China’s Consumable Currency: Cigarettes : Cigarettes: Seven percent of government revenue last year came from taxes on tobacco. Societal pressures to indulge are strong.

You want to change your job but your boss will not let go?

Then give him two or, even better, four packs of high-quality cigarettes--either one of the top local brands or Marlboro or 555--and it will help him change his mind.

Despite the rapidly expanding use of hard currency in China’s socialist economy, cigarettes have retained their value as a key gift, some would say bribe, to earn the favor of colleagues, bosses or business associates.

Ten years ago, a pack would do, but in these inflationary times it is two or multiples of two.

“Some say you should find out what brand the recipient likes best,” said one Beijing taxi driver. “I do not think so. It is the status that is most important. The more expensive the better.”

China’s most prestigious and expensive brand is Panda, said to be the favorite of paramount leader Deng Xiaoping, although officially he gave up smoking several years ago.

But go into a shop and you cannot buy it, at any price.

“They are made only for the leaders,” said the lady at the cigarette counter at one of Beijing’s biggest shopping centers. “Production goes straight to their special shops.”

So power still counts more than money, for some things.

The most expensive brand at the counter is Zhonghua (China), at $4.20 for a packet of 20, followed by Hill of the Red Pagoda at $2.30 and Marlboro and 555, both at $2.10.

What do officials of the State Tobacco Monopoly (STM) advise as a gift? “Most Chinese prefer one of those two top Chinese brands, but Marlboro and 555 are very popular among the young and in coastal cities,” said Zhou Ruizeng, deputy director of its System Reform Department.

Marlboro, the world’s top-selling cigarette, is a success story in China, thanks in part to the cowboy advertisements it uses worldwide and its widespread sponsorship of sporting events.

The STM imported 8 billion of them last year, seized an equal number in anti-smuggling raids and Zhou estimates even more than that could be circulating illegally.

“It is the fashion to smoke Marlboro among young people, even women,” said a 25-year-old saleswoman. “Marlboro has a very good, smart image. In male society, smoking is obligatory. If you do not, you feel left out.”

Marlboro’s office in Hong Kong was tight-lipped, declining to give figures for its sales or advertising in China.

On Aug. 16, it announced the signing of a cooperation agreement with China to produce and sell Marlboros for the local market and develop and produce other brands for both domestic and export sale.

The STM does well with legal imported cigarettes because it imposes a 170% duty on them.

But even Marlboro is only a drop in the bucket of China’s overall production of 1.64 trillion cigarettes last year. Its tobacco production accounts for a third of the world total.

Last year, the STM paid $5.35 billion in taxes to the state, China’s No. 1 tax-paying industry for the seventh straight year. It accounted for 7% of national budgetary revenue.

An estimated 300 million Chinese smoke. Zhou thinks this number and overall demand will not change much in the next few years.

The profits have spawned not only a vast smuggling industry but also widespread counterfeiting, with the biggest case coming to light last month with the sentencing to death of Han Shulin, 43, a former member of the air force.

After serving a term for fraud and bigamy and being released from prison, Han set up a firm in 1992 in Kunming, capital of Yunnan, where the nation’s best tobacco is grown, offering to sell the “Hill of the Red Pagoda” brand.

Posing as a unit of the air force and offering the use of military planes, his firm signed contracts worth $16.9 million to provide 18.7 million cartons.

Also losing out are thousands of tobacco farmers who planted too much leaf this year.

China has more than 5 million metric tons of leaf, enough for a 2 1/2-year supply and far more than the government can afford to buy. This has led some farmers burn their tobacco in despair.