao would seem to have a challenging job on his hands.

In China's fastest-growing province, where the population has wholeheartedly obeyed Mr Deng's command to push ahead with the free-market economic reforms of 'socialism with Chinese characteristics', Mr Lao is responsible for bringing new people into a party which at regular intervals still exhorts its members to 'arm their minds with Marxism'.

Is it, one ventures, getting harder to attract suitable members, now that most of the country prefers to xia hai, literally to 'go down to the sea', the contemporary Chinese euphemism for plunging into business? Could people perhaps only be joining to increase job opportunities and gain privileges?

Not so, protests Mr Lao. The Chinese Communist Party (CCP) membership in Canton is healthy and growing, he says. But while the CCP's policy of economic reform encourages entrepreneurs and private businessmen to play their part in China's development, it is clear from talking to officials that the party is not always ready to welcome China's new rich into its own hallowed organisation.

Mr Lao is a senior official in the organisation department at the Guangdong provincial CCP headquarters, and has spent most of his life working for the party. The province, he says, has some 2.5 million party members, an increase of 500,000 since the reform policies were introduced in the early Eighties. Nor is the changing social environment making recruitment harder, he insists; in 1990 some 230,000 had applied to join, but last year this jumped to 400,000, of whom 80,000 were accepted. In an average year one in six applicants is approved. 'So our principle for applications is that quality comes first, and quantity comes second,' says Mr Lao.

Who then, these days, applies to join the party, which last month celebrated its 72nd anniversary with a warning from the party chief, Jiang Zemin, that strict party discipline was needed and that some party officials had a growing tendency to 'worship money and pleasure'?

Over the whole country, the CCP added 1.76 million new members in 1992, to bring the total to more than 52 million members, according to an official report earlier this year. Applications to join rose by a fifth, to 12.8 million. Almost half the new members were workers or farmers, and two-thirds were under 35. But post-graduate, college and middle-school students accounted for just 3.9 per cent.

In Guangdong, where urban youth wearing Hong Kong fashions entertain themselves in karaoke bars, and central socialist planning has been usurped by huge foreign investment, a stock market and Mercedes-Benzs, Mr Lao's vocabulary is firmly rooted in another era. The new members are 'excellent elements of the workers, farmers and intellectuals'. What about the new entrepreneurs and private businessmen? Here, Mr Lao makes a sharp distinction between self-employed small traders or businessmen running state-owned or collective-owned enterprises, and those who have set up private businesses that employ others. Many of the former categories are party members, few of the latter are,

'There are about 30,000 private businesses in Guangdong, but only maybe 1 per cent of these private businessmen are members,' says Mr Lao. Does this worry him, and does this mean the CCP is not moving with the times? 'No, because according to the party's policy in China now, we allow the co-existence of various economic elements on the basis that public ownership remains the main part in the market economy.'

What does emerge is a deep suspicion of China's new private employers. During the past decade, says Mr Lao, many private businessmen applied to join the party. 'But we are very careful when we deal with these applications because, though we allow private business to operate in the market in China, between the worker and the entrepreneur there is a kind of relationship of exploitation that violates the CCP's character.'

In Shenzhen, the Special Economic Zone next to Hong Kong that is China's showcase of economic reform, Li Tong Shu, the deputy director of the CCP's organisation department, is equally forthright. Those who employ others must undergo a 'serious and cautious' check before being allowed to join the party and should have invested their money in the social welfare of the whole country. 'Although these private businessmen can be model entrepreneurs, to be a party member is a different thing . . . For a real party member they should have faith in Communism, they should serve the people heart and soul, and also lead the other people in economic development.'

The party is caught on both sides. It is already affected by the changing environment; some candidates for top provincial party jobs turn down the posts because they prefer to go into business. But at the same time the CCP is losing credibility with the population because of corruption as party cadres avail themselves of quasi-legal business opportunities.

It is a trend that has fuelled China's overheating economy, because local officials have given the go-ahead to many speculative ventures. Peking is now trying to reassert its authority over the provincial party organisations as part of reining-in economic growth. But 'some people still go their own way, in spite of repeated orders from above', says Mr Jiang.