FOR months, the white-hot blast furnaces at Capital Iron and Steel Works were working overtime to keep pace with China's latest economic drive. A boom in housing, factory and office block construction sent demand for steel surging and workers sweating to put out steel bars, rods and pig iron. The complex, one of the world's biggest steelmakers, set up its own bank to take advantage of financial reforms. Wages rose sharply to cope with inflation and multi-million dollar overseas purchases were made. But the heady flush of reform is beginning to fade as Beijing slows the economy, attempting to clamp down on a growth spiral. Capital has seen its sales fall and cash-flow problems mount. But its senior management, long used to their role as leaders of a ''showcase'' industrial enterprise, say the change in direction is only for the better. ''Of course, the economic changes have an effect on us,'' said Pan Huayuan, vice-president of international operations. ''But we are progressing along with our plans. All of the business plans we have set are proceeding.'' Wang Shunti, executive vice-president of Capital's Huaxia Bank, agreed: ''I think anyone would have said the financial situation over the last year was chaotic. Order is important.'' Capital, or Shougang Corp, has played a special role in the growth drive set in motion by senior leader Deng Xiaoping early last year, and its readjustments show how the new cool-down policies are taking effect. Mr Deng visited the plant outside Beijing in May 1992, giving his imprimatur to a set of special new rights designed to make Capital an example of how state enterprises could be freed from some official constraints. The steel plant is not following some other state enterprises in plans to issue stock or cut back its bloated workforce. But, in almost every other respect, Capital is a trailblazer. The enterprise, which has 280,000 employees and is itself a virtual suburb of Beijing, moved daringly into areas it had never explored before - including setting up Huaxia and bidding to buy a Peruvian iron mine. The Peru deal caused some backbiting in China after it was revealed Capital's successful secret US$312 million bid was far larger than those put in by other contenders - a sign, some said, of the dangers of playing in unfamiliar markets. ''They were quite strongly criticised afterwards,'' said one source close to the company. ''Top levels of the leadership said they had acted foolishly.'' But ''the fact is we need the iron, so for us any price was cheap'', Mr Pan said. ''We are definitely looking for more foreign work in future.'' Despite subsidiaries, ranging from construction and mining to electronics, shipping and advertising, Capital's core business remains iron and steel production. The frantic pace of construction over the past year gave Capital an unexpected lift: it produced 2.9 million tonnes of steel in the first half of 1993, up almost 20 per cent over the same 1992 period. Prices which, on January 1, were freed from state control, also rocketed and high-quality steel was selling at sharply higher levels across the country as builders fought for materials. The cooling order, which took effect in July, has put a stop to many of the real estate development projects consuming the extra steel and both prices and demand have dropped, according to Mr Pan.