Activist Promotes Competition, Bankruptcy

WHETHER in politics or business, Cao Siyuan confronts a bullheaded Beijing.

As a prominent activist, Mr. Cao campaigned on television to revise China's constitution and make its rubber-stamp parliament publicly accountable. That landed the economist first in hot water at his government job in 1988 and later in jail after the political crackdown in 1989.

Now, as a private bankruptcy consultant, Cao once again confronts China's immovable Communists. With the country's economy hovering between socialist planning and market reform, hundreds of state-run enterprises - one in 10, says the expert - are unviable in a capitalist system.

But Beijing refuses to budge, trumpeting market reform while continuing expensive subsidies and credits to loss-ridden enterprises. And hurting Cao's business in the process.

"Many enterprises should have been declared bankrupt, but the government protects them," the economist complains. "The enterprise doesn't yet have the decisionmaking power to apply for bankruptcy.

"I see lots of potential clients, but at the present they are still under the table," he says. "Some people attack me and say I want to become rich by exploiting enterprises. But I say it is glorious to make money from bankruptcy, because I'm actually promoting competition."

Cao, a stocky man with a jolly wit, gets serious when he talks about political and economic change in China. His hybrid Sitong Institute of Social Development, founded in 1988, does both bankruptcy counseling and studies on moving China toward parliamentary democracy. Cao, who employs 12 researchers, plans to broaden the consulting business.

Formerly attached to Stone Computer Group, a Beijing-based private firm that was a center of political protest in 1989, Cao lost his financial support and his salary when he was arrested.

Still, Cao says he remains committed to demands for parliamentary democracy, because "where people do not have freedom of choice, the candidates are imposed by the government and the government rapes public opinion."

But he says that more political freedom can only be ushered in by economic change.

"People say it's negative that the whole nation is doing business. But I say it's not bad," he says. "The Communist Party is using prosperity to try to fool the Chinese people. But with economic prosperity, the people will demand democracy."