CHEN YUN'S death has eased fears among foreign observers that China will abandon the drive towards capitalism after Deng Xiaoping dies. But it has heightened fears about China's political stability. Foreign diplomats in Beijing interpreted the delay in announcing his death as a sign of uncertainty within the Communist Party as Jiang Zemin tries to strengthen his grip on power before Mr Deng leaves the scene. 'If they are so nervous about Chen, how long they will wait to announce Deng Xiaoping's death?' asked one Western diplomat. For many years analysts had talked of a 'death race' between Mr Deng and Chen. The two were born within six months of each other. Mr Deng was born first in August 1904 but was for decades Chen's subordinate in the party hierarchy. Such was Chen's influence that it was thought that if he outlived Mr Deng, he would slow China's reforms and promote central planning. 'Deng won the race but it no longer matters as much as it would have two or three years ago,' a Western diplomat said. Without Chen the future direction of the reforms is more certain but his absence might also stimulate the conflict between potential winners and losers of the succession struggle. Both Mr Deng and Chen are among the 'eight immortals', the most powerful members of the generation who joined the Communist Party after its founding in the 1920s and who controlled China's destiny in the post-Mao era. Of the eight, only five are alive: Mr Deng, Bo Yibo, Yang Shangkun, Peng Zhen and Song Renqiong. Chen has now joined Wang Zhen, Li Xiannian and Deng Yingchao and many others who died in the past few years. Among them is Chen's foremost protege former vice-premier Yao Yilin. These Long March era veterans gradually discarded their most important titles in the late 1980s but retained a final say in party affairs through the Central Advisory Commission (CAC). This institution was unique to the Chinese Communist Party and was created by Mr Deng after 1978 to formalise the power of the revolutionary generation. It was abolished in 1992 after which the public appearances of Chen and his colleagues became more and more infrequent. However, the CAC's members always took charge at key moments. The CAC orchestrated the dismissal of former party secretary Hu Yaobang in 1987 for being too soft on student demonstrations and 'bourgeois liberalisation'. At such moments of crisis CAC chairman Chen ignored party rules and convened an enlarged Politburo meeting to ensure enough votes to oust Hu. The CAC was also behind the decision to dismiss Zhao Ziyang in 1989 and to authorise the Army's intervention against the student protesters. 'Without Chen Yun and the CAC, there's a power vacuum. No one has the final say anymore except Deng who is on his deathbed,' a Western diplomat said. 'That's why the leadership is so nervous.' Any power struggle within the party leadership will now have to be settled by Mr Jiang - core of the 'third generation' - who lacks the unchallengeable authority of the 'first and second generation' of leaders. Observers believe economic issues are no longer central to the power struggle. 'With both Chen and Deng more or less out of the picture, there's no longer a clear two-line struggle over economic policy,' a Western analyst said. Chen was regarded as the flag bearer for a politically conservative group of leaders who ensured the appointment of premier Li Peng in 1987. Since then Mr Li has promoted slower economic growth against the wishes of Mr Deng. As a Jeremiah figure, the influence of Chen's warnings is seen in the way Mr Jiang and others repeat his fears that the party is being undermined by pervasive corruption created by Mr Deng's dual-track economy. Cadres have enriched themselves by exploiting the gap between state and free market prices while weakening the party's power base by fostering the private sector. Chen's reputation as a moral beacon was enhanced by his record under Mao. While Mr Deng had enthusiastically backed Mao's disastrous Great Leap Forward in the late 1950s and persecuted intellectuals in the Hundred Flowers campaign, Chen opposed these policies. Chen's own policies helped China recover from the famine which cost tens of millions of lives but Mao condemned him as a 'rightist'. This verdict was deliberately withheld by one of Mao's secretaries Tian Jiaying which may have saved Chen's life during the Cultural Revolution. Chen dropped out of sight feigning illness and devoted himself to studying local opera. He did not return to centre stage until after Mao's death.