By Rebecca MacKinnon
CNN Beijing Bureau Chief

• Fast forward to affluence
• From starvation to expectation
• An unwelcome specter: urban unemployment
• On corruption, and the prospect of political reform

BEIJING (CNN) -- I first came to China as a child on a visit with my family in 1978. My blond brother and I went to a park. As we stopped at a bench, a silent, gaping crowd formed around us.

In those days, many people in Beijing had never seen European-looking children before, even on television.

The late Deng Xiaoping in 1994

Then, in the fall of 1979, my family came back to Beijing to live for two years, and I watched as China began to change.

First, a few tall buildings. Then bell-bottom pants, platform shoes and permanent waves. Women experimented with makeup. Before, they would have been branded "bourgeois rightists" for such small vanities, their lives ruined.

Chinese TV made its first broadcasts of an American television series, "The Man From Atlantis." Everybody, it seemed, was hooked. They'd never seen anything like it.

People pumped my brother and me for information about the United States: "How many rooms does your house have? How many cars do your parents own? How much does your father make? Isn't life in America better than in China?"

They wanted lives and opportunities like ours. For the first time, it seemed, they held hope that might happen some day.

At the time, as I watched the people around me relax and open up, I had little understanding of the politics driving it all.

I hardly knew who Deng Xiaoping was, let alone that the man who would later become China's paramount leader had launched a new era of economic reforms and "opening" to the outside world.

Nor did I know much about how, in the winter of 1978-79, some people put up posters and printed leaflets calling for political reform. Or how an electrician who was doing so, Wei Jingsheng, was jailed until 1993, a warning that Deng's reforms would not include political ones.

Fast forward to affluence

Fast forward to 1987, my first visit since my family had returned to the States.

I was only there briefly, but was shocked to see how much Beijing had changed. The Western hotels, international companies. The first Chinese-directed movie shown in China to be critical of the brutality of Mao's cultural revolution.

Young people were more sophisticated. Some had even traveled abroad. Many told me they wanted to study in the United States.

I wasn't here during the student demonstrations of 1989 and the bloodshed that ended them at Tiananmen Square.

I came back to Beijing to work for CNN in 1992. Twenty years of market reforms have enabled many to achieve a lifestyle unimaginable when I was here as a child.

There are millionaires. Young people with good university educations and language skills can get jobs with multinational companies, some earning $1,000 to $2,000 (in U.S. dollars) a month. That's more than many of their parents ever earned in a year.

People may have mixed feelings about much of what's happened over the past 20 years as reforms were pushed forward.

But most everyone seems grateful to Deng Xiaoping for putting pragmatism over ideology and allowing free market reforms in this communist country.

So, where does China go from here?

A new school in the village of Xiaogang

From starvation to expectation

Recently, I visited the village of Xiaogang, in China's landlocked Anhui province.

Its people have lived through two famines in the past century: the first in the 1930s, before the Communist Revolution, the second during Mao Tse-tung's Great Leap Forward in the late 1950s and early 1960s.

People continued to be hungry in Xiaogang, as they were across the countryside, until 1978.

In Xiaogang that year, a group of farmers got fed up and disbanded their commune. They divided the land among 20 families, each responsible for its own plot, and each allowed to keep everything above the government quota. Production quadrupled the next year.

Today in China's countryside, starvation appears to have been eliminated, though by Beijing's own estimate 50 million people still live below the government poverty line.

Everywhere I go, city and country, the people I meet think their incomes should continue to rise.

But economists report that peasant income in many provinces is no longer rising. Finding ways to get those incomes growing again will be key to social stability.

An unwelcome specter: urban unemployment

China's cities face similar problems.

Unemployed people advertise their skills

Many are now experiencing an economic slowdown, partly because of painful reforms of the debt-ridden, state-owned companies and industries.

With millions in the cities depending on state enterprises for jobs and benefits, reforms didn't pick up steam until the mid-1990s.

Economists predict 18 million urban Chinese will be unemployed by next year, the highest number since the Communist Revolution in 1949.

Generating new jobs for these people before they take to the streets in protest is a major challenge. Officials already admit privately that every day, somewhere in China, there is labor unrest.

Still, Chinese Prime Minister Zhu Rongji is pushing ahead with enterprise reforms because mounting bank debts are prompting concerns China could soon face a banking crisis.

On corruption, and the prospect of political reform

Then there's the problem of corruption.

One reason why so many people from all kinds of professions joined the pro-democracy protests at Tiananmen Square was because the students were calling for an end to corruption among government officials.

Despite ongoing crackdowns and trials of officials for embezzlement or smuggling, complaints persist that corruption is as bad as ever. Independent economist He Qinglian goes so far as to say that corruption threatens to destroy the Communist Party.

In the country, attempts are under way to create checks and balances through competitive village elections. Studies show that in villages where candidates are able to campaign over local issues, and where secret ballots are enforced, corruption by village officials has declined.

Still, candidates who criticize the Communist Party are not allowed. Several members of a dissident opposition party, the China Democratic Party, tried to run for office in local elections this year but were barred.

But recently, many prominent Chinese have been arguing publicly that China's economic reforms may not progress further without political reforms.

"I have suggested that we need to reform our political system, but we still need to figure out how," said He Qinglian. "We need to establish a system that would reduce opportunities for people to become corrupt."

But so far, Beijing has been hesitant to do more than tinker at the edges of the present political system.

"The main obstacle to political reform is the fear by the ruling group that when you open up the system, there's going to be chaos -- that there will be so many demands, people demonstrating in the streets, Tiananmen kind of stuff, that the regime will be overthrown," said Andrew Nathan of Columbia University.

Most of the world's communist governments have been overthrown in recent years. But the Chinese Communist Party remains in power, due in significant measure to the fact that its leaders were bold enough to reinvent China's economy.

Ensuring that Chinese lives continue to improve may require yet another bold leap into the unknown.