AMID the ritual praise for economic reform, enterprise restructuring and shareholding systems churned out by the deputies to the National People's Congress over the past two weeks, there was at least one voice of reason. Unlike most of the ministers, governors and mayors wheeled out to meet the press during the parliamentary festivities, Mr Xiao Yang, the newly appointed governor of Sichuan, did not pretend all was sweetness and light in the land of the socialist market economy. Mr Xiao candidly admitted that his province's experiments in converting enterprises to a shareholding system (a sacrosanct element of the Dengist reform canon) had been fraught with difficulties and that strict measures were needed to prevent stock speculation getting out of hand. The provincial government had been very cautious in limiting experiments in shareholding to just 12 enterprises but stock fever quickly spread as the news got out. Although the shares were supposed to be restricted to enterprise employees, there was a mad rush to get on the stock bandwagon, particularly in the capital Chengdu, and a fiercely intense - and illegal - secondary market soon developed, Mr Xiao said. ''Even enterprises which did not have permission to convert to a shareholding system, started selling off stock,'' he said. Mr Xiao said there was now an urgent need to rectify the market and strictly enforce the approval process for companies wishing to issue stock. But perhaps most importantly, he said, potential stockholders had to be educated to the fact that speculation did entail risk. ''People in China have not seen stocks for a very long time. They don't really know what they are,'' the governor said. ''They think that if you buy stock you will automatically make money. They don't understand that you can lose as well.'' Mr Xiao's comments are all the more notable because he is not, as one might think, a conservative economic planner seeking to pour cold water on Mr Deng's quasi-capitalist reforms, but a former ally of the disgraced communist party boss Mr Zhao Ziyang who pushed a series of radical reforms in the 1980s. The governor recognises both the disadvantages and the advantages of China's economic reform programme and unlike many of his comrades, he is willing to state so publicly. A rapid increase in corruption and influence peddling, for example, is one of the most obvious by-products of economic reform, so almost as soon as he took office this year, Mr Xiao introduced a three point ''morality code'' for his government employees. Officials would not be allowed to take a second job in the private sector while in public service, would not be permitted to play the stock market and would not be allowed to accept financial advantages from private companies. How strictly the code will be adhered to remains to be seen, but at least Mr Xiao has recognised there is a problem and has attempted to do something about it. Nor does Mr Xiao shy away from the delicate problem of his former friend and ally Mr Zhao. While most deputies avoided the issue or in some cases ran away when questioned about the former party general secretary, Mr Xiao talked at length about the need to recognise Mr Zhao's contributions to reform. The governor was careful to point out, however, that Mr Zhao had made ''mistakes'' and declined to say if he thought there was a role for Mr Zhao in the current government lineup. Mr Xiao is clearly a highly competent and resourceful politician with an excellent grasp of the issues and the ability to communicate his ideas. What's more, he even has a sense of humour. In a wide-ranging press conference last week Mr Xiao managed to combine the issues of family planning and the protection of Sichuan's most famous resident, the giant panda. ''While trying to strictly control [human] population growth we really must encourage those pandas to breed more,'' he said.