How China's Li Peng Is Gathering The Reins Of Power

In the West, Chinese Premier Li Peng is known for his perpetual scowl and his infamous support of the bloody 1989 crackdown at Tiananmen Square. But the 63-year-old Li is also proving to be a skilled politician who is deftly managing to boost his standing at home.

While China waits for Deng Xiaoping and his aging cohorts to pass from the scene, Li is carefully tending a power base that is designed to put him at the head of the pack once Deng dies. Not long ago, most analysts believed Li Peng had little staying power. But as head of the government, he has managed to take credit for China's economic recovery and for mending the country's diplomatic fences abroad.

Li has shrewdly taken advantage of the rapid collapse of Soviet communism, which sent a chilling message to the Chinese Communist party. Obsessed with maintaining stability, Beijing's top leaders were convinced that the best way for them to survive was to keep the screws on political dissent but also energize the economy with free-market reforms.

FAMILY MAN. Li has delivered on this program. As any visitor can see, China's economy is thriving. In contrast to Moscow's long breadlines and runaway inflation, Beijing's markets are piled high with affordable produce, stylish garments, and electronic gadgets. Inflation is down to 5% from 30% in 1988, and hard-currency reserves have surpassed $35 billion. "People can see that on a yearly, a daily basis even, life is getting better," says a U.S. official.

Many economists credit a three-year austerity drive that Li spearheaded for getting the economy back on course. A hydraulic engineer trained in Stalin's Soviet Union, Li is a hard-line Communist at heart. But now, he has jumped on the reform bandwagon. He appears on television almost daily, traipsing through factories, coastal free-trade zones, and new stock exchanges. But to avoid another outburst of inflation and layoffs at state-run factories, Li is resisting Boris Yeltsin-style economic shock treatment.

His Beijing propagandists are also trying to present a kinder, gentler Li Peng by depicting him as a humanitarian who rushes to the scene of natural disasters and as a family man. "Li Peng never behaves like a domineering husband, and he always helps me do housework when he is free," his wife, Zhu Lin, told the official press. They also highlight his close ties with the late Zhou Enlai, Li's stepfather. Portraits of Zhou are posted throughout Beijing. The subliminal message: Li is carrying the mantle for the revered elder statesman.

GLOBAL OVERTURES. To improve his international image, Li Peng has trotted the globe, presiding over the normalization of ties with former foes from Singapore and Vietnam to India and Israel. But Li's image has not sold well in the U.S., where memories of his leading role in the Tiananmen crackdown remain vivid. Bush took the risk of agreeing to see him in late January because the President believes in a "constructive engagement" policy with the world's most populous nation. But just by meeting with Li, Bush makes the Premier look like a star diplomat back home.

Li did make it easier for the meeting to take place: He released nine dissidents on Jan. 27. But he still has a long way to go. To Chinese intellectuals, who routinely refer to him as "disgusting," Li remains a throwback to a dying era of outmoded party hacks who turned the guns on their own people. But as China's doddering leaders cling to power, the savvy Li Peng is using his time wisely. He may wind up with more clout than anyone imagined.

By Pete Engardio in Beijing, with Amy Borrus in Washington and Joyce Barnathan in New York

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