Lifetime Job Security for Chinese in Peril : Workers: Beijing threatens to crack down on failing state plants, raising the specter of unemployment.

Lifetime job security, one of the hallowed traditions of Chinese communism, is coming under assault as the government threatens to shake up and shut down failing state companies.

“Of course I’m scared. If we go under, I’ll have nothing to eat,” said a 38-year-old woman who works at the Beijing Electric Component Factory, one of those most likely to be closed. The factory halted production months ago because it couldn’t sell its products.

In the old days, the state would have kept it going by pumping in more money. But after its 11th budget deficit in 12 years, the government is running out of funds and patience for the 39% of China’s 102,000 state factories that are operating in the red.

The collapse of communism in the Soviet Union last year gave new urgency to the problem, dramatizing that economic inefficiency can topple the most entrenched party.

Chinese officials began talking about “survival of the fittest” companies.

Large-scale closures and layoffs are not likely in the foreseeable future, Chinese and foreign economists agree. For one thing, it would undermine the ruling Communist Party’s claim to be the party of the working class.

China also lacks a nationwide unemployment insurance system, although some cities have small funds. Widespread layoffs could lead to social unrest, just what the government wants most to avoid.

But changes are finally coming to China’s huge and inefficient state factories, Premier Li Peng and other leaders have declared in recent speeches.

Already, scores of ailing factories nationwide have been shut down temporarily to make changes in production or management. Others have been merged with healthy factories.

At least one factory, the Jinzhou Clothing Printing and Dyeing Mill in the northeast city of Dalian, closed permanently in November. The State Council Production Office, in charge of state industries, refused to say how many other factories have been shut for good.

Workers at factories known to be in trouble are worried. As long as their factory stays in existence, they can count on being paid even if they do no work.

The Beijing Electric Component Factory, for example, still gives full wages to its 15,000 employees even though most stay home, said the woman worker. If the factory declares bankruptcy, that will stop.

She is looking for a new job. She spoke on condition of anonymity for fear that word would get back to her factory and cause trouble.

The Beijing Pharmaceutical Co.’s machine tool plant is a classic example of why Chinese state factories are inefficient. On a recent weekday afternoon, nearly two dozen workers sat playing cards and drinking tea alongside their silent lathes and drills, killing time until leaving at 2:30 p.m. for a union-organized skating trip.

They said the factory plans to make workers sign contracts to improve efficiency, but none seemed to understand that such contracts would allow the factory to get rid of lazy workers.