THE National People's Congress will in early March endorse Beijing's new policy of tailoring reform to the country's ability to cushion its effects on social stability. Sources in Beijing said the Communist Party leadership had decided to use the second plenary session of the Eighth NPC, which opens on March 10, to mobilise national support for a relatively cautious approach to development. The NPC would call for a measure of national sacrifice in reducing investment, curtailing inflation, and cutting the US$12 billion (HK$92.6 billion) trade deficit. The tone for economic policy in 1994 was laid down by Prime Minister Li Peng in a speech yesterday to the national conference on ideological and media work. ''We must handle well the relations among reform, development and stability,'' Xinhua (the New China News Agency) quoted Mr Li as saying. The premier added while reform and development remained the ''focus of all work'', ''stability is the prerequisite for development and reform.'' Moreover, Mr Li pointed out reform should be implemented in an ''active but cautious'' manner, and Beijing's macro-level control would be boosted to minimise disruptive social fallout. In an editorial published today, the People's Daily warned against blind and excessive capital construction among the regions. ''The tendency in some localities of paying no heed to objective conditions, neglecting economic returns and blindly seeking big projects and construction speed must be stopped,'' the Daily said. It also criticised areas for failing to implement a national unified construction plan, undertaking redundant projects, and over-extending the construction scale. Beijing sources said in a recent meeting, the Communist Party Politburo decided that politically disruptive reforms and over-ambitious developments would be toned down to decrease social tension, which had manifested itself in the record number of unrests among urban and rural residents last year. The sources said during the NPC, leaders of coastal provinces would be asked to exercise restraint in development projects, while representatives of poorer regions would be urged to persuade their constituents to show more resilience in absorbing the ''shocks'' of reform. At the meeting earlier this month, the Politburo confirmed suggestions by individual ministers that the gross national product (GNP) growth rate for 1994 be fixed at nine per cent, while the value of industrial and agricultural production would increase by respectively 15 per cent and 3.5 per cent. Last year, the GNP grew by 13 per cent, while industry expanded by 22 per cent. Other recommendations of the Politburo included a 470 billion yuan (HK$417.4 billion) expansion in bank credit in 1994 and a growth in currency in circulation of 180 billion yuan. Both imports and exports for the year were fixed at US$100 billion, and fixed-assets investments at 1,300 billion yuan. Inflation, which was over 20 per cent in urban areas last year, would be contained within 10 per cent. The Chinese-run Hong Kong daily, Wen Wei Po, yesterday revealed that the Politburo also laid down a 16-character guideline for economic policy in 1994: ''Seize the opportunity; deepen reform; promote development; and guarantee stability.'' Wen Wei Po quoted authoritative Chinese sources as saying the Politburo was anxious to strike a balance between reform and development on the one hand, and social stability on the other. Referring to the austerity measures taken in the latter half of 1993, the newspaper quoted the party's ''highest echelon'' as saying: ''If we had not raised [the austerity programme] in time, there was a possibility of a repeat of the [hyperinflationary]economic situation of the latter half of 1988. ''That would have constituted the big rises and falls Deng Xiaoping talked about, and major losses would have been incurred.'' The Politburo indicated, however, that the nine per cent growth rate was for the entire nation, and areas along the southeast coast which had the requisite qualifications could go faster. Informed sources said there was now a consensus within the Politburo and Central Committee that Mr Deng's ambitious goal of a development clip of ''10 per cent or more'' must be watered down to curb inflation and defuse bottlenecks in areas including energy and transport. The sources said, however, Beijing would likely encounter massive resistance from the localities. Leaders in fast-track provinces and zones such as Hainan, Guangzhou and Pudong have already set growth rates for 1994 of up to 30 per cent. Economic analysts said since the 1994 targets for money supply and fixed-assets investment were on a par with those of 1993, inflation would probably get worse instead of better. They added the Politburo goal of zero trade deficit would be almost impossible to attain given the reduction of many types of tariffs and the spending spree among consumers in most large cities. ''Beijing will have a hard time convincing NPC members that the economic plan is feasible and to the best interests of the localities they represent,'' a source said. The Communist Party was also anxious to contain signs of social unrest such as strikes that were triggered by inflation and massive layoffs in state factories. NPC members would be asked to bring home the message that social and political stability was the over-riding concern of the administration. Meanwhile, the semi-official China News Service yesterday indicated China's leading social scientists were divided as to whether ordinary people were willing to pay the price of reform. Wei Jie, an economist with the People's University, said: ''Enthusiasm for reform among the public is higher than that of the central authorities.'' Mr Wei predicted 80 per cent of the reforms proposed last year could be implemented in the near future. Renowned economist Dong Fureng, however, expressed worries that the extensiveness of the reforms might engender a major redistribution of interests among social groupings. ''If the reforms are not handled well, economic life will be rendered confusing and society unstable,'' he warned. On hyperinflation, CNS quoted other experts as saying: ''A considerable number of citizens have only a limited material basis with which to cushion the shock of rising prices.''