Inside Report (2)

Deng Xiaoping's campaign to rejuvenate the government and party seems to have hit a number of snags. Chairman Hua Guofeng has lost his bid to remain prime minister. But he may have enlisted the aid of conservative older military leaders in order to keep everything from going Deng's way. For instance:

* Marshal Xu Xiangchian will apparently stay on as defense minister, largely because agreement can't be reached on his replacement.

* Marshal Ye Jianying, chairman of China's legislature (the National People's Congress) and titular head of state, will also keep his post. He's been showing his displeasure with de-Maoization by staying away for months from major governmental occasions in Peking.

Observers think that if Hua can win support from conservatives in the army, he may be able to present an alternative line to the present trend of economic modernization and moving away from the policies identified with the late chairman Mao Tse-tung.m