ASIA : Boat Fire That Killed 24 Taiwan Tourists Strains China Relations : Incident embarrasses Beijing by spotlighting mounting insecurity in the countryside.

They came as cultural pilgrims, eager to see some of the fabled and sacred sites--cloud-shrouded mountains and serene lakes enshrined in classical Chinese poetry--that decades of hostility between Taiwan and China had previously blocked them from visiting.

But the package tour for 24 Taiwanese ended in fiery death on Qiandao (Thousand Island) Lake here in Zhejiang province late last month. Relatives who came to claim the bodies said mainland Chinese officials cremated the remains to hide what really happened in the March 31 incident.

The resulting outcry, joined by Taiwanese President Lee Teng-hui and other senior officials, has developed into a major setback to mainland-Taiwan relations after several years of gradual reconciliation between the Communist and Nationalist regimes. To the embarrassment of the Communist government in Beijing, the incident also spotlighted mounting insecurity in the Chinese countryside, where incidents involving armed gangs of brigands are increasingly common.

At first, the Chinese government characterized the mid-lake fire--which also claimed the lives of eight mainland Chinese crew members and tour guides--on the pleasure boat as an accident. But under pressure from the Taiwanese government, mainland officials earlier this week reversed themselves, admitting that investigators had found “suspicious clues” pointing to the possibility of sabotage.

Some of the Taiwanese relatives who came to the mainland claimed that pirates had herded all of the tourists and crew below decks and then set the excursion boat ablaze. Other sources discounted the possibility of robbery as a motive, claiming that valuables were found on the charred bodies.

“If evidence confirms that the accident was staged,” the official New China News Agency reported, “the culprits will be severely punished according to law.”

Some sources here in Hangzhou, the scenic lakeside provincial capital, said Public Security Department investigators already have several suspects in custody. A spokesman for the provincial press office declined requests for interviews from a foreign reporter, claiming that the “incident is still under investigation.”

However, the extent of crime at popular tourist destinations was revealed in an April 11 statement by the provincial Ministry of Security Police in the official newspaper, Zhejiang Daily. The statement spoke of “frequent occurrences of major incidents in tourism areas.”

Such admissions of uncontrolled crime are rare on the Chinese political scene. The ministry spokesman pledged that “security arrangements for scenic spots, tourism routes and sites will be reinforced” after the Qiandao Lake incident.

At stake are several hundred million dollars in revenue that Taiwan tourists bring annually to the mainland. Last year, Taiwanese made 1.5 million visits to China, up from about 500,000 in 1989. The increase reflected the recent era of reconciliation. In 1993, Taiwanese visitors spent an estimated $600 million.

One of the principal destinations is this verdant land of rolling hills and lakes 100 miles southwest of Shanghai. The ill-fated Taiwanese tourists were on a typical excursion, beginning in the Huangshan (Yellow Mountains) in neighboring Anhui province, stopping in Qiandao for a cruise and overnight stay, and ending up here in Hangzhou on the banks of scenic Xihu (West Lake).

Reacting to the unexplained deaths and the anguish of relatives, the Taiwan Ministry of Tourism on Wednesday suspended all tours to the mainland beginning May 1.

The Communist mainland government attempted to smooth things over by holding an emergency meeting with Taiwan representatives with the Straits Exchange Foundation, which represents Taiwan interests on the mainland. In a statement issued Thursday, the two sides said they had reached an understanding that the investigation should be stepped up and the results made public.

But the Taiwan government made clear that it will not be satisfied with anything less than the arrest and prosecution of criminals it believes are behind the incident. For the Chinese government, struggling recently to maintain order in a sea of economic growth and political uneasiness, such an admission that it lacks control may be too high a price to pay.

Tragic Trip

The Taiwanese tourists’ trip began in the Huangshan (Yellow Mountains) and ended in fiery death on Qiandao Lake.