A Day in The Life . . . . . . Of China: Free to Fly Inside the Cage

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Individuals are not the only ones eager to earn extra money. Under Deng's reforms, most state-run businesses and government agencies are expected to turn a profit. An aircraft factory in Xi'an runs a marriage-introduction center that does a booming business serving the needs of hundreds of well- educated women who by their late 20s are desperate for husbands because men with less schooling are reluctant to marry them. In Chengdu the Xinhua bookstore owns a flower shop, a hair salon and a clothing boutique whose manager gets his goods from "a guy in Shanghai who has good guanxi." In Shanghai itself the city's world-famous acrobats attract bigger audiences by sponsoring fashion shows between tumbles. A university in Guangdong has branched out to invest in a three-story bar in Shanghai whose top floor, called Lovers' World, features 15 banquettes where couples can smooch in privacy. Even the People's Liberation Army has got into the act. Knowing that . swank hotels are truly the country's most exotic tourist attractions, the P.L.A. is a co-owner of Beijing's poshest, the Palace, where two gold-colored Rolls-Royce Corniches are available for special guests.

But the tensions generated by the scramble for money are never far from the surface. Orthodox executives of China's state-run enterprises are very much like the Soviet Union's permanent bureaucracy, the nomenklatura. They have coasted for years under the old system, and they dislike Deng's perestroika because it asks them to compete like capitalists, and capitalism has losers. "Keeping their jobs is their No. 1 priority," says Sinclair Choy, a marine engineer from Hong Kong, who in partnership with a coastal town on the mainland runs a fishing boat-repair business. "Order, stability, calm," says Choy. "That's what these Chinese officials want. Anything that threatens to upset the applecart sets them off."

Choy and I are speaking on the ferry from Hong Kong to the mainland, where he hopes finally to convince his Chinese partners that the incentive system should be introduced at their business. "Everyone is paid the same at our place, even though many are willing to work harder for more money," says Choy. "But my Chinese government partners don't want to upset those who are lazy by allocating bonuses according to merit. They have their own version of the iron rice bowl, and they don't care if incentives will result in greater productivity and more profit. To a businessman their attitude is insane. But they are happy if they turn just a little profit, because they know that that will satisfy their higher-ups and that everyone will then be covered. Probably the only thing left for me to try is straight corruption."

Which is exactly the conclusion reached long ago by many other joint-venture businessmen. Perhaps the most typical piece of underhanded dealing involves the corruption of customs agents by hotels. "The law says customs can take up to 10% of an imported shipment of perishable items to test for disease," says a Chinese American who co-owns a Sichuan province hotel. To beat the delay and spoilage that can result from complying with such rules, hotel owners regularly pay off customs officials with "free samples."