Economic Reforms OKd in China : Politics: But as party congress opens, key official rules out a democratic system.

Communist Party leaders agreed Monday to adopt even more Western-style economic practices but made it clear that China will not embrace Western democratic policies.

Speaking to 2,000 delegates at the 14th Communist Party Congress--the first such key, strategy-setting meeting in five years--General Secretary Jiang Zemin insisted with unprecedented clarity and bluntness that China must shift to a market economy.

“We must change the way in which state-owned enterprises operate,” he declared in his outline of the economic goals of China’s leaders. “This is the key to establishing a socialist market economy, consolidating the socialist system and displaying its superiority. We should turn (state enterprises) into legal entities responsible for their own decisions about their operation and expansion and for their own profits and losses.”

Jiang added that “foreign funds, resources, technology and skilled personnel, along with privately owned enterprises that are a useful supplement to our economy, can and should be put to use.”

China’s emerging economic structure differs from capitalism in that it retains a higher proportion of state ownership than is common in the West. Jiang said growth of this “socialist market economy” should be supported by “improvement of the legal system.”

But he declared that China’s political goal is “absolutely not a Western, multi-party, parliamentary system.”

While labeled “socialist,” the vision he outlined comes remarkably close to a dictionary definition of fascism--”a system of government characterized by rigid one-party dictatorship, forcible suppression of opposition (and) private economic enterprise under centralized governmental control.”

Market forces and private economic activity have been allowed to grow gradually in China since 1978. But leaders avoided directly speaking of a market economy until months ago. Jiang’s speech, thus, advances trends that began more than a decade ago while also bringing the process of economic transformation to a new level.

Jiang focused primarily on a recitation of further market-oriented reforms that are needed. But he also stressed that dissent will not be tolerated.

“We must strengthen the people’s democratic dictatorship,” he declared. “To uphold justice and protect the people, we must crack down on the activities of (politically) hostile forces and of criminals. . . . It would be absolutely wrong and harmful for anyone to doubt, weaken or negate the party’s position in power and its leading role.”

Jiang’s speech was presented as a report to the congress by the party’s 175-member Central Committee. It represents not just his own views but a consensus of the party’s top leaders.

The speech contained praise for senior leader Deng Xiaoping, 88, the architect of China’s 14-year-old policies of market reform and opening to the outside world.

Earlier this year, Jiang credited Deng with laying the theoretical basis to openly proclaim the goal of a market economy.

Deng himself presided over the last party congress in 1987. A congress spokesman said Sunday that Deng was an invited delegate to the current congress. But Deng did not appear in the Great Hall of the People for the opening session.

The weeklong congress has two highlights: Jiang’s report, which serves as a policy document for the future, and the election of new leading bodies, including the Central Committee and Politburo.

Personnel shifts are almost completely predetermined but have not yet been announced. Promotions, especially to the elite Politburo Standing Committee, will provide clues to the balance of power in maneuvering over the ultimate succession to Deng.

A small clue emerged Sunday, when congress spokesman Liu Zhongde announced that Qiao Shi, the Politburo Standing Committee member who heads China’s security apparatus, had been named the congress’ secretary general. Qiao, whose already considerable power seems to be growing, is thus responsible for the organization of the congress itself.

Liu also announced that the Central Advisory Commission, a formally powerless but highly influential body of party elders, will be abolished. In China, where power flows from personal connections and prestige rather than formal titles, retired leaders have exercised immense influence. But the commission’s elimination removes one institutional base for the power of aging revolutionaries who have repeatedly thrown up ideological obstacles to more rapid reform.