For this China Yuppie the new capitalism brings six-digit salary

THERE are few factory managers in China, or anywhere else in the world, who could boast an income for last year of $125,000. In a country where annual incomes tend to be under $400 and where rice costs less than 10 cents a pound, Liu Chang Ming's windfall in 1984 was extraordinary.

His fortune resulted from a contract to manage a village-owned factory. He agreed to manage the factory in return for a percentage of any profits above a certain amount. He also received a house and car, since his enterprise met the contract's criteria for profitability. This year, he said, he wants to double last year's income.

How did Liu, a former factory worker in his late 20s, mobilize his workers at the Feide Electronics Corporation to assemble electrical casings last year for a profit of $1.8 million?

``We set up a system where there is only one leader of the unit. I have supreme power. . . . Whatever orders I give must be carried out, and I give people full responsibility under me,'' he said.

It is an open debate whether the inclination toward such individual responsibility and managerial autonomy is found more among the feisty and resourceful peasants of China's countryside or among the better-educated and sophisticated residents of its cities.

But the explosion in rural industries in the past two years, especially in the countryside near China's urban areas, hints that there may be more than one prodigy of managerial talent in the agricultural communities.

Until three years ago, most of the inhabitants of the village of Cai He, which hired Liu, were peasant farmers who raised mainly wheat, corn, and rice. Last year, 98 percent of the income of this village, with a population of 1,230, came from nonagricultural production.

There are now a dairy farm, an ice-cream factory, paper and cement mills, a machine repair shop, a transport service, and, of course, Liu's tightly run electrical equipment factory. All these small industries were established without state help, mainly from the savings of local villagers.

Now 80 percent of the labor force of 552 workers is involved in such economic activities, village leaders said. In explaining their efforts, the village's deputy Communist Party secretary, Wang De Jun, said that the peasants know they will never prosper from only tilling the soil, but must expand into industry and commerce.

``Our goal is to be no longer a peasant village but a rural industrial town,'' said Mr. Wang.

The village of Cai He, a two-hour bus ride north of the capital, is exceptional. (Communist Party General Secretary Hu Yaobang dropped in last spring on 20 minutes' notice to chat with village leaders and compare notes on implementing the economic reforms.) With a per-capita income last year of $900 -- more than twice the national level and four times that of the Peking region -- it is the richest village in the Peking municipality.

Cai He has built 330 two-story houses with four to five rooms each. The families paid 75 percent of the building costs, with the remainder subsidized by collective funds. More houses are under construction.

But Cai He is not that exceptional. In the Peking region in 1984, according to a government survey, the number of laborers in nonagricultural production surpassed for the first time the number engaged in agriculture. The city's planning commission reports that the number of rural enterprises in the municipality, which includes Peking and its surrounding 10 counties, shot up from 8,900 in 1983 to 16,500 in 1984. The value of rural industrial output rose to more than $1 billion, up 28 percent over the previous year, slightly above the national average.

For China as a whole, according to official sources, rural industry accounted for about 20 percent of the country's total industrial output last year. In the fastest-growing province of Jiangsu, the value of rural industrial output last year surpassed for the first time that of agriculture, forestry, animal husbandry, and fisheries.

In Zhejiang Province, some 40,000 new township-run enterprises were established with peasant funds during the first half of 1984. In southern Guangdong Province, especially around its largest city of Canton, the value of rural industrial output rose by 40 percent last year.

Rural industrialization is driven by local initiative and shaped by market forces. Central government economic planners have said they expect that by the year 2000, only 30 percent of China's rural work force would be engaged in agriculture, compared with 75 to 85 percent today.

The problems of such a massive shift in the nation's economic base are obvious. The flow of raw materials and commodities for the thousands of these small industries, which are outside the state-controlled enterprise system, must be improved. Technical know-how must be shared more widely among rural entrepreneurs if the new industries are to be efficient and competitive. Population shifts must be taken into account as people seek better-paying jobs.

In anticipating some of its future needs for technical and managerial know-how, the villagers of Cai He have pooled their resources to sponsor university students. The village last year selected 58 students to begin studies in engineering under an agreement that, after graduation, they will work in the village and help modernize its industries. This year the program is being expanded to 100 students in the fields of economics and business management.

What did self-trained Liu Chang Ming do with his hard-earned money last year? After paying 42 percent of it in taxes to the state, he said he gave most of it to build a kindergarten for the village.

The village leaders must be pleased not only with his capitalism, but also with his socialism.