In Cradle of Communism, a Brand-New Mall in Mao's 100th Year, the Town That Sheltered Him for a Decade Is Tackling the Problems of Socialism with a Capitalist Solution

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THE town that once sheltered Mao Zedong and his Red Army for a decade and calls itself the sacred place of Chinese communism has a new icon: a planned shopping mall.

Tucked among the remote, eroded hills of northern Shaanxi Province, Yanan became the communists' refuge at the end of the Long March in 1937 and the cradle of a movement which eventually brought Mao to power 12 years later.

But since then, communist answers have left this town behind. Mao's white horse may stand stuffed in the local museum. And tourists may flock to see the caves where Mao, Zhou Enlai, and other revolutionaries lived and the buildings where Chinese communism first took shape.

But Yanan remains a backward hinterland in contrast to fast-paced coastal provinces that showcase China's economic reforms. About half of its 300,000 people still live in cave dwellings carved from the mud hills. Many children do not go to school.

Much of the industry is polluting and outmoded. The city gets a comparatively small $2 million annual subsidy from the central government in Beijing.

The provincial government in Xian, a day's drive away, is more interested in developing rich oil, coal, and natural gas reserves north of Yanan than it is in creating jobs for the city. And there is only one flight a week and one train a day from the provincial capital.

Like Chinese communism itself, Yanan and its conservative local leaders remained stuck in the revolutionary past. Now, though, the city has decided it must help itself, and it is struggling to join the mainstream moving toward capitalist ventures. Glitzy mall

The symbol of the new Yanan is a glitzy new shopping mall to be called the Shrine of Asia Economic and Trade Center. Proposed by local businessmen and planned for the center of town, the facility will have two high-rise hotels, a dance hall, and a revolving restaurant on top.

Unable to get grants or loans from cash-strapped Beijing and Xian, the development company plans to raise funds by selling $100 municipal bonds and seeking foreign investors.

The local leadership reticently signed on after an ideological debate over the propriety of building such a monument to capitalism in communism's backyard.

"This area is economically backward and dominated by conservative ideas," says Wang Qi, the engineer in charge of the project.

"There is no conflict now because the whole nation is opening up to the outside world," he says. "If Yanan clings to the past and has no opening, gradually, gradually we might be eliminated. …