China Promotions Hint at Reforms by Elevating Moderates, Deng Has Rebuffed Conservatives Who Were Undercutting His Reforms

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CHINA'S rubber-stamp legislature yesterday promoted two pragmatic officials to be vice premiers in what is widely seen as an encouraging sign for the country's besieged economic reforms.

The elevation of the moderates is an attempt by Deng Xiaoping, China's senior leader and the architect of reform, to rebuff a powerful faction of doctrinaire conservatives, say Western and Asian diplomats.

The changes could help Mr. Deng revive the credo of bold innovation that inspired his reforms before his rivals reimposed strict central planning in 1988, the diplomats say.

The new vice premiers - Zou Jiahua, head of the State Planning Commission, and Zhu Rongji, mayor of Shanghai - are said to favor a renewal of market-oriented economic forces. They are likely to tilt the State Council, China's Cabinet, away from the harsher aspects of a command economy, the diplomats say.

"These changes are the most promising political sign for economic reform in more than two years," says an Asian diplomat on condition of anonymity.

The appointments are unlikely to spur immediate price decontrol, private shareholding, and other reforms that conservatives shelved. A severe deficit and worries of inflation preclude initiatives that could undercut stability, the diplomats say.

"The economy is in lousy shape and social stability is still the main concern: No one is going to go out on a limb for reform," a Western diplomat says.

Nevertheless, Mr. Zou and Mr. Zhu are likely to resist the continued dismantling of Deng's reforms and, if the economy improves, might support en- lightened changes, diplomats say.

Zhu, in particular, is said to approach economics with a pragmatic, open mind, free of orthodox Marxism. He earned the plaudits of foreign businessmen and the nickname "One-Chop Zhu" because of his efforts to cut red tape and promote foreign investment in China's largest city. Wooing new investment

Since becoming Shanghai's mayor in 1988, Zhu has stumped successfully among leadership circles for the Pudong New Area, a large tract of run-down buildings and rice paddies in East Shanghai set aside for foreign investment.

According to a highly ambitious development scheme, Pudong would include high-technology manufacturing, a free port, and foreign bank branches. It is the pet project of some leaders who see it as the catalyst for development of the lower half of the Yangtze River Valley. …