China Loosens Credit Limits, Aims to Boost Crop Output

TO grapple with growing economic unease in cities and the countryside, the Chinese leadership is easing tight credit restrictions on lending to ailing state enterprises and trying to spur increased grain and cotton production, according to Western and Chinese analysts.

In speeches released yesterday, Zhu Rongji, vice premier and economic czar, urged the government to help state enterprises resolve problems and become efficient. Last summer, Beijing imposed harsh credit limits to end inflation and rampant financial and real estate speculation.

But anxious over the threat of labor unrest in troubled state-owned companies, Mr. Zhu indicated funds to help the enterprises will be available again. The State Statistical Bureau reported last month that 50 percent of the state enterprises are losing money while rapid economic growth has eased slightly, lessening inflationary pressures.

``They have decided to relax the money supply to help the state enterprises,'' says a Chinese adviser who attended recent economic meetings.

Beijing also is struggling to placate rural unrest over rising prices and corruption among local officials.

Textile factories, one of the largest employers in China, face price increases and shortages in cotton due to a shortfall in cotton production.

Recently, some factories have even been forced to stop production.

Referring to growing official reports of crime, feuds, and rural unrest, Ren Jianxin, a senior party official dealing with security matters, was quoted in the official People's Daily yesterday as saying: ``The security problems are escalating enormously in some rural areas, and the public reaction is intense.''