IN sad but typical Chinese fashion, Deng Xiaoping, according to the official party line, is ''in good health''. According to his daughter, Deng Nan, Mr Deng still expects to visit Hong Kong after it returns to Chinese sovereignty on July 1, 1997. For those, Chinese and non-Chinese alike, who still obey the Dengist maxim to ''seek truth from facts'', that is not the way reality is currently being perceived. For a long time now, there has been a kind of Deng Xiaoping death-watch in that volatile casino, the Hong Kong Stock Exchange Speculators have been making - or losing - fortunes for years on the basis of the latest rumour about the declining state of Mr Deng's health. But now the death-watch fever has gone international. By a curious, almost incredible coincidence, last month both the Los Angeles Times and The New York Times placed the looming transition in China in sharper perspective. The Los Angeles Times had a front-page story from Washington by China specialist Jim Mann announcing ''Deng Believed Dying; Beijing Transition Seen''. The New York Times consigned the story to page three, where, over a lengthy report from the paper's Beijing correspondent Nicholas Kristof, the headline posed the question which has been nagging China-watchers for years - ''Who Runs China? Deng's Health Is A Major Issue''. The utter paucity of hard information on which to base such stories was well-illustrated by Mann, after he had quoted one US China expert as saying flatly that ''Deng is dying''. He then reported that: ''It is not clear how long Deng could last in this weakened state, but estimates range from a few weeks or months to as much as a year.'' So what is going on? The short answer is . . . we do not know. Because we do not know, the first and last short answer to the question ''After Deng, what?'' is . . . turbulence. Start by imagining what ought to be happening. After a long supercharged life embracing long years of civil war, and even longer years of just as brutal factional warfare within the Chinese Communist Party, Deng Xiaoping, an old veteran of all these wars, will celebrate his 89th birthday on Sunday. Since he has led a life of incredible ups and downs and much hardship in the service of China, and has been the chief mover and shaker in the Chinese political world since the death of Mao Zedong in 1976, a certain infirmity at such a ripe old age is to be expected. Nevertheless, China is regularly informed of the precise state of Mr Deng's health. On August 22 a few chosen reporters from the People's Daily and other leading Chinese newspapers are allowed in to share a cup of Chinese tea and a chat with Mr Deng. They report that he is a good deal more deaf than last year, and that communication with him is even harder than before, with his murmurs and grunts having to be interpreted by either of his two daughters, Deng Nan and Deng Rong. Politically-conscious Chinese (which means a hefty slice of the nation) read these reports avidly, and then rest content that Mr Deng's life is moving slowly towards its end. He has not merely retired from all his posts a few years ago. The Chinese system has actually allowed him to retire. That is what ought to be happening if China was a normal society, in which leaders ceased to be politically significant when they retire. But the system in China is still one in which old leaders cannot retire, they cannot even fade away. That is what would be happening, too, if China was a stable society, in which information about the lives of the nation's leaders, was freely available, as it is in most normal countries. B UT China remains defiantly abnormal and perennially unstable. Her leaders live behind a dense screen of secrecy, forcing both their own people and foreigners to find out even ordinary information through deduction and inference. So the myth is maintained that Mr Deng is still in charge of China, that he is still the chief power-broker and the paramount leader, that he is still the man to make the key decisions as the all-wise patriarch. Yet the mere sight of the increasingly rare and carefully stage-managed appearances of Deng on Chinese television in the last two years has clearly revealed that Mr Deng lacked the physical ability to be any of these things in any meaningful way. It is hard to be sure which comes first - does the myth create the need for the secrecy , or does the secrecy create the myth? Since the myth of Mr Deng in charge is maintained, as Kristof wittily observes: ''The problem with the official accounts of Deng's glowing health is that the government normally characterises leaders as fine and vigorous until the pulse has disappeared and the corpse gone cold.'' What is happening of course is not so much communist as vintage dynastic China. The feudal mystique of one man with superhuman qualities ultimately in charge of the vastness of China refuses to die. Emperor Deng is probably fading. Since the Middle Kingdom hinges on the Emperor's survival, or the installation of a new Emperor, speculation runs rife, not merely among foreigners but among Chinese themselves. That is why we can be sure that faxed copies of what appears about Mr Deng in foreign media are being avidly passed around in Beijing and elsewhere. We can even be sure that Mann's and Kristof's reports are being scrutinised within Zhongnanhai itself, the Chinese leadership compound wherein the communist leadership spends its secretive days. Within Zhongnanhai, those who withhold basic information from the outside world almost certainly do the same among themselves. Amid the pervasive atmosphere of endless intrigue, numerous speculations would inevitably flow from the US journalists' carefulguesstimates about Mr Deng's physical state. Inevitably the Chinese will wonder - is the simultaneous publication in the US of two Deng Dying stories some devious American plot pursuing some dubious diplomatic advantage? Hardliners will conjecture that these obviously planted Deng stories are a typical and cunning Dengist ploy, which seeks to encourage them to prematurely show their hand while the master-tactician (Deng) prepares a compelling counter-stroke. On the contrary, Dengists will anticipate that the hardliners themselves are doing the leaking about Mr Deng's declining health, aiming thereby to influence the factions which once supported him, but which are now already considering switching sides whenhe dies. The Dengists are furious that their enemies manipulate the natural feeling - why stay with a sinking ship? As the Chinese speculate over this and other incidents - basically because of the lack of direct information - they naturally fuel and trigger intensified factionalism. This in turn makes one possible answer to the question ''After Deng, what?'' - collective leadership of the communist party? - most unlikely. Chinese factionalism is, in any event, never as disciplined or as predictable as the organised factionalism long practised by the Liberal Democratic Party in Japan. Chinese factions are usually small, hinge on purely personal connections and loyalties, with each faction contributing its temporary attachment to a wider alliance. The wider alliance is often described as a faction, too, but it is more accurately a coalition, or alliance of convenience. Mr Deng's success over the past 15 years has been built upon his ability to build a bloc out of numerous coalitions or alliances. But the undisciplined and often temporary nature of Chinese factional alliances was well-illustrated when factional pressures forced him to dismiss his own chosen successors, Hu Yaobang and Zhao Ziyang. Collective leadership in such circumstances would be something of a miracle at the best of times. Amid the heightened atmosphere of intrigue which the Deng death-watch naturally stimulates, it can be considered all but impossible. Instead, the first and most important answer to the question ''After Deng, what?'' is that most Chinese, in and out of the top leadership circles, will be asking themselves the question ''After Deng, who?''. A better informed China might be more inclined to look at matters in an impersonal way. A closed secretive society is most unlikely to do so. In other words, the Emperor syndrome is being cultivated by the very way in which Mr Deng is being allowed to die, behind closed doors and still ostensibly the one-man-in-charge. His daughter Deng Rong is in the throes of producing a massive, adulatory two-volume biography to prove it. The Emperor syndrome makes a highly personal post-Deng quest mandatory. But so does the highly personalised factionalism. The only way in which some cohesion can be brought to this communist dynasty, as with most past dynasties, is through some individual having such a wide range of personal connections that he can create some factional order in place of incipient chaos. But since the Old Emperor must stay in charge until the moment his death is actually admitted, the decision as to who will be the next Emperor must be postponed. So rivalries are accentuated instead of diminished the more the death watch is protracted. Foreigners are the only people free to discuss Mr Deng's possible passing in a reasonably rational way. Chinese within China are not allowed to have any facts, so they cannot even seek the truth privately. The fact that Deng Xiaoping may be dying as the economy is requiring a period of drastic retrenchment adds more potential spice to the situation. Tragically, China's almost total lack of political modernity means that an archaic counter-productive political system virtually condemns China's 1.2 billion people to excessive uncertainty, and increased risk of chaos.