PREMIER Zhu Rongji is now finishing his first 100 days in power, and a year has gone by since President Jiang Zemin unveiled radical reform plans in his speech to the Party School in Beijing. The exaggerated predictions of the 'greatest sale in history' of state assets have yet to come true, and instead Premier Zhu, who promised to brave minefields in March, now looks like embarking on a tactical retreat. A sober look through the list of reforms promised in March suggests that far from experiencing a 'big bang', China is moving forward as it always has - slowly and incrementally. At the same time, Mr Zhu is also showing a steely determination not to be panicked or blown off course by the Asian financial crisis. He is steaming ahead with plans to cut the central bureaucracy to 29 ministries with a 50 per cent staff reduction. Yet the momentum is slowing, as is the case with most of his reforms. The deadline for ministries to finalise their plans to relocate staff has been delayed a month, to the end of July. Many ministries and provinces are saying it cannot be done and are only offering staff cuts of 20 per cent. At the same time, Mr Zhu has ordered provinces to scrap the innumerable fees and charges they levy to bolster their tax revenues and pay for staff. Newspapers report success with, for instance, Hebei announcing it has cancelled more than 100 extra fees. Yet many local and provincial governments are still short of cash, with both teachers and officials getting wages three months late - if they are paid at all. Out of the five areas he slated for structural reform during his National People's Congress press conference, he is already back-pedalling on grain and housing reforms. Instead of relaxing the state's grip on the purchase, storage and sale of grain by encouraging competition between the state and private companies, Premier Zhu has issued new regulations outlawing competition from the private sector. China wants to keep subsidising state grain purchases in the hope that it can stop peasant incomes from falling. Average rural income growth has slowed much more than expected, denting hopes that rural demand could soak up the huge stocks created by industrial overcapacity. As there is also a surplus of grain and cotton, liberalising controls would mean market prices would fall and lower peasant incomes. Housing reform is also being sacrificed to ensure average annual economic growth reaches eight per cent this year. To keep the construction industry growing, Mr Zhu is not enforcing a sell-off of overpriced housing stock nor is he ordering work units to raise rents on July 1, a move which would have encouraged people to buy housing. Rising unemployment and growing social unrest make this politically impossible in many cities. Instead, Mr Zhu is now saying that each province will have to proceed with this reform according to its own circumstances. In Beijing the cut-off date for receiving free state housing has been extended from July to the year end. Although Mr Zhu had promised to make housing a new engine of economic growth, this area of reform will take longer to make an impact than initially expected. And as people who do buy are not allowed to sell for the first five years, a secondary market will only grow slowly and people will still find it hard to move where the jobs are. It remains to be seen when health-care reforms will start. Mr Zhu had said this would begin only in the second half of the year after a nationwide programme was formulated. In the face of the bad-debt crisis in Japan and East Asia, Mr Zhu's promise to start 'fundamental reform' of the country's banking system seems even more important. So far he has shown determination to improve regulation but has taken no dramatic steps. The 270 billion yuan of state bonds which were to bolster the capital ratio of the four big state banks have yet to be issued. Much hangs on progress in state-enterprise reforms. Little is being achieved towards either 'corporatising' the big state companies or enabling banks to recover loans and break through the debt chain. At the 15th Party Congress last October, Mr Jiang promised to let go hundreds of thousands of small- and medium-scale enterprises in what some observers called privatisation. The process is now so far advanced that by the end of last year a third of the 520,000 township enterprises had been sold off or turned into shareholding co-operatives. Yet the Communist Party is worried that this is not going according to plan. A circular issued this month warned against officials selling firms to themselves at low prices and evading the repayment of debts. It seems officials are being allowed to divert state assets into their own pockets while leaving the state to pick up the tab for the enterprises' liabilities. Contrary to expectations a year ago, few of these enterprises are reported to be issuing shares to workers or becoming joint stock companies. If this is happening, the media is not publicising it. Still fewer reports are printed of successful public auctioning of state enterprises or sale to foreign buyers. Shenyang has tried hawking companies in Europe, but the tour by its party secretary, Mu Suixin, brought few reported results. The only exception is Kodak, which is acquiring three struggling domestic film manufacturers. Mr Zhu has promised to turn around the state sector within three years, so it is too early to say whether he can get the job done. But so far, circumstantial evidence points to nothing better than a collapse with enterprises closing down or shedding labour at an accelerating rate. Official figures claim the number of laid-off workers in the first quarter this year was 10.1 million. Some 18 per cent of textile industry workers have been laid off and, in all, perhaps 10 per cent of state enterprise workers have now been made redundant. This figure, however, does not include those workers and pensioners who are not being paid. The tight monetary policy Mr Zhu has stuck to - coupled with an oversupply of many goods - means he will certainly stick to one commitment, keeping inflation under three per cent. In fact, the economy seems to be slowing so fast that most prices are actually falling. The challenge has become deflation, not inflation. Chinese economists are claiming that the additional infrastructure spending promised has been put in motion and will kick in during the second half of the year. This has to be big enough to reverse a five-year continual slowdown in economic growth rates. If Mr Zhu's biggest promises - to keep the economy growing at eight per cent this year and not to devalue - are to be kept, it is becoming clear that new measures will be needed. For all the personal confidence many have in his abilities and character, signs now point to growth slipping below seven per cent this year. Urban demand for consumer goods is still declining as unemployment grows, while rural demand is very weak, with incomes rising only two per cent this year. Stockpiles of consumer goods - from suits to bicycles - are still growing. About a third of China's GDP growth is linked to exports, and while these were still growing in the first four months this year, in May exports declined for the first time in two years. Beijing keeps increasing export subsidies by expanding the tax rebates it gives to exporters and taking other measures short of devaluation. Yet the criticism of Japan's actions and the hints about a possible devaluation are fuelling speculation. Certainly, money-changers on the streets of Beijing are busy offering higher rates as people buy dollars. In the three months since Premier Zhu installed his new team, the difficulties of carrying through his domestic reforms have increased so much that he may have to follow his predecessor Li Peng in opting for social stability over radical reform. Slower growth will not necessarily be ruinous economically, but it will shake public confidence in Mr Zhu and could fatally undermine his authority.