Visit to a Chinese `millionaire'. If the government ever gives the signal that unbridled capitalism is acceptable, Mr. Hong will gladly become the king of the moon-cake manufacturers.

THE day began unpropitiously. At 7 a.m. the dense, sepia smog was thicker than it had been during the first three days of my visit to Chengdu, the capital of Sichuan Province in the People's Republic of China. The chronically dusty city was gloomier than usual. I could barely distinguish the two graceful old people whom I had watched floating through their tai chi exercises on previous days. The streetlights illuminated the large particles of grit in the air - a combination of soot from burning bituminous coal, industrial pollution, and probably the cigarette smoke that was everywhere.

Chengdu was to have been the ideal city in which to learn about China's Great Leaps Forward since the end of the Cultural Revolution (1966-76), particularly about its accomplishments in science and technology. The city boasted more than a dozen institutions of higher education, including the internationally known Sichuan University and Sichuan University of Science and Technology and two medical schools - one conducting important research on the chemistry of traditional Chinese herbal medicine.

Electronic industries are thriving (along with many other small industries responsible for unpleasant air quality). Several hours' ride beyond the city, the country's major nuclear fusion laboratory is reputed to be carrying out advanced research. In addition, an experienced American journalist in Peking had said that it was imperative to meet the commissioner of science and technology to gain an overview of the rapid changes taking place in Sichuan, a province so populous that were it a county it would be the seventh-largest in the world, larger than France. A visit to each major institution stood high on my list.

But no one had warned me that National Day, Oct. 1, the 38th anniversary of the communist revolution, would be celebrated much like bank holidays in Britain - for days before and after the holiday itself.

For almost one week I had been wandering around to museums and historical sites, usually of great interest, but hardly what I had prepared for so arduously. As a visiting scholar to the Chinese Academy of Sciences, I had assumed that, as in the previous weeks in Peking, I would be scheduled to lecture at local universities and research institutes. Plans had been under way for more than a year, so it was with no small amount of dismay that after finally meeting my interpreter, Mr. Liu, who had been sent by the academy, I realized that he did not have one science-related activity in store for me. Instead, he mumbled something about everyone's being away for the holidays and that we would visit a farmer's factory.

Once more I pleaded for an opportunity to visit the academy, but it was not to be. Liu said again, this time more firmly, ``We go to farm.'' I relented. After all, I had heard a great deal about the rapid social changes since farmers had been allowed to market their own crops, use the profits to go into business, and build their own houses.

I woke the driver (who would go to sleep as soon as the car stopped), and climbed into the academy's 1980 Shanghai, a behemoth that looked like a pre-World War II Cadillac. Equipped with lace curtains on the back windows, underneath which lay a chicken feather duster that along with the curtains had collected a measurable amount of dust, the car plowed murderously through the dense crowds of pedestrians, bicyclists, and trucks that packed the road.

Somewhere just west of the city, the car veered sharply to the left onto a dirt road, forcing the hapless passers-by into the fields. We were faced with an incongruous landscape. Small, smokestack factories interspersed with one-story red brick houses seemed to be growing at random out of the acres of densely cultivated plots. We approached our destination - a compound that combined several shapes and sizes of small buildings built around a courtyard - via a driveway through the cabbages that appeared to have been designed by a freehand artist - not exactly the entrance I had envisioned to the new, capitalist enterprise. This was to be the first of many surprises.

As we drove into the courtyard, which was strung with laundry, I noticed four, one-room attached buildings. All at once several friendly faces emerged from the first building on the left and I was ushered into the third (here a bed was hidden behind a partition) where a small group quickly assembled - the owner's wife, daughter, a friend of the family, the head salesman, the daredevil driver, and my interpreter, all within a space not more than six feet square. As we were settling into the ritual of sipping jasmine tea, a motorcycle zoomed up to the open door, and a sturdy, exuberant figure who resembled a young Chairman Mao dashed into our midst.

It was the boss, Hong Se Kun, farmer and factory owner. I had encountered my first Chinese ``millionaire'' and he his first Western guest. It is safe to say, neither of us was disappointed.

Impatient that the others had not extended sufficient hospitality, he darted behind the screen to produce fresh mandarin oranges and mounds of moon cakes, the latter being the basis on which his fortune had been made. I learned quickly that these little cakes, made from a lard-based dough and stuffed with chopped nuts, were consumed in ever-growing quantities, particularly on holidays. Unbounded appetite for sweets coupled with growing affluence in China had created a market for which Mr. Hong, as I later learned, was busily providing.

Not wasting any time, he launched into a delightful, animated recitation of how as a once-poor farmer he had been able to borrow 2,000 yuan from each of five friends (about $3,000) four years ago to set up his factory. By the end of the first year his profits allowed him to provide each of his 55 employees with a bonus of a trip to Peking or Kunming to visit historical sites; at the end of the second year they had a choice between a trip or cash; and the third year they had received even larger bonuses.

As I warmed to Hong's and his family's fascinating saga and irresistible friendliness, he responded by bringing forth more and more offerings. The first sign that I was not an ordinary guest (according to Liu) came when he produced from the back room his most special offering ... a package of Marlboro cigarettes, which cost about half a month's salary for a factory worker and are available only to those with special currency. The room was windowless except for the open door, and even before the prized Marlboros arrived, I had been wheezing from the thick smoke of Chinese cigarettes. I wanted to explain that I believed that smoking was a dreadful habit. It was impossible to explain all of this through an interpreter. Instead I asked to visit the factory.

THERE at the end of the courtyard, about 20 young people, mostly teen-age girls, were cheerfully engaged in baking cookies. The premises might not have passed inspection by any Western country's sanitation office, but the factory had an enviable cheerful atmosphere.

As a skeptical social scientist, I tend not to trust my first impressions, particularly when they are as enthusiastic as mine were both about the Hongs and their workers. An employee I met with later, however, assured me that the workers were as happy as they appeared, and that Hong's success had been based in part on his caretaking but also his great capacity for making friends. He not only housed and fed his workers, but also provided them and the local government officials with banquets on every significant occasion.

On our return to the still smoke-laden office, Mrs. Hong began to bring out the family photograph albums, which pictured the Hong family and their workers at the Great Wall; at the Ming tombs; and at many feasts, the most important one being the completion of the Hong family home. My interest in the house, based on the Hongs' obvious great pleasure in it, inspired an invitation from Mr. Hong.

We set off for the three-mile trip to visit their two-year-old house. He took the lead on his motorcycle, with his daughter, the company bookkeeper, perched precariously over the rear fender. The rest of us followed in two cars along roads so densely packed with trucks, bicycles, pedestrians, and farm-produce vendors that the pavement was often indiscernible. We arrived safely in front of a two-story brick house set behind a solid six-foot wall on top of which shards stood against would-be robbers.

In the front yard on one side, two cooks were standing over enormous woks, not making the family's meals but one more product for the market ... a sort of a ``meals on wheels'' for the farmers who came in from the countryside to sell their crops.

Hong was also marketing the cabbages growing along the factory driveway. He was expanding into every business niche. The other side of the front yard, where several chickens were foraging, was dominated by a huge coal pile used to fuel the stoves. Refuse covered much of the grounds, but colorful banners given by employees and friends to celebrate the completion of the house lent such spirit that it overwhelmed my impression of squalor. We were taken directly to the second floor - four rooms each with its own lock, off an outdoor corridor. As we entered the living room, Mrs. Hong apologized for the dust. Business was so demanding, she said, that they had not slept at home for three months. Now I understood the laundry at the factory.

Mr. Hong uncovered a television and announced proudly that he owned four color sets. He said he also owned two other houses, which he had built for his children. At each further revelation about Hong's financial achievements, I sensed Liu's growing discomfort, which I could attribute only to envy.

I had noted such envy of the new-capitalist farmers from others on many occasions during the previous weeks. A young professor in Peking with whom I ate at the wagon of a street vendor from Harbin exclaimed with awe that this scruffy barbecue chef and all his compatriots lined up behind similar barbecues were ``millionaires.''

The visit was also a first for Liu. As we left the Hong house, he stood with me in the road and looked back at it. Finally, visibly paled and unable to hold back his feelings any longer, he burst out that no matter how hard he and his wife would work for the rest of their lives, they would ``never, never'' be able to own a house even half this size.

Yet by Chinese standards, Mr. Liu was one of the elite. He was a 27-year-old university graduate in a country where less than 3 percent of those of college age attend university. His wife, a stunning young woman, was a designer. He had invited me to visit them, and I had looked forward to discussing with her the new fascination with Western clothes. (The latest fad had young city women spending many months' salary on Italian shoes.)

Cultural stereotyping had led me to the mistaken interpretation of Mrs. Liu as a designer of chic clothes. In fact, she designed coal-fired power plants. But the Lius lived in one room (immaculately and attractively furnished) provided by the power company, and would not be entitled to another room for two more years. They had a handsome 11-month-old baby son, but because of their crowded living conditions they boarded him with an older woman on the far side of the city and saw him only once a week.

Mr. Hong, not formally educated, nevertheless provided great luxuries for his children. His income appeared to be growing every month. A recent banquet photograph showed the mayor thanking Hong for providing the town with a new bridge. Mr. Liu, a heavy smoker, yearned for Marlboro cigarettes, but even this small luxury he would never be able to afford.

After we returned to the factory, Hong's gift-giving continued. More cookies, candy, and Chinese wine appeared. Mrs. Hong insisted that I choose one picture from their family album to take home. I was drawn in by the warmth of this family and touched by their efforts to get to know all about me and my family. It was not just the friendliness and heartwarming tales of new challenges met with success, but also the contagion of their pleasure in what they were accomplishing.

Although Hong said he did not want the firm to grow larger, insisting that he was already a ``millionaire,'' there was little doubt that if the government gave the signal that unbridled capitalism was acceptable, he would gladly become king of the moon-cake manufacturers.

I learned from one of Hong's salesmen (who said that his boss had more friends than anyone he knew) that total sales had amounted to about $250,000 the previous year, of which the government took 6 percent. After all of his expenses, Hong retained $10,000. Liu earns $300.

The hours sped by. As I left, I was loaded down with gifts and, most valuable of all, a marvelous picture of the family and Mrs. Hong's mother in front of the banner-covered house the day they moved in - or at least moved in their possessions.

Determined to reciprocate in some fashion, I asked my interpreter to rearrange some appointments so that I could return with appropriate gifts. Much to my surprise, the otherwise retiring Liu said, ``There is only one gift he would like, and that's a carton of Marlboros ... and so would I.''

What a dilemma for a founding member of Action on Smoking and Health, and the scourge of all cigar and pipe smokers. The discomfort in buying those cigarettes still lingers. But the memories of the ``millionaire'' farmer and his family has helped me compensate ... almost.