Illegal schemes of China's 'King of Cars' grind to a halt

Once he was called the ''Great King of Cars.''

Today Chen Xihai sits in jail awaiting trial on charges of bribery, illicit sales, and profiteering.

The Chen case illustrates China's determination to restore the communist party's reputation for integrity.

The details of the case, extensively reported in national newspapers, also indicate how endemic corruption has become among party and government officials.

In the wake of the collapse of Chen's network, 95 government officials have been implicated; 78 are party members. Chen and his accomplice Cao (pronounced ''tsao'') Zhenshan are accused of having bought 1,300 cars and trucks between December 1979 and March 1981. They then illegally resold 758 of them, along with 72 motorcycles and 29 tractors, and reaped a profit of 1,300,000 yuan (about $ 800,000). Chen and Cao personally pocketed 480,000 yuan -- about $300,000.

In a country where monthly salaries average 50 yuan, these are huge sums. Chen's official salary as sales and purchasing agent of a communal supply station in Henan province was also 50 yuan per month.

According to a reliable report, prosecutors made their first attempt to arrest Chen in March last year, only to be foiled by opposition from unnamed officials. Only when highest party officials intervened in the summer did prosecutors make progress. Chen and Cao were finally arrested last autumn.

But as recently as this past January, officials of the First Ministry of Machine-Building (which is in charge of car production) were denying that anything was improper in Chen's relationship with certain ministry officials.

Chen's activities extended to 15 provinces and cities from Anyang City, his headquarters, to Peking, Shanghai, Canton, and distant Xinjiang (Sinkiang), and involved more than 130 organizations. Of the 95 officials accused of receiving bribes from Chen, six are bureau directors, and 16 division directors.

The most senior official is Geng Zhenhua, deputy manager of the Henan branch of the Agricultural Bank. Since Henan is a rich agricultural province with a population of 70 million, this is a position of great financial influence.

Chen financed his operations through loans from the Henan bank and the Anyang City agricultural bank totalling over two million yuan ($1.25 million). The loans were obtained through Geng's influence.

What seems extraordinary is that Geng, a veteran party cadre who ''joined the revolution,'' as the saying goes, in 1939, was fully aware of Chen's unsavory past. Originally a guard in a cotton mill in Zhengzhou, the capital of Henan, Chen was twice imprisoned for unspecified infractions of the law. In prison, he met Geng's son. After his second release in 1973, Chen made friends with Geng himself.

Why Geng's son was imprisoned is not specified in media reports, but the fact that he was, highlights another widespread phenomenon in China - that children of officials have a reputation for enjoying privileges and engaging in illegal activities. The current wave of arrests is said to be causing panic among children of high officials in Peking and elsewhere.

Chen began buying and reselling cars on a small scale when he became sales and purchasing agent of a communal supply station in Anyang County after his release from jail.

He came into the big time only in March 1980 when an official of Anyang City, who had formerly worked in Peking, asked him to take a gift to the wife of a former ''responsible person'' in a bureau of the State Council (the central government). Through this ''responsible person,'' whose name is not given, Chen obtained a room at a first-class Peking hotel frequented by foreigners and high Chinese officials.

He used the hotel to wine, dine, and bribe mid-level officials of the General Bureau of Motor Vehicles. Through them he obtained access to China's major automobile manufacturers and commodity fairs.

On one occasion, a Peking official asked Chen to buy a radio-tape recorder for him. Chen immediately took a plane to Canton and returned three days later with a recorder costing 600 yuan, for which he charged the official 300 yuan. This official is said later to have personally escorted Chen to the No. Two Motor Vehicle Plant in Shiyan, Hubei province. Here he made further connections which enabled him to purchase 150 ''east wind'' trucks.

The ''sugar-coated bullets'' Chen used to snare officials into his net of connections included wines and expensive medicines, television sets, tape recorders, cameras, sewing machines, wristwatches, bicycles, and electric fans. At the height of his career, he also dealt with steel, rubber, lead, and lumber products. ''Except for airplanes and cannons, there is nothing I cannot handle, '' he is said to have boasted.

The National People's Congress (China's legislature) has added the death penalty for convictions on economic crimes such as Chen's.

Whether the law, to take effect April 1, will be applied to Chen's case remains to be seen. Also uncertain is whether the names of high officials said to have been corrupted by Chen will be disclosed.