King of carving

FROM the 11th-floor suite of his company headquarters, Zhang Guoxi looks to the horizon of one of China's poorest provinces and takes a sip of tea in a toast to Lee Iacocca. ``In the future I will face a lot of political and financial difficulties, but if I bravely face these challenges then I will be a real man - like Iacocca,'' said Mr. Zhang. By his own measure, however, Zhang has already proved his manhood several times over.

Building what some officials say is the largest private business fortune in China, he has overcome adversities that could unnerve some of capitalism's most idolized industrialists.

The rags-to-riches climb of Zhang Guoxi is more than a tribute to perseverance and business acumen. His story epitomizes the grim ordeal and sudden revival of Chinese capitalists. And it shows how China's Communist Party, seeking swift economic growth in a decade of reform, has created class conflict by nurturing capitalists in its ranks.

Zhang began amassing his wealth - estimated at more than $20 million by some officials - during the Cultural Revolution, the dark days for Chinese capitalists and other ``counterrevolutionaries.'' He sold his house in 1973 for $380, built a workshop, and recruited a woodcarver to train 21 fellow workers in a defunct garage.

After persuading a state trading company in Shanghai to export his hand-carved chests, Zhang enjoyed a sudden surge of profits that prompted radical zealots to label him ``a newborn capitalist thing.''

A team of fanatical Maoists dogged him throughout the remaining three years of the chaotic period, criticizing his work and obstructing any plans that did not jibe with their iconoclasm. They often disrupted his supply of raw materials and electricity.

When the Communist Party decided in 1978 to exploit rather than continue destroying capitalists, Zhang's workshop gained its first official token of political legitimacy.

In the ensuing decade, economic reform has unleashed go-getters like Zhang and allowed supply and demand instead of government dictates to shape much of the economy. As a result, China has been buoyed to unprecedented prosperity, and Chinese entrepreneurs have enjoyed a heyday unseen in more than four decades.

Zhang employs nearly 3,000 workers in 32 branches in China and seven offices in Japan, West Germany, and Hong Kong. While broadening into plastics, garments, pesticides, and electric fans, his company specializes in furniture, Buddhist shrines, and other finely carved wood and copper decorations made for export at its Yujiang Arts Woodcarving Factory.

``I plan to be the world's `king of carving,''' Zhang said, above the rapid tapping of dozens of carvers turning blocks of wood into Buddhas, pagodas, bearded sages, strutting cranes, and phoenixes in repose.

Ironically, such ambitious entrepreneurs have sprung not from a throwback class of pre-revolution capitalists, but from the government and Communist Party. Zhang is the son of a local communist cadre, has been a member of the party since 1972, and is a delegate to China's nominal parliament.

Former party or government officials run about 80 percent of China's 220,000 private enterprises, said Liang Chuanyun, a vice-director of the state administration for industry and commerce. ``These people possess the qualities of an entrepreneur because they have a deeper understanding of party and government policy than ordinary citizens and have the right connections,'' Mr. Liang said.

Most members of the new moneyed class, therefore, are snugly tied to China's exclusive political party, despite its legacy of anticapitalism. They have derived political power from business skill and wealth instead of revolutionary ardor or working-class background.

The small group of emerging merchants and capitalists are as dependent on officialdom as their predecessors in pre-revolution China. Like those earlier business magnates, they have not built industrial and entrepreneurial power free of government control.

Consequently, like other members of China's nouveaux riches, Zhang must continually cultivate the favor of his communist patrons. He confronts the absurd task of reconciling his growing personal riches with the communist ideal of eliminating private property.

Zhang tries to soften envy over his wealth by sharing it, delivering philanthropy with high-minded socialist rhetoric. Last April, he donated $293,000 to charities. In 1986, he built a seven-story science center for the local junior high school.

In leisure, however, his tastes are distinctly plutocratic. He hunts for wild boar and pheasant in nearby hills and plays billiards in the penthouse of his headquarters. He has sent his oldest daughter to Shanghai for schooling, owns eight cars, and has asked the province for permission to purchase a helicopter.

Unable to hide his wealth, Zhang has received threats and retains a kung fu champion and two other bodyguards skilled in martial arts.

Other Chinese entrepreneurs also fear for their safety. After the murder of a model reformist hotel manager in Shenyang in July, the Chinese Entrepreneurs' Association released a statement saying, ``As the reforms depend [on us] we are the focus of all kinds of conflict.

``We face every kind of obstacle: illegal slanders, threats and injury,'' the association said. Moreover, a recently enacted law that legitimizes entrepreneurs and their firms ``lacks effective measures and concrete regulations,'' it said.

Communist leaders have done little more to ease the class tension between haves and have-nots than to urge entrepreneurs to seek the protection of the law. They say such conflict is inevitable during the long, ``first stage of socialism,'' in which wealthy private businessmen help build the economy to a level sufficient for a smooth transition to a communist Utopia.

Within the walls of his factory complex, Zhang appears to give his workers little cause for resentment. He drives himself from building to building and often wears nothing more ostentatious than a T-shirt.

Workers call Zhang simply ``lao ban,'' or ``boss,'' an accolade that disappeared during the Maoist era because of class overtones. He trains them in carving and gives them subsided housing, child day care, lunch, haircuts, a movie twice a week, and a daily cookie.

Attending so thoroughly to his workers' material needs, the self-made tycoon with just a grade school education keeps communist ideological training to a minimum.

Zhang said that at Yujiang, unlike many other Chinese factories, there is no strife between the party secretary, who upholds education in communist dogma, and the factory manager, who tends the bottom line.

With a deep laugh Zhang said, ``Yes, we have a Communist Party secretary here - me.''

Next: While some grow rich, poverty persists for Chinese battling drought and hunger on the vast northwestern plateau.