BEIJING has suspended, at least temporarily, its three-month-old austerity programme in spite of evidence that hyperinflation and other signs of economic overheating continue. Chinese sources said yesterday that leaders, including President Jiang Zemin and Executive Vice-Premier Zhu Rongji, had declared in internal speeches that ''initial results have been attained in efforts to boost macro-level adjustments and control of the economy''. They said that the banking system under Mr Zhu had made credit available to several provinces since last month on a selective basis. In recent speeches, leaders, including Mr Jiang, indicated that the thrust of economic policy-making had shifted from retrenchment to ''sustained, high-speed, and healthy growth''. Another priority is the deepening and widening of reform, with emphasis being put on the modernisation of the tax and financial system. An economic source said that in recent meetings with regional officials, Mr Zhu and Mr Jiang had pledged that credit lines would again be opened for ''worthy projects''. Provinces such as Anhui and Jiangsu have been promised injections of central funds of up to 10 billion yuan (HK$13.4 billion) each. Last month, Mr Zhu, who is also governor of the People's Bank of China, had postponed until the end of the year the deadline for local administrations and enterprises to surrender to central coffers ''improperly secured'' funds from banks and government departments. ''Zhu has made many enemies among leaders of both coastal and inland provinces, who flatly told him they were not heeding central directives because the latter would lead to the bankruptcy of the local economies,'' the source said. ''After having only achieved limited results such as the closure of some unauthorised development zones, the Vice-Premier decided last month to drastically tone down the austerity measures so as not to alienate local cadres.'' Western diplomats in Beijing said the objective of slowing down the overheated economy had been replaced by the political need for heavyweight players, including Mr Jiang and Mr Zhu, to widen their power base through securing the support of the ''regional warlords''. They said the jockeying for position had increased as evidence that the health of patriarch Deng Xiaoping might not hold up for too long. A senior Western diplomat said Mr Deng, who last appeared in public during the Lunar New Year, had ''significantly lost weight''. ''Support from the regional chieftains will be crucial in the power struggle that will ensue after Deng's death,'' the diplomat said. However, economic analysts said that because basic economic problems such as the uncontrolled money supply had not been resolved, elements of the austerity programme would almost certainly be re-applied next year.